Articles & Summaries in Economics, Political Science, Psychology, & More

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It is of interesting note that Paul Krugman and Paul Samuelson, in their dismissal of John Kenneth Galbraith’s The New Industrial State, mentioned that Galbraith was a talented writer (Duhs, 2009, p123). Perhaps it would not be too far-fetched to suggest that such a comment was motivated by the fact that both Krugman and Samuelson were Keynesians. John Maynard Keynes was not known for being an easy read, with scholars and economists alike criticizing The General Theory of Employment, Interest and Money for its complex writing despite its largely practical nature. Keynes, whose fame peaked with the publication of The General Theory heralded some sort of revolution in the economics of the late 1930s. The General Theory created a change in the way governments handled the recessions of a post-Depression era. Once economies were lifted out of depressions, Keynesian policies gradually disappeared and in the 1970s were mostly displaced by Milton Friedman’s monetarism (Stewart, 1993). Keynes may have lost his popularity towards the end of the 20th century, but he returned to attention recently in light of the global financial crisis. Seeing as long after his death Keynes remains a big name in economics, it is only natural then to expect his teachings introduced in a standard macroeconomic course. Hence this essay will examine the content of textbook macroeconomics and how much of it agrees with the economics of Keynes, primarily through the analysis of introductory macroeconomics textbooks.

Looking at the history of Macroeconomics textbooks, we can see that Keynesian economics began to saturate economics textbooks since as early as the 1940s. A study of Paul Samuelson’s Economics shows that Keynesian economics was gradually assimilated into mainstream economics syllabus, starting with its first edition which was loosely structured around Keynes’s concepts. Samuelson’s text was the principle introductory economics textbook of the USA and today it is built around ideas from The General Theory alongside other relatively recent economic concepts such as the Phillip’s Curve. Pearce and Hoover (2005, p186) additionally notes that today’s macroeconomics textbooks are mostly Keynesian. However, it is worth mentioning that most textbook Keynesian economics are not necessarily teachings of Keynes but rather other economist’s interpretations or understanding of Keynes. There exists a difference between (as Alex Leojohnhufvud famously put it) “Keynesian Economics and the Economics of Keynes” (Garrison, 1994). Colander observes that textbook Keynesian policies were not exactly Keynes but rather Abba Lerner’s interpretation of Keynes while Caporaso and Levine (1992, p101) notes that economists such as textbook writer Samuelson placed Keynesian ideas into a neoclassically inspired framework. The latter supports the notion put forward by Littleboy that textbook writers merely picked up bits of Keynes that fit into its neoclassical vision.

Things take a fascinating turn when the discord between Keynes’s own teachings and textbook macroeconomics are made visible. A quick review of standard macroeconomics textbooks is sufficient to show that Keynes was not purely “watered down” or “bastardized” as claimed by some economists, but rather eliminated completely in certain crucial parts. The most obvious would be the lack of the political side of Keynes due to the textbook writer’s pursuit of the measurable and results-oriented components of Keynesian economics. Keynes did not trust the market system to perform satisfactorily on its own, and this forms a core section of Keynesian economics. Sharing a similar opinion with Karl Marx (who is completely absent from most modern macroeconomics textbooks), Keynes denied the ability of the market to keep a steady rate of employment and production. However, Marx went on to claim that the free market system is “violently unstable”, a thought that Keynes disagreed upon (Caporaso Levine, 1992, p101-2).

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According to Keynes, too often has Adam Smith’s “invisible hand” been let off with a slap on the wrist despite its ineffectiveness in keeping economies above water and this forms the basis as to why Keynes sees the need for some form of government intervention. Keynes’s pessimism regarding markets was never taken seriously by textbooks, with most writers attributing it to the turbulent period he lived in.

One particularly big predicament for Keynes was the development of the private corporation. A part which the standard macroeconomics textbook fails to give coverage on, the private corporation is to Keynes the cause of faults in the financial market. The distribution of shares as a method enabling individuals to hold wealth in a liquid form generated instability in the accumulation of wealth. Caporaso and Levine (1992, p110) observe that this makes long run commitment to a particular productive enterprise no longer compulsory and places a premium on short term capital gains. As Keynes (1936, p156) put it, those who profit from this are those who best forecast “what the average opinion expects the average opinion to be” a short time ahead of the general public. This in turn encourages speculative activities and in the end results in price instability. Keynes (1936, p159) likens these investors to gamblers, stating that “when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”. Keynes advocates share market transaction taxes in order to solve this problem. Simply put, the ultra-short term nature of financial market exchanges would be heavily dampened by a tax that is capable of raising transaction costs. This shifts investor perspectives away from the short run side of the spectrum and reigns in the pace of transactions. This reform along with Keynes’s proposal for an International Clearing Union was never mentioned in textbooks, possibly for their radical nature.

Taking things a little further, it is perhaps fair to say that Keynes would not agree to the content of today’s macroeconomics textbook even if they are based on derivations of his concept. Firstly, the way in which textbooks today present content can best be portrayed as being of mainly mathematical and diagrammatical manner. Today’s textbooks are neoclassical, combining Keynesian theory and classical theory. Macroeconomics textbooks take an engineering approach at seeing the world, resulting in society being projected as a highly mechanized structure to ruling technocrats. This is much in line with the Benthamite movement where society’s utility is given a value and governmental decisions are made to maximize collective utility. On the other hand, we have Keynes who was not just an economist, but was additionally a social reformer and a philosopher. He had a more earthly view of the world and concedes that uncertainty remains an integral part in everyday life. He took note of the way people discount what they don’t know from making future decisions, and how this posed a flaw in the decision-making process. Then there is also the concept of “animal spirits” where Keynes believed people are often governed by their whims and fancies rather than cost-benefit calculation. This is perhaps consistent with his personal life in which he was known to enjoy artwork, have affairs with men, and finally marry a famous ballerina. This quirky side of Keynes contrasts sharply from the rigid economics of textbooks.

In the end, Keynes’s writings and beliefs were to guide people towards what he thought would be an ideal state of society. Before The General Theory, he wrote Economic Possibilities for our Grandchildren in 1930 which dealt with the potential of future living conditions and society.

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Ohanian (2008, p10-11) notes that Keynes’s 100 year prediction was highly accurate despite the lack of empirical record and insufficient theory at the time he wrote the essay. Keynes wanted a society where production was no longer a problem and there was equal choice for everyone. To put it simply, all wants can be satisfied due to increasing productivity from constant technological progress. Keynes even forecasted that eventually society will reach a point where too much leisure becomes a problem. Ohanian states that Keynes’s forecast of dramatically decreasing work hours in the future was near to that predicted by a modern growth model, and this was a stunning achievement for his time period. However, his prediction of the future state of leisure is still very far off the mark and for the time being does not seem very likely.

Keynes was no doubt a brilliant contributor to economics, and one that was far ahead of his time. The oversimplification and exclusion of much of his work in textbooks could be seen as insulting by some scholars, but perhaps it is of necessity to the technocratic age that we live in. In an era where the focus on results and technology dominate the analytical process, it is most probably best if the neoclassical vision of textbooks remained for the time being. In conclusion, it can be said that the content of macroeconomics textbooks does leave a lot to be desired particularly when it comes to Keynes and in general, the political economy. By reducing macroeconomics to mainly calculations and forecasts to maximize wellbeing, the more thoughtful and challenging side of economics has been left out. If prior to Keynes textbooks were planned around Adam Smith’s teachings, it would be very interesting to know which economist would be the next to mark a revolution in macroeconomics education.

(approximately 1480 words)

References

Duhs, A. 2009. “Course Notes”, Political Economy and Comparative Systems, The University of Queensland, Queensland, Australia.

Garrison, R. W. 1994. “Keynes was a Keynesian”, The Review of Austrian Economics, Vol. 9 No.1, pp. 165-171.

Littleboy, B, Taylor, J. 2006. “Macroeconomics 3rd Edition”, John Wiley Sons Australia, Queensland.

Littleboy, B. 2009. “Commentary on Keynes”, The University of Queensland.

Ohanian, L. E. 2008. “Back to the Future with Keynes”, Federal Reserve Bank of

Minneapolis Quarterly Review, Vol. 32, No. 1, pp. 10–16.

Pearce, K. A, Hoover, K. D. 2005. “After The Revolution: Paul Samuelson and the Textbook

Keynesian Model”, History of Political Economy, Vol. 27, pp. 183-216.

Stewart, M. 1993. “Keynes in the 1990s”. Penguin Books, Middlesex, England.

Taylor, H. 1936. “Mr. Keynes’s General Theory”, New Republic 86 (April 29): 349

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I was actually turking, working on Amazon’s Requester’s “Ask a Question” task when this article popped up: Restore Economic Confidence by Robbing Banks by Spencer Green. The article draws a parallel between our current economic crisis and the 60s bank robbing duo Bonnie & Clyde, suggesting that a new brand of “populist criminals stand up for all of us.”

The interesting thing about this article is that I can’t tell whether it’s a parody of Keynesianism, or it’s someone with a Keynesian viewpoint simply being facetious but still oblivious to the absurdities of his position. Reading it like a libertarian, I see good satire (which is basically true of any statist piece read as a consistent libertarian; it’s either something someone really written or really good satire of the nonsense people believe). Reading it as a real statist piece, it makes my stomach turn.

It’s posted under “Comedy News,” so I’m really thinking it’s satire, but I don’t know. Someone advise me?

Apparently, Hawaii’s hailed “universal child health care” initiative has been, well, uninitiated.

http://news.yahoo.com/s/ap/20081017/ap_on_he_me/child_health_hawaii

HONOLULU – Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.

Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.

“People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. “I don’t believe that was the intent of the program.”

…

Basically, this is an illustration of why mixed economies don’t work effectively. If the government guarantees a good or service of certain value to those who don’t have it, it will be exploited. More broadly, any entitlement system will be exploited because it’s simply economically stupid to do otherwise. If you can foist the cost of anything you need onto someone else and you don’t notice or have no moral qualms about the force involved, why wouldn’t you?

Read more…

In the ludicrous atmosphere of platitudes, slogans, and cliches, we certainly hear plenty about how the boys in Washington are off drafting a bailout, er, rescue, err, investment to save the U.S. economy. Yes, I’m sure Barack Obama and John McCain have some idea about how to spend $700 billion that doesn’t even exist – at least more than those banks do! And what about That Congress? Why, nothing but the amassed intellectual wealth of America, legislating for the common good.

They’re doing such a great job that the financial sector decided to throw a little "bonus money" their way – you know, to reward them for working for the common good and all.

This is how the government ‘protects’ the economy. The empirical evidence is in: large corporations don’t spend money for nothing.

But hey, "more regulation" and "the government needs to do something" are the calls of the day, especially among those young people. I wonder if they’ve noticed our national debt lately, have considered the notion of legislative corruption and regulatory capture, or thought about how a bailout might encourage companies to undercapitalize, even decades into the future, allowing them to play the upsides of risky investments and letting taxpayers take the rest. Oh wait.

The government should totally do something, like really.

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From time to time an author or thinker will create a work, often in the Utopian genre, which lays out a detailed design of an ideal society. Fourier’s phalanestères are one example: they are described as the structure of a social unit, all the way down to the number of inhabitants and to the shape of the actual buildings that house them.

The general problem with these plans is that they lack generality over time and space. They fail the test of universality. The following will be my random walk through some of the problems with rationalist institutional construction and the subsequent problems of central planning. –more–>Most people would recognize that a particular building design or architecture can become obsolete. Many would laugh if there were an actual plan to actually construct Campanella’s City of the Sun or Fourier’s phalanxes in the present day. Their reasoning would be obvious: those things were designed in an entirely different time, under different circumstances. This is not to say that those authors and many like them put forth their ideas as timeless and never requiring change (some occasionally have had the delusion of technological growth simply stopping at one point), but a large degree of universality is frequently attached to more abstract kinds of social planning.

Some examples of central design are much more concrete than others, but central planning when it involves a particular kind of physical engineering is not the only instance in which central design encounters severe problems. It can also include institutional design. For a long time, it was thought to be sound business strategy to always have a middle-man for many kinds of transactions. With changes in technology, the middle-man has frequently been cut out, and with good reason: he’s no longer needed. Yet what would happen if, in my ideal construction of a society, there were always a middle man between wholesale and retail? What if I claimed that this middle man led to the greatest well-being of my society’s members? Economics would most certainly stand against me.

Despite that, all kinds of social manifestos, utopias, and even national constitutions establish permanent institutions as a feature of the society. It can be a ruling council of Thirteen, a Guardian class, or a president, a 480-member congress, and a 11-member judiciary. They make the mistake of integrating information available at the current time and creating a set of concrete institutions that are to be held as universal, but are not in fact universal. This is symptomatic of a general problem with leftist thought, which is that it is often too concrete-bound in its approach to society. Those contingent concretes – such as the current distribution of income and power in society – are then used as premises from which “universal principles” are derived, like: there’s always the class of the rich and the class of the poor, and the former always oppress the latter. The problem is that those supposedly universal principles only apply in narrowly contingent cases, which makes them not universal (not even considering whether the derivation of those principles is valid). They ignore changing circumstances and technology (never mind all the other fallacies, like the total fabrication of principles of justice, ignorance of actual factors that cause poverty, etc. )

The general empirical principle underlying this is that no mind or group of minds can ever gather, process, and coordinate all of the information necessary to perfectly govern complex human conduct. Even without any normative principles relating to individual autonomy, the idea of governance – especially economic governance – by few over the many is riddled with problems, in theory and as it has been demonstrated in practice. Every economic agent has a delicately unique and complex set of circumstances and preferences, and has direct access to his own set. Supposing that someone trying to make economic decisions for this person was acting totally altruistically (another very generous premise, again as demonstrated in practice), he would require a means of translating that agent’s changing circumstances and preferences (closely related to subjective experiences of pain, pleasure, etc. into usable information which he then must process to prescribe a course of action which must be then executed correctly. Multiply this process over thousands or millions of people, and there is quite a huge problem. It is wishful thinking already that one person can make decisions for another effectively (people already have enough problems making decisions for themselves), so it must be even more wishful to think that some people can do it for many others, even suspending for a moment the selfish interests of those decision makers.

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Only the free market (which is run by, precisely, nobody) is capable of coordinating the largely diffuse information spread among economic agents into forming an optimum output. This is not just an optimum regarding maximal manufacturing output for the lowest possible cost, a common straw man constructed against the free market to paint it as a cutthroat institution of total efficiency. That notion is just a Platonic hangover as if goods are produced for the goods’ sake which ignores why those goods are created in the first place: to enhance an individual’s well-being. The free market forms an optimum output with respect to the amount of resources available, and, more importantly, to the totality of the individual preferences of all market participants.

Very closely related to the information problem of central planning is pricing or, more broadly, valuation of goods, services, or virtually everything whose control and consumption can be transferred from one individual to another. Valuation by demand is self-defining: what someone is willing to pay for something is what it’s worth. No Platonism necessary, no intrinsicism, just pure empirical fact. In a centrally planned system that prohibits free association, value must be decided; otherwise, there is no meaningful way of allocating produced goods among the members of society. Again, suspending the selfish interests of the appraisers, this leads to bizarre information problems and to the humorous possibility of the “value” contributed by producers exceeding the amount of goods and services available in an economy, resulting in people deserving more than is possible to provide.

Another problem with central planning is, in brief, the actual presence of human beings. Markets can’t be avoided; the free market is all about incentives. Proof in practice of markets is the responsiveness to incentives embedded in human nature, no matter what system prevails. Black markets develop in response to government prohibitions; defying the law becomes a business, where risks are taken but large profits are reaped. In totalitarian systems (especially those with distributive wealth patterns, like in communism) individuals use their positions as or connections with bureaucrats and politicians in order to gain a bigger share of the pie. Even in our purportedly “free” economy in which the government intervenes to harness the “dangers” of the free market, interest groups spend billions of dollars yearly lobbying federal, state, and local governments getting laws passed in their favor to the detriment of others and electing politicians and bureaucrats who use the force of the law to increase business profits.

(Incidentally, the few errant cases in which people’s preferences are static and minimized do not undermine this universality of the human condition, for the reason that incentives can be structured to shun accumulation of material possessions or other conventional measures of well-being. Some tribes have a social value of personal prestige over wealth, and thus individual members will often spend all of their wealth on extravagant feasts for the tribe or on constructing large memorial edifices. )

Up to this point I’ve freely switched back and forth between central institutional design and central planning. Though there is a distinction between the two, they ultimately suffer from the same problems. First, even in a static environment, central design and planning simply lack the coordination of information necessary to achieve anything close to efficiency. Gathering the information is either next to impossible or is so costly to achieve that it defeats the purpose of establishing any institutions in the first place. Then, not only must the institution measure up to the circumstances of the time, it must be resilient and adaptable to the rapidly changing and non-ergodic world. The environment changes. Technology changes. People change. If the institution itself entails an active form of intervention (such as value arbitration, as in Marxism), the central planners constantly face the problem of incomplete and changing information.

Any societal plans that establish hard-and-fixed institutions and that rely on constant governance are prone to disaster, especially when abuse of power is considered. Up to this point, I’ve neglected to address that fact, which is the most important of all: much of the preceding discussion generously takes for granted that those involved in the central planning have no interest but doing their job the best they can. For the most part, that means that I’ve ignored an even more fundamental flaw in central planning. Yet even with that, it still had problems, didn’t it?

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While oil interests may not be the sole explanation of their foreign policy goals, they stand as part of a wider variety of interests that share common goals, such as defense contractors. A glimpse at the news today reveals that the price of oil per gallon to the customer is as much a leading economic statistic as the stock indexes. The “price at the pump” has become a highly symbolic issue, and many Americans often complain that gas prices have been allowed to become too high and that something ought to be done about it. To some, this means moving to alternative fuel sources. To oil companies, it is an opportunity to continue arguing for the necessity of oil on the basis of economic growth, appealing to the average American’s lifestyle.

The issue of global climate change has particularly in the last decade led to political gamesmanship from major corporate interests in the oil industry. The Kyoto protocols, negotiated and signed by the Clinton administration in 1997, were drafted with the objective of “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. “[9] This would entail the reduction of emissions, either via increased automobile efficiency among other conservation measures, or even possibly the development of permanent alternative fuel sources- a clear threat to the oil industry’s many sunken capital costs. Exxon-Mobil, the largest oil company in the world and contributor of the greatest amount of U. S. lobbying dollars in its industry, has undertaken a strong anti-global-warming campaign, funding private think-tanks to promote uncertainty over global warming and the economic danger of environmental regulations. Not surprisingly, their business model is suited primarily for research and development in oil extraction and refinement, and they hold several oil assets abroad, including major pipelines in Siberia and Africa.

Oil companies like Exxon-Mobil had quickly realized that they needed to win the war against the Kyoto protocols and all other climate control policies, and doing so would require the scientific agreement of the public, and in turn Congress. In 1998, the New York Times revealed a leaked American Petroleum Institute (an organization whose membership includes Exxon-Mobil) memo aimed at addressing the ubiquitous presence of global climate concerns. Its proposed organization, the Global Climate Science Data Center, would serve several useful functions, among them, “identifying and establishing cooperative relationships with all major scientists whose research in this field supports our position,” and “developing opportunities to maximize the impact of scientific views consistent with ours with Congress, the media and other key audiences. ” It is quite clear that no matter where the evidence lies for global warming phenomena, money is pushed into politics in a manner concurrent with partisanship over science. [10]

In Opensecrets. org’s special election report, “President Bush’s First 100 Days: A Look at How the Special Interests Have Fared,” the section subtitled “Energy” begins bluntly: “If there were any doubt that President Bush and Vice President Cheney, two former oil executives, would be sympathetic to the interests of energy companies, it has been put to rest in the first 100 days of the new administration. ”[11] Evidence of a “revolving door”-style administration is abundant with respect to the petroleum industry. In 2001, Exxon-Mobil lobbyist Randy Randol sent a memo to the White House requesting that Intergovernmental Panel on Climate Change (IPCC) chairman Robert Watson resign. Though he did not resign, his reelection was blocked one year later. [12] In 2003, the Bush administration officially denounced the Kyoto protocols. Presently, the administration shows few signs of substantively addressing the global warming issue, and the “lame-duck” period will likely prolong that trend until 2009.

Conclusions

The omnipresence of private interests bearing significant influence on governmental policy is not unknown or surprising to most people. However, an understanding of the process of how these interests come to affect government policies is important for the MNC strategy theorist, for the foundations that underlie it must be considered as new developments in globalization world governance begin to surface. Greater empirical study of the effects of political dollars on profits can yield great insight into the causes MNC decision-making, along with possible reforms to counteract the exploitation of political systems for subsidies, but it is ultimately limited by the obscure nature of the interpersonal dealings and complexity of publicized procedures that constitute the lobbying-subsidy process. More exploration of the broad spectrum of powers such as multilateral institutions that can be tapped for MNC benefit can also explain how government intervention is still not out of the question in a rapidly globalizing economy.

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[1] Lobbying Database, Center for Responsive Politics. http://www. opensecrets. org/lobbyists/index. asp (Accessed April 3, 2007)

[2] These large firms, because of their size, require bureaucracy-like institutions in order to effectively manage their vast resources.

[3] This is a quasi-political function of corporations that is captured exogenously in u_i in order to keep the lobbying-subsidy model simple.

[4] “Lobbying in the United States. ” Wikipedia. http://en. wikipedia. org/wiki/Lobbying_in_the_United_States

[5] Compiled from Opensecrets. org.

[6] “Pharmaceutical Industry Spent $800M on Lobbying Over 7 Years, Report States. ” Medical News Today. http://www. medicalnewstoday. com/medicalnews. php? newsid=27125

[7] “The U. S. Congress Votes Database. ” The Washington Post. http://projects. washingtonpost. com/congress/109/house/1/votes/443/

[8] “CAFTA, Data Protection and Generic Drugs. ” Embassy of the United States: Guatemala. http://guatemala. usembassy. gov/factsheetcaftagenerics. html

[9] The United Nations Framework Convention on Climate Change. http://unfccc. int/essential_background/convention/background/items/1353. php.

[10] Global Climate Science Communications: Action Plan. The American Petroleum Institute. http://www. euronet. nl/users/e_wesker/ew@shell/API-prop. html

[11]“President Bush’s First 100 Days: A Look at How the Special Interests Have Fared,” Center for Responsive Politics. http://www. opensecrets. org/bush/100days/energy. asp

[12] Mooney, Chris. “Some Like it Hot. ” Mother Jones. http://www. motherjones. com/news/feature/2005/05/some_like_it_hot. html

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” Increasing demand for lobbyists in the late 1980s led to a growth in popularity of the practice, and the “Washington Game” began to perpetuate itself. The high demand also changed the traditional viewpoint that it was inappropriate for former elected officials to become lobbyists. Since 1998, 43 percent of the 198 members of Congress who are no longer in any elected office have registered as lobbyists at least once. [4] The overall result of this evolution is the ever-increasing presence of private money circulating in public affairs. The bottom line is that to the American politician, money matters greatly. In the 2002 midterm elections, candidates who spent more money than their opponents won 95% of all contested House seats and 75% of all Senate seats. [5]

In context of the model provided, there are many examples of the significant influence of multinational corporations on economic policy. America, despite being considered the most laissez-faire major power, is a massive provider of corporate welfare. A symbolic and instrumental assessment of most recent U. S. policy relating to multinationals bears very strong explanatory power. Partisan politics serve as a major front for symbolic stratification of policy. Generally, at least some semblance of connection between the larger stated ideological issues and the actual policies must exist. Though members of both the Democrat and Republican parties regardless receive immense contributions from multinationals, the prime political actors on behalf of large MNCs usually consist of Republicans, likely due to their ideological platforms which usually involve deregulation, trade liberalization, belief in the strength of entrepreneurship, and so forth. These beliefs, ironically, are used as the symbols to mask the economic interventionism of subsidizing large MNCs.

Given the general claims stated up to this point, the next inquiry must be into their actual historical relevance: what contemporary examples are there of MNCs demonstrating a palpable influence on U. S. policy? The difficulty of finding information on the topic is testament to the transparency that MNCs often enjoy in their lobbying activities, at least in regards to the general public. To discover the appropriate connections, one must integrate diffuse pieces of information from diverse sources in order to draw the connection between a particular firm’s action and how a government policy was determined. Furthermore, lobbying disclosure law is only relatively new, with the Lobbying Disclosure Act having been only passed in 1995. Besides the fact that lobbying activities falling under the guidelines of the law were sometimes underreported (especially during the first few years), there are still many methods of lobbying that have no legal disclosure requirements. These include “revolving door” offers, personal favors, insider information, and other transactions that frequently have no official paper trail. Discovering these obscure relationships beyond mere speculation is a matter of intensive research, including investigative reporting across many sources that only provide small amounts of information individually. For now, we will briefly explore two major and well-known contemporary examples of multinational industries that engage in and profit from abundant political activity: pharmaceuticals and petroleum.

The pharmaceuticals and health products industry constituted the largest portion of reported political contributions in 1998-2006, spending over $1 million.

Their critical policy objectives focus on international recognition of “intellectual property” rights to their drugs, in order to undermine cheaper competitive drugs which cut into their market shares, and the elimination of price controls caused by growing desires for healthcare guarantees. [6]

The pharmaceutical industry deals primarily with products that prolong or improve the bodily well-being of humans. In most societies, the act of “saving lives” is a moral priority, or at least a noble deed. It is no surprise, then, that all related policies are couched in strongly symbolic terms. Their public claims are broadly reflected by statements such as “without [assistance on this issue] from government, expensive research on important drugs will stop and many life-saving implements will not be available. ”

The industry’s influence on international trade is very palpable and significant. Its trade association, Pharmaceutical Research and Manufacturers of America (PhRMA) includes Pfizer Inc. GlaxoSmithKline Plc, Merck & Co Inc. primarily functioning as a means to increase transparency of individual companies’ political influence. PhRMA has filed 59 lobbying reports concerning the Office of the U. S. Trade Representative, more than any other organization historically. Drafts of the Dominican Republic-Central American Free Trade Agreement echo the pharmaceutical industry’s sentiments about price controls and intellectual property. Under its provisions, member nations will be required to comply with deregulated pricing and international patent laws. An examination of the voting record for implementing DR-CAFTA demonstrates almost unanimous votes along party lines: only 15 Democrats voted for the measure, and only 27 Republicans voted against it. [7] Furthermore, in light of CAFTA in 2005, Guatemala was pressured to repeal a law that would allow for increased marketing of generic drugs as long as the drugs were demonstrated to behave like approved drugs. The U. S. ambassador to Guatemala issued presented an ultimatum: Guatemala had to change its law to provide the clinical study data exclusivity mandated by CAFTA, or the U. S. Congress would not allow them membership. [8]

The oil industry, especially in extraction and transportation, is the beneficiary of a large amount of both direct and indirect subsidies. Two of the most significant (relating to their international position) are in the use of government resources in protecting their assets abroad as well as expanding their potential asset base, and in their lack of responsibility for environmental externalities caused by the consumption of fossil fuels.

The physical security of oil drills, pipelines, and shipping lanes constitutes billions of dollars of U. S. government services. Friendly diplomatic relations must be maintained with major exporter countries, especially those with U. S. -owned holdings. Likewise, military force must be readily available to combat any attempt to seize or otherwise disrupt oil supplies by foreign aggressors. Besides maintaining existing American assets and relationships, the government has also engaged in policies in seeking out new sources of oil. One need only imagine a world that did not need petroleum, and aptly ask: “would our foreign policy be the same if that were the case? ” It is misleading, of course, to characterize the government’s heavy interest in maintaining and expanding oil supplies as only a resource transfer to large oil companies, as much income in America is authentically dependent on the energy generated by oil. Nonetheless, it is still a subsidy that discourages substitutes and conservation.

It is no surprise that Republicans advocate the very symbolic policy goal of an aggressive outward foreign policy. According to the Center for Reponsive Politics, in the 2006 election cycle, Republicans received 84% of all campaign contributions from the oil industry.

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