How Businesses Do Lobby for Political Influence
Sleazy closed door deals and slipped brown paper envelopes – that’s the image people have when they hear the word ‘lobbying”. In today’s political climate, lobbying and business influence on political discourse have become especially heated topics.
So, what is lobbying all about? How can a business do lobby for political influence or is it all just a bunch of fanciful thinking and scaremongering?
WHAT DOES IT MEAN TO LOBBY?
Your ideas about lobbying might be based on TV shows and hearsay stories of “Do you know who paid this to that”. What does ‘lobbying’ actually mean?
To get to the bottom of how a business can utilize lobbying, you first have to know the definition and the different types of lobbying – not to mention that lobbying isn’t actually the same everywhere in the world.
The definition of lobbying
If you look up the definition of a lobby in the Business Dictionary, you find the following statement. Aside from being a main entrance hall to various buildings, a lobby is
“a group that attempts to influence a legislation or government spending plans to achieve an outcome more favourable to its agenda or objectives”.
Interestingly, the word lobby actually derives from the outside area of the legislative chamber, which was the place where people tried to influence how the legislators voted.
The word is also a verb, to lobby. According to the dictionary, lobbying is
“the act of attempting to influence business and government leaders to create legislation or conduct an activity that will help a particular organization.”
To break this down to core elements, you could say that lobbying requires:
- An organization that is in charge of specific things, such as laws or regulations.
- An individual or a group, which is influenced by the things the organization controls.
Therefore, lobbying has someone or something in control of an element that influences the actions or behaviors of someone or something else. An example would be the government, which decides how much tax a business pays. Therefore, the government’s action of deciding tax rates influences the way a business can operate.
Furthermore, lobbying requires that:
- The individual or the group to hold a specific desire and/or aim, which the organization in charge can influence.
If you take the example of the government controlling the tax rates, in terms of lobbying, the business would need to hold a specific aim or desire towards the tax. This could be the aim to lower the rates and therefore, the business would embark upon ensuring the government changes its position.
In essence, lobbying is about convincing someone to change its current position to a position you want. If you were not happy with the government’s tax rates, you would try to argue and convince them that your desired rate is much better.
The different types of lobbying
Let’s say you wanted to get your spouse to take you on a date to the newest restaurant in town. What would you do? In general, you have two options. You can either say “I want you to take me to Place Y”, or you can be subtle and casually mention how there’s a new restaurant in town while eating breakfast. Lobbying or persuading someone on your side can take these two routes:
- Direct action, or
- Indirect action.
Direct form is the classic example. In terms of lobbying, it means dealing directly with the people in charge of the decision and, generally speaking, also being open about the objectives you want to achieve. In the example of the tax rates, direct lobbying would be the business contacting the government and outlining what kind of tax rates they want to see imposed and why.
Direct lobbying can occur in different settings. Business representatives can be part of the legislative process, in terms of attending hearings or committee meetings. For instance, a new government might set upon changing or examining its tax policies and therefore invite businesses to propose their ideas on the topic.
But direct lobbying can also take place in a non-formal setting. Government officials might be in touch with businesses on the halls of the legislative place, such as congress, or these direct discussions can happen during dinner parties or other public events.
As the name suggests, indirect lobbying is about trying to influence the decision-making without being directly involved or open about the aims. A business might try to change the public opinion instead of talking directly to the government about its hopes.
The public opinion can then start influencing the decision-making, as the government notices the consensus wants lower taxes. Just like the date example showed, you are essentially dropping gentle hints about a position you want the government or organization to take without stating your aims aloud.
In most cases, lobbying is about using both indirect and direct techniques. Businesses don’t just outline their hopes, but they also try to convince the general public. A good example could be an animal rights group that doesn’t just discuss the required changes with the legislature, but also wants to ensure the voters pressure the government to focus on these topics.
Lobbying around the world
How lobbying takes place differs slightly on where you are in the world. Although the purpose and the aim are the same – influencing an organization in charge – different cultures approach the task differently.
Furthermore, you even have different approaches to what type of lobbying is allowed in terms of politics. Businesses don’t have the same access to lobby for political influence everywhere. So, if you’re looking to engage in some lobbying activities, you need to check what the country you’re operating in permits and what the practices tend to be.
To give you an idea of the differences, below are three country examples of lobbying: the US, France and Australia.
|Lobbying in the US is a multibillion-dollar industry, which is professionally organized. A lot of special interest groups hire professional lobbyists to argue for their causes. The system to keep an eye out for the lobbyists is extensively monitored and has complex rules to ensure the system is transparent. Nonetheless, it is often surrounded with controversy.||France does not have lobbying practice as part of its political process. So, while lobbying naturally occurs in France, organized lobbying hasn’t so far occurred in a significant manner. Since the system is not regulated, the country’s lobbying is often criticized for lacking in transparency.||Lobbying in Australia is another multibillion-dollar industry and it takes place in local, state and federal level. In order to influence the federal government, lobbyists need to obtain a pass to gain access to the parliament building. The pass is valid for two years and it is administered by the Department of Parliamentary Services (DPS).|
|Lobbying takes place in local, state and federal level.||Nonetheless, recent years have seen an increased attempt by businesses to organize and grassroots groups are growing in number. In addition, French lobbyist can register with the European Union public lobby register.||The pass is not required for successful lobbying, as indirect lobbying also takes place. But if you want to meet with lawmakers directly at the heart of the decision-making process, you need to sign a register. Indeed, there is a public record of lobbyists, which can be accessed online through the government website.|
THE DIFFERENT WAYS TO LOBBY FOR POLITICAL INFLUENCE
You’ve hopefully gotten a good indication of how lobbying works in general. The actual ways businesses use these direct and indirect forms of lobbying can differ depending on the things they are looking to change, as well as the kind of business they are.
Resources, i.e. the amount of money a business can sink into lobbying, can make a difference, with large companies often using a number of ways, while small ones might try to put more effort in gaining political influence through a single channel.
There are essentially three different ways or routes to lobby for political influence: controlling the public discourse, spending money on the message, and using organizations for political gains.
Controlling the public discourse
One of the methods of gaining political influence is through control of the public discourse. If a business can get the public to back its claims and aims, the politicians are sure to follow. After all, the public helps to elect these people and if you have the public on your side, you can have more leverage.
If your business deals with organic goods, then you want to convince the public to push for organic goods first and therefore, force the government to reduce red tape and drive down prices, for instance.
On the other hand, if your business is a sugary drink producer and the public discourse is focused on healthier options for kids, the government might be more inclined to push for regulation that isn’t good for your business.
Control of the public discourse can happen in three different ways – all of which are regularly used by modern businesses. First, you have to direct the conversation into areas the business wants to talk about. If the public is talking about a topic, the politicians are likely going to have to talk about it too.
This then brings attention to the topic and can result in changes to the law or the regulations. Let’s say you are looking to ease the regulations around setting up a gym easier. You might start a discourse in the public (by talking to the media, raising awareness and running campaigns) about the obesity epidemic.
If people start talking about the issues surrounding health and keeping fit, such as the cost of joining a gym or the lack of gyms, the government might want to start looking into measures that help keep people active and healthy.
You can also control the discourse by spinning the media. This is all about ensuring the discussion is positive for your cause. In term, you would ensure to media focuses on the positive benefits of what you are trying to achieve – especially if there are also negatives that people might point out.
So, if the reduction of corporate tax causes people to argue it will lead to loss of public revenue and therefore worsens things like public healthcare, your focus would be on ensuring the media also talks about the positives. For instance, you could focus on noting how lower taxes would lead to more business activity, which in turn would lead to more jobs being available in the area.
(If you want to learn the tricks of the media spin, check out the video below!)
Finally, you can create a following to push for the cause. As I’ve mentioned, you can start generating a movement through the political discourse.
If the public starts focusing on the benefits you are driving for, they will essentially begin lobbying for the business. They will organize and pressure the politicians on the need to reduce red tape for new businesses or to help stores have better access to healthy foods.
By ensuring people understand the benefits of the message your business tries to achieve, you create a powerful lobby – not of paid professionals convincing the politicians, but of the voting public.
Spending money on the message
Businesses can, of course, spend money on the act of lobbying. Money is often the cause of controversy in terms of lobby for political influence. It’s also the area of lobbying that can seem the most negative or at least have a grey area where you aren’t quite sure if the intentions and outcomes are as good as they could be.
How does money influence lobbying? First off, businesses could spend money on supporting organizations and lobby groups that work for a specific cause.
For example, if you are a solar energy business, you might help a professional green energy group to ensure the government makes policies that support alternative energy companies. It’s not necessarily that the lobby group pushes for a specific policy change you want, but rather it drives forward your interests as a business in terms of the industry and the market.
Furthermore, you might also fund a think-tank supporting your arguments. This might be a specific health organization that researches the benefits of fats and by supporting them, your olive oil business gets validation that its products are good. It could also be an economic organization studying the benefits of lower corporate tax and therefore, their findings could help the government to reconsider its tax policies.
A business can also directly fund a party or individual politician in the hope they help push forward policies that also benefit the business. There are generally a lot of rules and regulations influencing the ability to donate to political parties and in most countries, directly paying for a specific regulation is strictly forbidden. This isn’t to say lobbying of the kind doesn’t exist.
Finally, a business can skip the craft of lobbying and opt for using professional lobby groups and individuals. This was already touched on a bit above – it’s about getting professional lobbying groups further causes that you believe in. For larger organizations, it might also mean hiring professional lobbyist to push through your business’ specific causes.
While these organizations can use any of the above tactics, it can also mean further involvement with the political process. As I mentioned in the examples of different countries, there can be specific lobbying groups that push forward the interests of businesses and other organizations right in the halls of the legislature.
Professional lobby groups often sit on special committees, attend organized meetings with the politicians and other decision-makers, and they directly outline the special objectives of their representative groups. Using organizations provides businesses a direct access to the decision-making process – an ability to influence the processes head on and be part of the decision-making.
But as mentioned above, the impact of this can depend on the country in which the business operates. In certain countries, like the US, these organizations can be widespread and highly sophisticated, while in others less organized and lack in actual ability to drive change.
BUSINESS LOBBYING IN ACTION
You might still be wondering what lobbying for political influence looks like in reality. Do businesses actually influence decision-making or are they just chasing shadows in the corridors of power? If you look at the numbers, the story of lobbying and its power becomes rather convincing.
According to a 2015 Washington Post article, different interest groups in the US claim over $3 billion a year in lobbying expenditures, with a lot of spending staying off the record books. In addition, most organizations can have up to 100 lobbyists in different levels of local, state, and federal government to represent them. F
urthermore, while corporations aren’t the only ones seeking political influence, they are certainly often outspending other interest groups. The Atlantic reported in 2015, how for every dollar spent by labor unions and other public-interest groups put together, larger corporations will spend $34. Around 95% of the organizations that spend the most on lobbying are also businesses or representatives of business interests.
It’s also easy to understand some of the problems surrounding lobbying when you consider the above figures are troublesome in two ways. First, it doesn’t necessarily reveal the full spending and discussions that happen behind closed doors. Indeed, the lack of transparency also manifests itself in many countries. In the UK, organizations don’t have to inform the public or their shareholders about their lobbying efforts. Therefore, you don’t quite know what is happening and where.
This isn’t to say there aren’t examples of successful lobbying for influence. You could take the example of a successful media spin in the UK by a business group that wanted a new High Speed 2 (HS2) rail line built. A lobbyist called James Bethell, representing Westbourne Communications, helped change the media discussion around this failing project away from the lack of benefits for the local people to economic growth and new jobs. The discussion moved away from the project just being about posh people wanting a better train service, to providing real jobs for the poorer northern areas of the country.
Examples of successful lobbying by businesses can also be found in the country that could be dubbed the ‘King of lobbying’, the US. The Atlantic noted in its article on lobbying how CEOs started taking a more active role in politics in the 1970s. It’s when a community of leading CEOs called the Business Roundtable was born.
As lobbying activities intensified, businesses were able to influence labor law reforms, regulations, and even tax legislation, according to the article. So, if you’re wondering whether lobbying can actually influence politics, the honest answer is ‘yes’. But as the Washington Post noted it isn’t always about the money – lobbying often results in “a bias in the pressure system”.
THE BOTTOM LINE
Political influence is essentially about, well, influencing. It’s about persuading the lawmakers to your cause – lobbying for your specific interests. Businesses, just as individuals, want to persuade the decision-makers that their ideas, needs and desires deserve a fair hearing.
Lobbying, the art of persuading, can happen indirectly or directly in a variety of ways. You can simply use information and public pressure to ensure politicians listen to your side of the argument or focus on issues your business cares about.
You can also provide funding to organizations that help in this or directly support the political parties or politicians that fight in your corner. And all of this happens around the world to a variety of degrees and within a different kind of framework, depending on the law of the land.
So, if you want your business to have political influence, you had better engage in some of the activities listed above – and if you’re a politician, the above can help you identify when you’re being lobbied for.
We keep hearing news stories and anecdotes about this “successful business” or that “entrepreneur …