The CEO and the Senator

Scott Adams has a degree in Economics. Judging by the comic below, he must have studied some Public Choice.

In relatively well-functioning western democracies, politicians accepting outright bribes take a significant political risk. The final two panels illustrate two ways special interests can rent-seek without the need for a brown paper bag full of money.

Special hiring favours like the one suggested in the second panel are one way of making bribes less transparent. Unfortunately, this will usually be more costly than a pure transfer. The Senator’s dimwitted wife might get the equivalent of one brown paper bag of money, but the rigmarole of hiring her as a consultant will add additional costs to the transaction. Opaque bribes are inefficient, and, from a utilitarian point of view, are worse than transparent bribes.

If we ignore the “thief” and focus on the “lazy,” the third panel illustrates the concept of lobbying as legislative subsidy. Let’s say the preferences of the CEO and the Senator are aligned, thereby making bribes unnecessary. The CEO might be a producer and the Senator an ideologically-motivated protectionist. For every bootlegger, there’s bound to be some baptist. The CEO can use his resources to increase the effectiveness of the friendly Senator by offering help drafting legislation and performing other duties which make passage of favourable bills more likely. This will make legislation serving special interests more likely to be passed. At the end of the day, the effect will be similar to bribery, though this will only work with policies which already have some degree of public support.

Dogbert is a very capable rent-seeker. He’ll go far in business, especially in the current environment.