Maybe Legislators Aren’t Bought And Sold By Evil Corporate Interests After All

Walter Jones points to a study released last month by Rice University showing political donations don’t have the impact they are often thought to have.

Rice University released details last month of research showing that in terms of influencing specific government policy, most companies come up empty-handed. Looking at 943 large, publicly traded firms, the researchers concluded that their political investments actually worsened their bottom line.

Putting a former public official on the board also coincided with weaker performance.

“Since our country’s founding, corporate political activity has been seen as promoting its own interests and agendas over those of the broader public,” said Doug Schuler, study co-author and associate professor of business and public policy at Rice’s Jones Graduate School of Business. “This study simply demonstrates that it might not be quite the return on investment that corporate America or the public at large believes it to be.”

The authors admit the results “fly in the face of popular notions of what leads to legislation.”

Remember the email blast I referenced last month that claimed any kindness to any politician anywhere is bribery? Yea, not so much.

The same email blaster now seems to think I’m “gnashing my teeth” over people exercising their 1st Amendment rights. Huh?

The Rice study, set to be released in full this fall, support the findings of another paper published by the Universities of Minnesota and Kansas:

A $10,000 increase in donations is associated with a reduction in annual excess returns of 7.4 basis points. Worse corporate governance is associated with larger donations. … We find virtually no support for the hypothesis that donations represent an investment in political capital. Instead, political donations are symptomatic of agency problems within firms.

I’ve made this comment before and I’ll make it again: a few phone calls or emails from constituents on a issue has a whole lot more impact than what special interests say or do.

You folks have a still lot of power in the political process. Use it.

11 comments

  1. greencracker says:

    Click on Walter’s story and maybe you too will get the Athens paper’s ad for “discreet erotic fun at fantasy world.”

    Does the ad get generated on my web browsing history or the content of the article?? Which is more alluring? 😉

  2. ryanhawk says:

    “Whether such contributions are wise from a business standpoint, the money generally shows no signs of stopping, despite what some college professors say.”

    Having suffered through reading more than my fair share of academic “research” of this sort I think I’m going to place my confidence in the market signals, not this silly “research”.

    • Calypso says:

      Yeah, when a ‘study’ flies in the face of conventional wisdom and common sense then I have to look at it with a very jaundiced eye.

      • Bob Loblaw says:

        Yeah, kind of like the study where GA ranked “dead last” in the Nation on Ethics where a Member of the group releasing the report had GA ranked 6th best?

  3. This part is relevant to the PSC:

    “The one area where the researchers did find corporations benefitting from their political activity was among highly regulated industries like utilities, financial services and pharmaceuticals.”

    And where does Stan Wise get most of his campaign donations from again? Looking at the filing for this period which he filed yesterday… SCANA, Troutman Sanders (Georgia Power attorney… just so happens his son was given a job there not that long ago as well), multiple subsidized rural telephone companies, Joe Tanner and Associates and Atlanta Gas Light. A bit over $98K in donations in the past few months. Not too shabby for a position which I would wager most people in the state know little to nothing about.

      • Well, I actually was approached about running for the PSC shortly after the Republicans had qualified. I would have considered running as an R had I been approached about it in time, but then it would be splitting the R vote 3 ways – not an easy way to beat an incumbent. Republicans at least have two chances to unseat Stan, beginning with Pam Davidson. Pam and I have chatted a couple of times now and I think we find a lot of agreement when it comes to the PSC. Social issues I think we’d probably find more disagreement, but the PSC has nothing to do with social issues. The upside to Republican voters is that Libertarians and Republicans usually agree quite a bit when it comes to fiscal matters – at least if you go by the stated belief of the Republican Party of “smaller government”. I think we all know that in practice that isn’t necessarily the case, but those are the ones the Republican grassroots want to unseat, right?

  4. novicegirl says:

    Pam Davidson?

    She lied about having two different college degrees, until the AJC called her out on it.

    I get that you want to run against a weakened Wise or, better yet, Davidson, but give me a break.

    • Well, I’d like to think I could earn every vote in Georgia. I think we both can agree that’s not very likely. Since I’m not on the ballot until November, primary voters have to ask themselves this one main question – who would be better for the taxpayers and ratepayers of Georgia, should they also beat me to win the general in November? For some the answer will be Pam, while for others it will be Stan. I’d like to think that everyone will do hours and hours of research on both candidates before coming to a conclusion as to who they’re voting for. I think we can probably both agree that’s not very likely either.

      I do know that it’s tough to explain a situation like hers in a short quote in a news article or in a timed answer in a debate or forum. Have you asked her about it yourself? Either way, how does that issue impact how she would serve as a Commissioner? How does it impact how she would vote in the matters that face the PSC? This of course brings us back to the main question I posed earlier – who would be better for the taxpayers and ratepayers of Georgia, should they also beat me to win the general in November? (I’m not advocating for or against either of them here… I’d seriously like to hear your thought process here… which one you prefer and why?)

  5. Dave Bearse says:

    “Putting a former public official on the board also coincided with weaker performance.”

    That’s not as much to the point as the results when a current public official is on the board. I don’t know how the corporations do, but it’s rather well established that the investment of many state officials and particularly Congress do much better than those of professional money-managers.

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