David Rodeback's Blog

Thursday, March 2, 2006

We Three Kings (Kong): The Really Big Lobbies

Here's a look at three oversized, hugely influential lobbies in Washington and state capitals.

The politics in Washington rarely stop for a deep breath, but sometimes things get considerably more frenzied than usual. I learned when I worked at the US Senate that all plans to go home for Christmas, or even home from work in the evening during December, are tentative, because you never know when Congress will adjourn for the holidays, or the day (or night). Could be early, could be late, but the one thing it will definitely be is frenzied.

The Utah legislature, on the other hand, has a 45-day annual session, fixed by statute. Special sessions can be called, and often are, but for most issues and lobbies, the regular session is it for the year. This year's session began January 16 and ended at midnight last night. Understandably, the last few days are hectic for legislators and for the ubiquitous lobbyists.

You didn't think that hard-core lobbying went on only in Washington, did you? It has been a big deal at the state level for longer than I can remember, but tight federal budgets over the past couple of decades have tended to redirect a lot of lobbying from Washington, DC, to state capitals. I'll bet you've noticed state taxes ballooning to match.

We often talk of lobbying as if it were a bad thing, when in fact -- well, at least in theory -- it is a good, necessary, constitutional thing. It's that basic right to petition our governments for redress of . . . whatever. (Would you rather have a government you couldn't lobby?)

For a view inside at the state level, and for a sense of the passion and energy involved (especially this week), see this post by DaltonGirl, an American Fork blogger who is also a lobbyist for the state Parent-Teachers Association (PTA). Her political sacred cows and mine are not entirely in common, but fine writing goes a long way, don't you think?

For my part, I've been musing on a trio of big gorillas in the lobbying world. In fact, in a primate house full of large specimens, these are approximately the King Kong triplets -- and don't get the idea they're just that way in Washington.

The National Association of Realtors (NAR) -- which owns the word realtor as a registered trademark, by the way -- is cash-rich, has a huge dues-paying membership, and is trying desperately to protect an outdated quasi-monopoly with commission rates that don't stand up against competition. (It's almost a reflex: When this happens to your industry, you try to suppress the competition, and the problem gets worse.) In most markets, both the buyer's agent and the seller's agent have traditionally commanded commissions of at least 2.5 percent of a property's purchase price; 3.0 percent seems more common, and it's sometimes twice that. (Sometimes -- rarely -- the agent is worth it, too.)

In their nicer moments, NAR tells us that the reason they try to enforce those high commissions is to guarantee that the buyers and sellers can receive the level of professional service they deserve. If my own experience in the real estate market included anything resembling professionalism on the agent's part, this would be a little less laughable. I actually know, and in another context have worked with, some real estate agents who are quite professional and likely are worth the traditional commissions, but they are relatively few.

Like insurance agents, real estate agents tend to run for local and state political office. I suppose the name recognition is good for business, but they also tend to have flexible schedules to allow for such things. In any case, despite the significant percentage of legislators who are agents, and despite NAR's vast resources, NAR's position is not enviable lately. Between the Internet (for information) and a good title company (for paperwork), and occasionally a good real estate attorney (for safety), it's getting harder to see a place for the real estate agent in most transactions -- especially for three percent commissions on each side. Even where the real estate market is booming, life can be difficult for the agents. You'd think that in a wild and crazy real estate market like St. George, Utah, an agent would be more necessary than ever, but my contacts tell me that houses down there sell so quickly that more and more sellers, especially, are simply bypassing the real estate agent, because they do just fine without one.

Even locally, some agents are charging flat fees for specific services, such as putting a listing on the Multiple Listing Service (database), and these fees tend to be a lot less than the traditional 2.5 to 5.0 percent. NAR would love to stop them from doing this, but in these troubled times, NAR has had to play nice, more or less. It can't throw its weight around too much, for fear of aggravating its legal difficulties. It seems that NAR is being investigated by the feds -- and likely a state or two -- for alleged price-fixing and monopolistic practices. Even sympathetic and self-interested real estate agents in state legislatures have a tough time shielding NAR from that. So for now, NAR plays the twelve million pound . . . diplomat.

Then there's the National Education Association (NEA), with its state associations (including the UEA in Utah), and another large, similar union, the American Federation of Teachers. They're beleagured, too, at least vicariously -- because the public schools are under increasing fire for failing to do what they claim is their job: teach children. In a sense, though, they have the perfect monopoly. The system is funded by tax dollars. (The government forces people to pay for it.) Moreover, education is something everyone needs in the modern world, and almost everyone knows it. Perhaps best of all (for them, not the children) they can claim that everything they do is "for the children." It follows that anyone who opposes them is opposed to children; few people and even fewer politicians willingly risk that stigma, however false it may be.

In dollars expended, the NEA is about as big as a lobby gets, at the state and national levels. They will sometimes deny being a labor union, but they're the biggest of those, too. The vast majority of teachers and administrators belong -- but its impact is even bigger than that. They have a lot of volunteer allies in the PTA, one of the nation's largest and best-organized volunteer organizations. The PTA's own official positions essentially mirror the NEA's; this means that a lot of voters' default position on a variety of issues is the NEA's. And that is a lot of weight to throw around.

The education lobby's reasoning, when we suggest that perhaps we're not getting what we are paying for and should take our dollars elsewhere, in the form of vouchers or tuition tax credits, is essentially this:

1. The public schools can't compete in quality or cost of education, so they shouldn't have to. Never mind that excellent private schools can provide a solid education for two or three children for the same price the public schools charge to give one child a shaky education. Never mind that I have to compete in my profession at least five days per week, and the children in question will have to compete in their professions in a very global economy. Never mind that private-public competition in higher education works far better than the near-total public monopoly at lower levels. The public schools fear the very competition that would make them much better.
2. There is no way private schools could absorb the mass of students who now attend the public schools. In a word, baloney. Most people understand that education is important to their children's futures. Given the demand, the supply would balloon almost overnight. Besides that, it's not self-evident that the government has to provide what it mandates people to have. I have automobile liability insurance; state law requires it. But -- thank heaven! -- I don't have to buy it from the government. The government doesn't even sell it, as far as I know. Yet in every state where they seriously enforce such a law, virtually everyone has liability insurance. Why not do the same with education, at least for children under 16? Require that the children be enrolled in and attend accredited schools, without actually providing those schools.
3. Vouchers or tax credits for children in private schools would violate the separation of church and state. It's as if the only alternatives to public schools for most people would be either no education at all or dogmatic, tyrannical schools the Taliban (or their scattered Christian equivalents) would applaud. More baloney. Since it is not, fundamentally, the government's money, how would this be government supporting religious instruction? These programs would simply be an official acknowledgement that the money comes from the taxpayers, who, if they send their children to private school, ought to get back part of the money they are forced to pay to educate their children in the public schools they do not attend. (No one seriously says they should get it all back, these days.)
4. Without the public schools, children with special needs would be neglected. Two points: First, the government could fully subsidize a first-rate education -- private or public -- for every "challenged" child in the union; it could let the taxpayers keep billions of dollars per year (more than they'd need to spend on educating all their children at excellent private schools) -- and still have money left over to help the parents of poor children afford to send their children to those private school. In short, we could get a lot more education for a lot less money. Second, academically gifted children have needs, too, which the public schools are generally philosophically opposed to acknowledging, let alone capable of meeting. Private schools already do far better with that class of special needs.

Why do we keep pumping more money into an obviously failing system, when that system itself in some ways resists the suggestion that it can or should succeed? Because it could always be worse? No. Next year, it will be worse, but that's not the point. The root of it all is political power. Money, too, but mostly political power. That is the core value of the education lobby -- and, to be fair, most other lobbies. If it were the education of children, things would be far different. Competition would be welcome, my kids could afford a better education, and my tax bill would be a lot lower. Meanwhile, I, a religious person, would still want them taught religion at home and at church, not at school.

The American Association of Retired Persons (AARP) is the third of the Kings Kong, and numerically the largest. They lobby for all sorts of benefits (principally Medicare and Social Security) to be given to the demographic which has the highest per capita income of all, and which has had the most years to plan and prepare for future financial needs. True, some seniors are on fixed, barely adequate incomes, and some of those are in that situation for perfectly honorable reasons, not their own lack of fiscal discipline or planning. But on average no one is better situated to pay for his own prescription drugs (for example) than the senior citizen.

The collective senior sense of entitlement, mixed with the AARP's ability to strike fear into the hearts of legislators -- because more seniors vote -- makes usefully reforming Social Security and Medicare nearly a political impossibility. At the same time, it's an economic necessity, because in the current schemes the math just doesn't work, and there's no way to make it work. The destination to which our current, foolish path leads is as predictable in economic terms as the near impossibility of timely reform is predictable in political terms.

But you don't need to rely on predictions for this one; current reality provides close analogues. Look at General Motors, a sort of vast corporate welfare state that is verging on collapse. (This is partly because it succeeded for years in getting the government to shield it from competition, but that's another story.) Look at the major US airlines, which generally could stay afloat, except for their oversize pension commitments to current and retired employees. These businesses do not have the power to tax to shield them from bankruptcy, like governments do, so they hit the wall sooner than the welfare state itself will. But it's simply a matter of different timing, not a different destination. Sooner or later, any large system which relies on the production of future workers to pay for the benefits of present workers (or retirees) will hit that wall. Even the power to tax is ultimately limited.

That's enough from me for today. Cue the John Williams theme. . .

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