Monday, December 26, 2005

Can Lobbyists Perform Good Deeds?

Apparently, Washigton Post's Jeffrey H. Birnbaum thinks so, read his story here.

He cites a lot of instances where lobbyists spend time and effort for free trying to steer government expenditures on socials goals that these lobbyists consider worthwhile.

Should we cheer for these lobbyists effort, just like what Jeffrey did in the piece?

The concept of opportunity costs tells me things are not as sanguine as Jeffrey protrays them to be.

Suppose the government's expenditure is fixed a certain level, say 10 bucks, then before the lobbyists effort 5 bucks are spent on education while the rest are spent on medical uses. Now the lobbyists come in and ask for more funding in education. As a result, 8 bucks are now spent on education and the rest are spent on medical uses.

Now you can of course cheer, just like Jeffrey did in the piece, for the success of the lobbyists in helping to increase the funding for education. But the problem is we also have to consider the other side of the picture. With more funding for education, given a fixed level of government spending, that also means less resources are devoted to medical uses. Can anyone be so sure that the marginal benefits that result from additional 2 bucks spent in education are higher than than the loss in beneifts (or marginal costs) that result because 2 bucks less are now spent on medical uses?

I am not so sure for one, what about you?

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