Politico’s Tim Mak uncovers a recent study by Rice University which found that massive lobbying, hiring former public officials, and campaign donations by top corporations lead to poorer market performance.
“In a surprising finding, a new study shows that massive lobbying in D.C. and campaign donations by corporations are linked with worse market performance.
“The Rice University study looked at the amount of money spent on lobbying and campaigning donations by 943 S&P 1500 firms between 1998 and 2008 and found that so-called political investments lead to weaker performance in terms of stock value and return on assets.”
Jeff Horwitz and Chris Cumming explore how New York City’s recent taxi fare raise is benefitting the “deep-pocketed” medallion owners while leaving drivers and passengers in the dust.
“When New York’s Taxi and Limousine Commission held a public hearing last week to consider whether to raise taxi fares by 20 percent, cabdrivers pled poverty and passengers argued that fares are too high. Paradoxically, both groups were right.”
A Reuters article talks about the upcoming merger of two large prescription drug plan providers. This merger has some other pharmacies worried, but instead of facing the new competition with better products or services – they filed a lawsuit to stop the merger.
David Bier at the OpenMarket blog writes about the need for a wall of separation between business and government, noting that the current situation has harmed society:
Bailouts have sunk billions of taxpayer dollars into failed banks, corporations, and other private organizations since the financial crisis began in late 2008. At the same time, corporate subsidies have increased dramatically as policymakers have attempted to stimulate the economy…Rather than creating products that create prosperity for society, corporate success has become tied to managing political relationships through lobbyists and political intelligence firms.
Bill Sizemore and Julian Walker write an article in The Virginian-Pilot about the case of a Virginia Senator who helped pass tax breaks for a local business, then went to work for them shortly afterwords.
The Kojo Nnamdi radio show had an interesting segment recently about state and local attempts to subsidize businesses, and the guests of the program (including economist Matt Mitchell) discuss the costs and benefits.
Donald J. Boudreaux, an Economics Professor at George Mason University, writes at the blog Cafe Hayek about a letter he sent to the Wall Street Journal. This letter is a response to another letter from the CEO of Dow Chemical which argues for more government involvement in reviving manufacturing. Boudreaux says:
The number of flaws that infect Mr. Liveris’s letter are legion; they far outnumber the one that I highlight above. His entire letter is a fine specimen of the poor reasoning, misleading claims, and ignorance of history and public-choice that are typical in such apologies routinely issued by business people for government policies that pick taxpayers’ and consumers’ pockets in order to acquire booty for the benefit of CEO’s and their companies.
Jennifer Liberto at CNNMoney.com writes about the fact that the government sponsored enterprises (GSE) Fannie Mae and Freddie Mac are having tens of millions of taxpayers dollar spent on their legal bills:
A watchdog agency said Wednesday that the legal tab for former leaders of mortgage finance giants Fannie Mae and Freddie Mac is at least $110 million.
And taxpayers have paid at least $47 million of it, according to an Office of Inspector General of the Federal Housing Finance Agency report.
And the total bill could be even higher since the inspector general report focused on only one particular legal case against Fannie Mae, and isn’t an exhaustive account of the housing giants’ legal bills, reportedly more than $160 million, according to a 2011 congressional hearing.
Sandra Block writes an article at USA TODAY about the possibility of states putting a sales tax on online purchases. Here is one reason she outlines:
Heavy lobbying from retailers. Retailers have long argued that exempting online purchases from sales taxes gives online retailers an unfair advantage over brick-and-mortar stores. The pressure escalated in December after online giant Amazon offered customers a one-day 5% discount if they used its Price Check app to make a purchase while in a physical store, says Jason Brewer of the Retail Industry Leaders Association, which supports taxing online purchases.
“A store manager has the power to say, ‘I’ll match that price,’ but they don’t have the power to say, ‘I won’t charge you a sales tax,’ ” he says. “They go to jail if they do that.”
Timothy Puko at the Pittsburgh Tribune-Review writes about the state of Pennsylvania’s attempt to give away millions of dollars of incentives to bring one company to their state.