Flickr-Daniel Huizinga
Modern democracies operate - in short - on the principle that citizens elect their representatives in freedom and in fair and free elections. These elected representatives exercise the legislative power and control the executive power (the government), which is either directly elected (presidential system) or formed e ton the basis of the results of the parliamentary election (parliamentary system). An independent judiciary then monitors compliance with the laws made by the legislature and enforced by the executive. Such is the theory. However, in practice, everything hinges on whether countries succeed in putting these principles into practice and treat their citizens equally before the law without regard to persons and apply the rule of law.
The system is interdependent. The institutions' strength and quality determine the extent to which citizens can make their choice in freedom in honest and free elections. Conversely, if citizens allow themselves to be guided in their choice by, for example, populism or opportunism, there is a risk that the institutions will weaken and corrupt. Unfortunately, this is more than a distant possibility; it is a reality in countries like Turkey, Poland, Hungary, and yes, increasingly also in the United States under Trump (not to mention China and Russia).
The fact is that only a limited number of countries are considered full democracies. In Western Europe, the Economist Intelligence Unit Democracy Index 2019 identifies only 15 states as such. Worldwide there are no more than 22 (out of a total of 167 ranked countries). This low number should worry us deeply. But even these democracies are under fire. In addition to populist and opportunistic politics by politicians themselves, there is a whole industry of political interest representation that influences the democratic legislative mandate.
Lobbying: Political interest representation
Lobbying is defined as exerting influence on political decision-makers and implementers. It serves to protect or promote (third parties') interests, which are at risk of being affected or have already been affected by political decision-making processes.
Political interest representation (euphemistically referred to as ''government relations'') is a multi-billion business globally. Reliable figures are lacking, but based on available public information, at least 11,885 lobbyists make a minimum of $3.4 billion to influence US federal institutions and policymakers. In and around the center of EU power, 11,988 lobbyists registered themselves as such; however, incomplete and unreliable registration makes it more challenging to come up with estimates of their revenues. Nevertheless, an amount of between €1.75 and €2 billion seems a reasonable low indication. It is impossible to extrapolate to worldwide figures, but these figures indicate the importance of lobbying as a meaningful and significant activity.
Supporters and opponents of political interest representation agree that it is essential that policymakers, who like us, are certainly not omniscient, are fed with all relevant facts, opinions, arguments, and objections in their decision-making. An informed decision is in all circumstances better than a decision based on prejudice, half-truths, and ignorance. Citizens must have the right to submit their concerns and defend their interests to those they have chosen, who represent them, govern them, and exercise power over them. Citizens can exercise this right individually, but clearly, these efforts gain impact if they join forces. Organizations such as the AAA, Greenpeace, and the Consumer Federation of America, for example, have much more influence as a collective than citizens who exercise their rights individually.
So long this openly takes place, and members are aware which points of view, to what audience, and for what purpose are expressed on their behalf, this is perfectly fine. No harm is done, and the quality of the decision-making process is raised to a higher level.
Commercial interests
However, it all becomes less transparent and more complex when commercial interests come into play or influence is 'bought.' Lobbying, by its very nature, takes place out of sight of the public and thus lacks transparency and accountability. Based on US data, we assume that commercial interests and ideological advocacy drive 80 to 90% of lobbyists' total spending. Lack of transparency and real accountability makes it impossible to judge whether there have been any contacts at all. And if so, what its nature was and which considerations lead politicians or civil servants to what decision. This shadowy process undermines the integrity of the decision-making process and, thus, threatens society's fundamental democratic values. By way of illustration, I give several current 'examples':
Do chemical giants involve lobbyists because they are concerned about the welfare of citizens in the vicinity of their factories, or is it to block environmental and health legislation that is damaging to the profitability of the companies concerned?
Are tax changes being made in favor of wealthy US citizens because it's good for the economy, or because expensive lobbyists give their clients a lower tax bill?
Are Internet platforms so well represented in Brussels because they are concerned about restrictions on citizens' freedom of expression or fearing derailment of their revenue model?
We cannot afford to be naive in this respect. Money plays an enormous role in influencing political decision-making. It buys influence and power and feeds a very dangerous and highly undesirable dichotomy in society. What if one side of the argument has much more spending power than the other? It undermines confidence in democracy in general and politics in particular. Therefore, it is astonishing that the Dutch State Committee's report on the Parliamentary System in the Netherlands, published at the end of 2018, makes no mention of the influence of interest representation on politics. Are politicians blind to their role in this?
If well-organized and wealthy interest groups and large corporations manage to make their interests prevail over voters, surely something strange is going on.
Insight into political interest representation
Both the US and the EU initiated efforts to gain more insight into political advocacy's nature and scope.
In the EU, the penny dropped relatively late on this issue. Only in 2011 accreditation at and physical access to the European Parliament and the European Commission was made dependent on the, otherwise voluntary, registration as a lobbyist. By registering, the lobbyist undertakes to comply with a standard code of conduct. However, the reports in the register are incomplete and not very specific. It seems that there is little emphasis on compliance. Only with great effort, it is possible to gain some insight into the financial flows. Data is missing or is vague, incomplete, or incorrect. It is impossible to gain a clear insight into the money spent on lobbyists in a specific sector or industry. Some registrations seem to be a signpost of expertise on the one hand and a proof of economy on the other hand.
FOR EXAMPLE, consultancy FIPRA International Limited claims to have 49.5 FTEs of professional lobbyists on its payroll and employing the largest number of lobbyists accredited to the European Parliament (29). It rents an office in Brussels' diplomatic district and yet reports spending less than €2,250,000 in costs. For a professional consultancy, this is extremely unlikely. According to official EU guidelines, the declared cost amount should include staff, office, administrative and operational costs, outsourced third party work, membership fees, and other relevant costs.
The conclusion can only be that reports such as these do not contribute to transparency: databases may contain a lot of data but ultimately generate little or no information. It remains anybody's guess what the lobbyists registered with 'Brussels' are precisely doing, whose interests they represent, and how their work benefits EU citizens. It reinforces the image of an introverted bureaucracy that fails to present itself to voters as an energetic and purposeful organization.
The US has had regulations in place since 1995, requiring lobbyists to register and provide insight into their activities. These regulations go way further than those in the EU. In essence, they provide a more accurate and in-depth insight into the expenditures involved in lobbying, the target groups reached, contributions to politicians' (re)election funds, etc.. All this does not imply that the insight goes far enough or that the regulations are perfect. There are still loopholes in the rules (particularly regarding campaign contributions to politicians) that need to be closed. Although voters have the right to gain insight into whose interests their representative serves, politicians do not like to cut into their own flesh (read: their (re)election coffers). As a result, American elections are incredibly costly - the 2018 presidential and congressional elections together would have cost $6.5 billion - without it being clear whether this excessive cost has raised the quality of politics to a higher level. More likely, the opposite is the case.
As the volume of spending on political advocacy increases, confidence in the work of the US Congress and the Presidency is steadily declining. Is this inverse correlation a coincidence, or is there a relationship? If the latter is the case - and it is certainly plausible - then that is very worrying, and action required.
Above all, the reports do not indicate what objectives or business, lobbyists and companies seek from the EU and federal US institutions. In some cases, it is possible, based on news reports, to guess. It is hard to miss attention-grabbing headlines about imposed mega-fines, investigations into undesirable practices, or irregularities on orders solicited. In most cases, however, it is guesswork for the outsider. In the top 5 'big spenders', this may still be clear, but it illustrates an important point.
Amazon.com, Facebook, Google, and Microsoft are under fire because of their market dominance, privacy violations, and opaque algorithms. Bayer has a problem with its subsidiary Monsanto because of genetic manipulation and the negative consequences for the environment and health. Boeing and Northrop are angling for defense orders. Shell is (probably?) under fire because of its activities in Nigeria. But why is the US health insurer Blue Cross/Blue Shield so prominently active in lobbying the US federal government? What public interest is served by this form of conflict management? What takes place in the contacts between companies and civil servants; what exchange of interests takes place? When it comes to finding the truth, why does all this have to occur behind closed doors? What interests play a role with the many thousands of companies that are not in this top 5? Do individual citizens and small businesses have similar entrances and opportunities?
Regions, NGOs, trade unions, business boards, scientific organizations, universities, or research institutes are only too happy to tap into the deep pockets and opportunities the EU and the US federal government provide. This process, also, is not very transparent. Why does Initiative X get money and Initiative Y not? Which criteria apply? Is it possible to get anything done without the support of third parties such as lobbyists or subsidy consultants? What does this say about the level playing field?
Way forward
When you see how seriously we take democracy, the rule of law, parliamentary work, the integrity of those in authority, the judiciary's independence, etc., it is astonishing to see that the entire influencing process initiated by lobbyists is so lacking in transparency. Precisely because of the principle of the rule of law that everyone is equal before the law, the interaction between civil servants and political interest representatives from the private sector (citizens, companies, and interest groups of both) and science require great attention and scrutiny. I am well aware that, for example, competition-sensitivity of certain information stands in the way of complete transparency. Ultimately, however, it must be possible to trace which efforts, on which grounds, have led to which result.
Websites of the ultimate parent of the companies, associations, and institutions involved should contain clear and accessible reports on what the various interactions with government institutions have consisted of and at what cost. This obligation should apply to every organization that interacts with the relevant government institution(s) to create a level playing field. The model below, drawn up by me, could serve as a starting point.
Governments should set up their IT structure so that, based on the same data to be uploaded by the relevant companies, clear and unambiguous reports can be extracted at both organizational and aggregated (sector/industry) level.
It is essential to realize that influencing policy itself is not the problem, but the absence of transparency is. The necessary transparency, as I describe above, goes many steps further than the current situation. Still, our society's increasingly complex relationships demand different solutions than those we are used to now. Discussions about advanced globalization or the neo-liberal world order (whatever that may be) also require more openness and a clearer understanding of the relationship between government and the private sector.
Voters in general but also individual stakeholders have a justified interest in this insight. If we take the pursuit of sound corporate governance seriously and consider transparency within our democracy concerning government policy and spending necessary, there is no reasonable alternative.
I can go one step further. Transparency and clarity are the only weapons against totalitarian regimes' and extremists' efforts to undermine Western democracies and their legal order, making backroom politics suspicious and spreading rumors about big business's alleged secret influence. Providing insight into the impact of policy-meddling, on the one hand, inspires self-reflection and self-restraint and thus prevents excesses, and on the other hand, provides transparency and clarity and, therefore, accountability. This ability to hold to account distinguishes real democracies from those states that always demand trust but never give it to protect their leaders' interests and their faithful.