LOBBYISTS FIX AND FIGHT REGULATIONS

Uber, the sensational new personal transportation service, is a constant target of the news media as the company fights against established regulations for its place in new technology. Needless to say, taxicab and other private transportation firms are fighting back to keep their exclusive rights to transport passengers for hire.

I shall use Uber as a classic example of how powerful lobbyists oppose government legislation that protects companies from competition. For example, Uber has 250 lobbyists and 29 lobbying firms registered in capitals around the nation, at least a third more than industry giant Wall-Mart Stores.

According to Karen Weiss reporting in a Bloomberg Businessweek article, Uber has built one of the largest and most successful lobbying forces in the country. Columnist Justin Fox claims, “Uber has become a fearsome, relentless lobbying machine.”

Monopolistic industry has relied on government legislation and administrative rules to keep the competition away ever since the Industrial Revolution began. Past champions have been petroleum companies, coal producers and steel manufacturers, just to name a few of the biggest. Today the proprietors of new and innovative startup companies are being targeted by the established businesses that operate under regulations. That’s why these new companies are investing heavily with lobbyists to prove that they are entitled to compete in an open market.

I was in San Francisco recently and used the Uber service several times a day to conveniently get around the city at a reasonable cost. While waiting for the pickup, I noted a constant flow of unused taxis looking for a fare. They are no doubt suffering because so many riders have discovered how useful Uber can be. This private enterprise business began in San Francisco and spread worldwide.

 

 

 

 

 

 

Another similar private enterprise industry also got its roots in San Francisco under the logo of Airbnb. Again, this newly created cottage industry is in direct competition with regulated transient housing including the major hotel chains and the network of registered tourist inns and B&Bs. The first big test of an individual having the opportunity to rent out a room to temporary residents and business visitors came as a ballot measure to impose regulations. It was defeated in a November local election in the Golden Gate city. City officials under pressure from licensed hostelries attempted to limit the time an Airbnb could take a guest and impose a room tax.

Founded in 2008 by a San Francisco businessman, Airbnb began as a network of frugal accommodations for business travelers avoiding the high cost of a hotel room. It has grown to 1,500,000 listings in 34,000 cities and 190 countries. The founders saw the need for convenient and inexpensive housing and began their business by laying down air mattresses in their living room and serving breakfast to the guests.

The idea caught on rapidly with people who had extra bedrooms in areas where there was a heavy tourist or business meeting activity. They added their listings to a network that became popular with travelers overnight with extensive advertising in advance of a major convention. The rental of rooms in private homes has been a popular activity in Europe for many years. In the United States there were regulations requiring business licenses and collection of transient room tax.

Now various government agencies are attempting to regulate Airbnb and similar enterprises. Needless to say, lobbyists will be kept busy fending off these regulations and keeping the private hospitality services free of government interference. It will not be easy as the large hotel chains and international travel agencies have their army of lobbyists to force the cottage industry with the same rules and regulations they must meet.

On a broader scale of lobbying, big international firms have always employed lobbyists to influence legislation for their benefit. Most notable are the petroleum industry, farmers and pharmaceuticals, just to name a few of the major corporations who depend on favorable legislation and rules to support their enterprise. One blatant example is the major agricultural industry that takes advantage of farming subsidies to enhance their bottom line. Government funding for farming was originally intended to help the small farmer in bad times but now mostly benefit the big Agra firms. All kinds of government subsidies and regulations benefit the petroleum industry keeping the price of oil favorable to the producers.

These mega-corporate government subsidies are kept in place by thousands of lobbyists positioned in Washington D.C. and state capitols to be sure that new legislation will not damage their clients. Although the business of lobbying is supposed to be subject to restrictions, there is no doubt that political contributions help to fuel their activities. Otherwise, why would public corporations spend hundreds of millions of dollars employing lobbyists?

I referred to above to the business of lobbying coming into play during the Industrial Revolution of the 19th century. Actually, further research indicates that lobbyists can be traced back to early Greek days and even Imperial China. I guess efforts to influence government is endemic.

The word “lobby” referring to influence was created during the era of the British Empire when the English Parliament set aside and anteroom for lobbyists to gather and network with members of Parliament. The room was referred to as the lobby and consequently those availing themselves of this opportunity became known as lobbyists.

When the U.S. Constitution was being drafted, James Madison and his colleagues were familiar with the British system of lobbying and had to define a constitutionally-protected free speech provision in the First Amendment creating a covenant to influence members of Congress. Since then the number of lobbyists registered in Washington D.C. is estimated to be over 12,000.

According to Wikipedia, Wall Street lobbyists and the financial industry spent more than $100 million in one year to influence lawmakers. Big banks are prolific spenders which is reflected in the protective regulations against competition and being able to avoid criminal prosecution for some of the more vagrant manipulations of the economy.

Lobbying can cover the entire spectrum of business. Amazon spent $450,000 in just one quarter to fight taxation of online sales. Boeing aircraft, which has sizable defense contracts, spends millions of dollars connecting with government agencies.

It’s no surprise that Uber and Airbnb have used the same methods to establish their independence and compete in an open market without government interference. After the Army of lobbyists fix legislation for their clients, the next wave of lobbyists fight these regulations. The whole system does provide gainful employment for these specialists.