According to the New York Times last week, pharmaceutical industry leader Amgen made $5 million in political contributions over the past few years. In the recent “fiscal cliff” federal budget bill, Amgen lobbyists persuaded Congress to insert a provision, Section 632, delaying for an important Amgen drug the Medicare price restraints that are now imposed on other drugs. Net savings for Amgen shareholders: up to $500 million.
This payout for Amgen’s investment in campaign contributions is very impressive (business experts call payoffs on particular projects the “return on investment” or “ROI”, and admittedly this figure would be somewhat lower if compensation of lobbyists on the project were included in the cost of Amgen’s initial investment). This ROI beats that on just about anything other business executives have come up with – even the latest derivative product sold by Goldman Sachs. Congratulations to Amgen’s top executives. They should be rewarded with generous stock options for helping their shareholders.
Taxpayers who are on the other side of this transaction may have a different view, and if so, the Times article identifies particular individuals within management of the United States Government who could be replaced.
Amgen’s executives and their Washington lobbyists will sit in their plush offices reading the New York Times article and ask “where’s the ethics issue here?” They will insist that Amgen got what it wanted because of the merits (its drug is simply better than the many other drugs that did not get similar preferential treatment). They will emphasize that Amgen and its lobbyists feel passionately about the issue (this drug is needed to care for very sick people). Amgen’s campaign contributions were incidental and probably irrelevant. Nobody, not even Bill Gates, has enough money to influence Congress on matters so important to the American people, and a single pharmaceutical company such as Amgen certainly does not have such influence. Persons who are prejudiced against pharmaceutical companies may argue otherwise, but people who understand how business and government works will at least respect Amgen’s point of view and not try to silence Amgen by criticizing it. Those who object to the preferential treatment given to Amgen’s drug should agree to disagree, and not claim that this has something to do with business ethics or government ethics. And so on.
Some taxpayers who foot the bill may see things differently, but that is their problem.
Others should consider Amgen’s example. Thus, for example:
If you want to sell a new weapons system to the Pentagon, you have two alternatives. First, you could make sure the US military needs it, that it actually works and that the cost is reasonable (low to moderate ROI). Alternatively, you could contribute generously to political campaigns while addressing substantive issues with the weapon system only to the extent consistent with improving your bottom line (high ROI).
If you want a contract to provide security services to United States diplomats overseas you could recruit experienced personnel who know how to use their weapons, understand reasonable use of force, and avoid killing innocent civilians, and you could train and pay them appropriately while charging the government a reasonable fee (low to moderate ROI). Alternatively you could invest in campaign contributions so Congress and the Pentagon won’t worry too much about these other issues (high ROI).
If you want to raise money to support a particular Middle Eastern Country – let’s say Egypt – you could raise the money yourself from individuals willing to donate to the cause (low to moderate ROI). Alternatively you could raise money for political contributions and then lobby for several billion dollars in additional aid to Egypt in next year’s federal budget (high ROI) (never mind bellicose rants of a newly elected leader that cause some to worry about how the money will be spent; everything he said can be explained to an important Senator or Member of Congress at the next political fundraiser)
And so on.
These issues should be taught at business schools preparing executives to succeed in today’s world of ever expanding government budgets. Also, you need to have a high before-tax ROI because with this kind of government your taxes are bound to go up, unless of course you use a similar strategy to get a tax loophole as well.
What should be taught in schools of government? Probably the same thing. Getting elected is what counts and money is needed to get elected. If you don’t give a high ROI to your campaign contributors, you are out of business. Taxpayers’ ROI is not your problem.
This is great. Keep it up.
Posted by: Rick Underwood | January 25, 2013 at 12:18 AM
Is it that easy to manipulate the political system by throwing a few bucks around? Maybe. But either way, I share your concern with the collective impact of money on politics. Lobbying has played no small role in this Country's problems, including without limitation the fiscal crisis.
But I disagree to the extent you are suggesting that individual lobbyists or those who contribute to them are acting unethically just because we do not like some of the results. Ethics are examined at the individual level. Just because, at the macro level, lobbying has troubling results, it does not mean that individual lobbyists or donors are behaving unethically. As in all lines of work, some lobbyists are unethical, but there is nothing inherent to lobbying that is unethical.
To use an analogy to legal ethics, rich criminal defendants generally do better than poor ones who cannot afford to retain private counsel. Depending on your view this is either a flaw in the system or an inevitable fact of life, but either way it does not taint the ethics of the criminal lawyers who are doing the best for their clients.
Posted by: Dan Abrams | January 25, 2013 at 11:55 AM
Ethics are also examined at the collective level (I made this point when I wrote a report for the ABCNY professional responsibility committee back in 1991 recommending that New York State discipline law firms as well as individual lawyers, an approach that New York and some other states have now adopted). On the macro level, citizens, particularly members of the bar and others in prominent positions, shape the society they live in through collective as well as individual actions.
The relationship between money and government is an area in which we have failed, and our failure is an ethical failure. A particular law may not have been broken, and a code of professional responsibility may not have been broken either (specific rules would be broken if a lawyer promised a client that the lawyer could make something happen because of campaign contributions or some other quid pro quo. See MR 8.4(e)). But there is an ethical failure regardless of whether a particular rule was broken by a particular individual, and to varying degrees we share responsibility for that ethical failure, and more importantly we share responsibility for correcting it.
Perhaps we should change laws in this area, as suggested by the Represent US campaign, or perhaps we should simply rely upon our own and the New York Times’ First Amendment right to shame the people involved when these things occur, or perhaps we should do both, but it is our ethical obligation to do something.
Posted by: Richard W. Painter | January 25, 2013 at 01:14 PM