With a majority of key regulatory groups and non-government organizations pertinent to the business located in or near the Washington, D.C. area, the move will further facilitate important conversations about bringing the best foods and beverages to U.S. consumers
If we expect Nestle to use its new location to increase its influence with the Federal regulators, we would expect that to show up in the lobbying activities. I checked on opensecrets.org. What I found was that total spending went down quite a bit after the move, but overall lobbying activity did go up. Below is a small chart showing the changes.
Total spending on lobbying groups went down from over $3 million to $1.5 million, a drop of 50%, after the move in 2018. However, full-time Nestlé lobbyists went from 3 to 5, and the company was able to increase the number of issues it lobbied.
It is hard to draw any firm conclusions from this, but it remains at least plausible that proximity to Capitol Hill increases the opportunities for rent-seeking.
Here you can see who the beneficiaries are. As the biggest beneficiary, we would expect Boeing to lobby for the bank’s survival. Their lobbying did indeed bump in 2015. On the particular re-authorization bill, the three largest beneficiaries to loan guarantees, Boeing, Caterpillar and General Electric are all in the top-ten list of contributors. Bechtel, the largest beneficiary of direct loans, lobbies less and did not provide reports or testimony to the re-authorization bill, but then they are also a much smaller company, with about $20 billion in annual revenue.
As the articles above point out, there are several mechanisms in place for Mylan to support the high price of the Epipen. One thing about the case that I wanted to find out is why the FDA keeps rejecting competitors. The rejection that stands out is that of Teva Pharmaceuticals’ application, which was rejected February 23, 2016. The only thing that were reported as the cause was “major deficiencies.” There is little visibility into FDA rejections.
Mylan spent $1.5 million on lobbying in 2015. Much as I the am against the costly FDA approval process and lament the distasteful (yet successful) lobbying by Mylan, I don’t really see how their influence could reach inside the FDA. The rejection of Teva’s application is unfortunate, and the process should be more transparent, but there is no discernible link between Mylan and FDA.
Nevertheless, I have filed a FOIA request with the FDA. I will report again if I get any information regarding the rejection.
The Federal Government has a tax credit for the construction of low-income housing. Whatever its intentions, it is mostly used to transfer wealth into construction businesses and developers.
This NPR Report documents cases of outright fraud in Miami. Michael Cox, a repentant developer, calls it a kick-back scheme. Businesses would inflate their costs in order to maximize the tax credits. As far as we know, this is still going on.
Even with cleaner projects, the tax credit mostly gives wealthy developers a monetary benefit for projects they would have undertaken anyway. A study by Michael Eriksen and Stuart Rosenthal (2008) finds that nearly all financing using the tax credit displaces private investments.
Central Pacific Financial (CPF) is a troubled bank. The last year it was profitable was 2007. Its stock is worth a fortieth (1/40) of its peak. It is over-exposed to troubled assets, in the form of sub-prime mortgages. In late 2008, when the Federal Government started the Trouble Asset Relief Program (TARP), CPF applied.
Central Pacific was not a likely candidate. TARP was meant to save healthy banks and companies. The Treasury Department, which runs TARP, had initially rejected the bank’s application, with a stated concern that the bank had too few capital reserves to be viable. The bank had already been chastised by the FDIC for being low on reserves.
In late 2008, the TARP application was sitting in review council. According the the Huffington Post: “The internal e-mails show that the application had been forwarded to an inter-agency council headed by the Treasury Department that reviews cases in which a bank did not meet the criteria for a federal investment. Those criteria require banks to demonstrate their viability without the benefit of federal funding.”
Then, suddenly in December 2008, the bank received $135 million in TARP funds.
In November of that year, the Treasury Department received a call from the staff of Daniel Inouye, inquiring about the status of the application. News of this phone-call travelled by email from San Francisco to Washington, DC. The application was approved two weeks later.
In 2007, Inouye represented Hawaii in the senate. At the end of 2007, a year before these events, he owned about half a million dollars worth of shares in CPF.
The Real Life Plutocracy blog will feature stories from the news that demonstrates how some business people use political machinery to gain competitive or monetary advantages. As with the game itself, the underlying theory is Public Choice.