The more powerful government is, the more incentive there is for special interest groups to influence it for their own, narrow benefit. Casey Mulligan:
Some people have expressed dismay at the unprecedented amounts spent on 2012 political campaigns. But heightened political spending and other forms of political participation are an expected consequence of our more active government.
As explained by a pioneer in political economy research, Gordon Tullock, the real surprise about spending on campaigns and lobbying is how little it is compared with the amount of resources controlled by governments.
The federal government spends about $4 trillion every year, and state and local governments another $2 trillion, not to mention the resources these governments control through regulatory activities.
At the same time, estimates of aggregate campaign and lobbying spending are well below than 1 percent of total government spending. For example, analysis of filings under the Lobbying Disclosure Act finds that $3.5 billion was spent on lobbying in the year 2010.
This is also the topic of the great new book by Luigi Zingales, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity. To quote Mr. Z.:
When government is small and relatively weak, the most effective way to make money is to start a successful private-sector business. But the larger the size and scope of government spending, the easier it is to make money by diverting public resources.