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Zombie Lobbying Pays Off

Twisting the system is unproductive behavior – but it pays off...

IF YOU'RE a movie goer, writes Daily Reckoning founder Bill Bonner, you've probably seen trailers for Brad Pitt's zombie movie, World War Z. Pitt plays a United Nations employee forced to deal with a global zombie pandemic of epic proportions.

Hollywood is picking up on a theme we've been discussing in these pages at some length...

First, let us remind you of what zombies are. We're not talking about the cartoon characters you see in the movies. We're talking about real people who live at the expense of others...people who take, but don't give...people who twist 'the system' to get things that rightfully belong to others.

Here is our zombie hypothesis in case you've forgotten. As a society ages, more and more people find ways to take advantage of it. Everybody wants power, wealth or status. And they naturally try to get it in the easiest way possible.

The shortest, softest and surest route is to game the system: use it to get subsidies, grants, jobs, tax breaks, bail-outs, welfare, special parking places and other benefits.

But gradually, the cost of supporting all these chiselers and layabouts increases...until the whole system goes broke. Society can no longer afford to continue. As in France before the revolution of 1789, the whole shebang collapses.

A colleague has done a study of the large companies that spent the most on lobbying. He calls it the 'K Street Index' after the street which lobbying firms tend to call home. In the period measured, they spent $1.2trn on lobbying (including campaign contributions).

Readers will note that lobbying is not productive behavior, at least not in the ordinary sense. It does not lead to higher output. It does not fund innovation or new invention. It does not pay workers nor stimulate additional sales.

Lobbying expenses should lead to lower stock prices. Like spending money on call girls or rent boys, it means the companies are using their scarce resources on things that will not raise production or increase sales or boost profits.

But so what? This is a zombie economy... It's not greater output or better management that counts; it's who you know in Washington. Lobbying pays off. It's how to grab hold of the system and twist it in your favor.

The K Street Index outperformed the rest of the stock market more than two to one. The rest of the market rose 60%. These top ass-kissers rose 170%.

How do you like that? Politics pays. You make campaign contributions. You hire a K Street lobbyist to curry favor for you. Your business may not really get better. But your stock goes up!

What's the harm? It's always been like that, hasn't it?

Well, no. There have always been corrupt politicians and conniving corporations. Zombies will always be with us. But never before have the zombies been so numerous and profitable. Zombyism pays like never before.

Why? Because there are more opportunities for parasites than ever before. More laws. More loopholes. More little giveaways and privileges...thousands of them snuck into every piece of legislation and every petty rule.

The tax code alone has more opportunities for favoritism that the whole of the US government a few years ago.

The new ObamaCare regulations are so complex, you could hide hundreds of blood-suckers in them.

And then, there are the 'environmental' protection rules too — full of subsidies, low-cost financing, tax breaks and other giveaways.

Is it really any wonder that lobbying pays off?

A report in the Wall Street Journal last week told us about housing assistance programs. We can't recall the details, but the gist of it was that people wait years to get on the list to get free housing. Then, they're fixed for life. There's no time limit. They can live at the expense of other people for the rest of their lives.

Sometimes the unintentional parts of a story tell more than the intentional parts. The story included a photo of a woman who had just got into the program. It was like 'winning the lottery', said another free-housing beneficiary.

And like winning the lottery, it comes with certain advantages. In the photo of this poor woman who has just been given free housing are two automobiles. One is a Cadillac. The other a Mercedes.

Go figure. There are zombies everywhere.

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

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