Theorizing Full Transparency within Legislative Consultaion Procedures

Implications for Big Business


Seminar Paper, 2010

17 Pages, Grade: 1,0


Excerpt

Contents

1. Introduction:

2. Research question and methodology

3. The offspring of lobbyism

4. The global transparency issue
4.1 Criticism and advocacy of "full transparency"
4.2 The legislative status quo of "transparency legislation"

5. Lobbyism within a "world of full transparency"

6. Implications for "big business"

7. Conclusion and future outlook

References:

Appendix:

1. Introduction:

"Knowledge itself is power."
(Francis Bacon)

With the breakthrough in information technology since the early 1990s pivoting in a maturing global information network accessible for a broad mass of consumers called the internet, the power information relays to its "owner" and the means and speed of its diffusion have been revolutionized. In this context, looking at various societal actors, the issue of equal access to and transparency of information triggered not only broad scientific research efforts, but again placed the spotlight of public scrutiny on the issue of transparency of information in societal, economical and governmental mechanisms of decision making and business conduct. Civil society bombarding multinational enterprises with postulations to disclose supply chain locations and their labor and environmental practices especially abroad conveys that not doing so bears certain, if not even very lucrative, advantages for such businesses. With governmental legislation setting the stage for businesses' profitability in many realms, exerting "selfish" influence on national politics holds great allurement for business itself. Fronting supranational joint efforts like the establishment of the OECD Financial Action Task Force[1] of the G-7 member states or the European Transparency Initiative[2], business has ever since the beginning of nation states found its way to interact with the mechanism ultimately affecting their profitability in a regulatory or constraining way. Looking back at the financial crisis of 2008, it becomes clear that nowadays business making use of their involvement in shaping national policies has not declined at all. The multinational "Cash for Clunkers" law and the failure of the "nutrition facts traffic light" law in Germany prove conclusive examples of how "a passive transmission belt for corporate interest" (Stubbs 2006: 171) in form of lobbyism successfully influences legislative outcomes which crucially benefit a certain societal group. With a broad landscape of "industries of intermediaries" (Bac 2001: 95) which offer not only the expertise but also the necessary connections to crucial hotspots of legislative decision making, "Big Business" is successfully leveraging its' resources to increase its power. Consequently civil society's scrutiny in terms of where and to what extent certain business actors are involved in legislative outcomes is vital to ensuring the common good being put ahead of interests of certain societal elites. This principle's prerequisite though is embodied in civil society having access to relevant information and data which is still not disclosed by the target actors. Many countries pursue half-hearted policies in terms of relevant information disclosure of legislative procedures with the best recent example being the United Kingdom which despite many promises and the release of a pro-transparency White Paper by the current government has yet to promulgate a freedom of information act allowing public access to information about the doings of the government (Florini 1999: 29). Therefore, lack of transparency on the one hand triggers unnecessary incentives for moral hazard in terms of businesses lobbying activities, and on the other hand makes it more difficult for civil society to combat such behavior.

2. Research question and methodology

During the examination of for the topic of political lobbyism and lack of transparency relevant academic literature, the aspect of most countries not endorsing mandatory registration requirements including disclosure of affiliation and funding sources of lobbyists surfaced frequently. The discussion is therefore concentrating on transparency of interest representation within legislative procedures of nation states. Thus whenever "full transparency" is addressed in this paper it should explicitly be taken related to interest representation within the consultative process of parliamentary lawmaking. At first this paper will briefly outline lobbyism's genesis and arguments for and against organizational transparency. The main part will be examining what sort of structural changes are to be achieved and what behavioral change would be induced into business entities if "full transparency" could be pushed through in particular speaking of the consultation phase a draft law has to pass through. Consideration of the above points yielded the following research question: "Looking at "big business", what behavioral change could full affiliationary disclosure of in the legislative consultation process "involved" external agents achieve in terms of lobbying practices and resource allocation?".

3. The offspring of lobbyism

"Our politicians are for sale." (Kuhner 2008)

As individuals pursing their own interest is a basic element of human nature, premature elements of lobbyism can be assumed to have existed since the first primitive forms of governance emerged. Looking further, it seems that with the promulgation of the constitution of the United States of the America in 1787 the "fundamental right for lobbyism" was unconsciously given. The first amendment reads that bills which would constrain “the right of the people peaceably to assemble, and to petition the government for a redress of grievances" (US Constitution 1787) can be interpreted in a way consistent with the line of argument of lobbyists about why they defend what they are doing. Likewise similar given rights can be found in all constitutions of developed democratic states. In light of the above, having sufficient resources always enabled people to somehow influence decision making in governing structures. The first reports about small elites like peers meeting members of parliaments to talk to them about upcoming legislative voting sessions originate from the United Kingdom as early as the 17th century (Fuchs 2007: 71). The following centuries gave birth to industrialization and consequently not only financially but also mentally empowered a small elite of entrepreneurs to enlarge their "share of the pie”. Ronald Shaiko claims that before 1920 only one single corporation had a permanent office in Washington, DC (Shaiko 1998: 3-18). He further acknowledges that this number had risen to 175 in 1968 and subsequently again more than tripled until 1990 to more than 600 (Shaiko 1998: 3-18). Indeed those numbers illustrate a global trend of "political mobilization of business" (Fuchs 2007: 74) throughout the 20th century. Nowadays an "economization of interest representation" (Heinze 2009: 11) has already been realized in form of a multibillion dollar consulting industry providing the necessary know-how and access to political key procedures respectively. However, looking at the major political clusters like the European Union (EU) or most developed nation states, little not only mandatory but more important effective legislation exists.

4. The global transparency issue

"No actor is transparent by nature, not even the defenders of this concept, therefore as a society we are permanently trapped in a vicious circle of mistrust, surrounded by a forced transparency as a value that is constantly being eroded"

(Arellano-Gaul 2008: 16)

From a pessimistic point of view the above citation would characterize the world's Status Quo in terms of transparency of lobbyism quite accurate. Nevertheless the term "transparency" actually still seems ubiquitous these days, it is rarely defined with much rigor (Florini 1999: 6). The International Monetary Fund (IMF) defines transparency as:

"...a process by which information about existing conditions, decisions and actions is made accessible, visible and understandable" (IMF Working Group 1998).

Therefore in theory every organization which engages in productive work which in some way affects citizens in a beneficiary or disadvantageous way is therefore morally bound to adhere to the above mentioned principal. Thus, transparency can also be defined as "the release of information by institutions that are relevant to evaluating those institutions" (Florini 1999: 5).

On the political scale certain national and supranational entities like the United States of America through its Lobbying Disclosure Act of 1995 or the EU through its 2004 European Transparency Obligations Directive partially endorse such policy. On the contrary developing and third world countries naturally can be considered to be the least transparent. Undemocratic political systems and third world countries either due to their political nature or due to insufficient resources usually expose the greatest lack of transparency in various organizational structures. Democratic and developed countries' governments' inability to promulgate effective legislation which ensures transparency is mostly caused by the established influence and power of non-governmental actors in regard to the legislative process a bill has to pass through in the first place. Looking at "role models” like the United States, there are still a lot of flaws visible in terms of existing disclosure legislation. Holman criticizes especially that only the "who" and not the "how" is regulated properly (Holman 2009: 14). If we follow his argument it becomes obvious that especially the conduct of lobbying practices poses the next great challenge to nation states (Holman 2009: 14). Old "patterns of patronage" and social relationships between members of parliament (MPs) and non-ministers based on mutually beneficiary patterns of interaction have to be addressed next. Consequently privileged access routines to MPs have to be shattered for introducing a way which guarantees pluralistic information flows from and to MPs.

Nevertheless, besides globally existing shortcomings regarding to information disclosure, transparency, especially in the governmental realm, is on the rise. Not only have countless non-governmental organizations (NGOs) devoted themselves to end the corporate reign of privileged access and resource-dependent extent of influence. A global trend towards transparency cannot be neglected. Scholars, policymakers, and activists have called for transparency in such varied contexts as control of drug trafficking, environment, anti­corruption efforts, banking, national fiscal practices, auditing and accounting standards, multilateral development assistance, and private sector environmental and labor practices (Florini 1999: 2). For instance the development of assessment tools like the ISO 26000 - Guidance Standard on Social Responsibility will sooner or later also contribute to business reconsidering their responsibilities towards the people. By some transparency is even "touted as the ultimate remedy to such disparate "diseases" as financial volatility, environmental degradation, money laundering, and corruption" (Florini 1999: 2).

4.1 Criticism and advocacy of "full transparency"

”Transparency does not always redistribute power from the strong to the weak. ” (Florini 1999: 8)

Assessing transparency in the narrow field of the consultative processes as draft law has to undergo, it is generally agreed upon that sharp distinctions have to be made upon what part of information has to remain secret to serve the greater good and which part has to be disclosed in a fully transparent and universally accessible way (Florini 1999: 4-9). Sensitive information regarding national defense, personal data sets existing in health care matters or fully disclosed budget plans are out of the question here. Focusing on the general question of accessibility of publishable information of lawmaking procedures certain key issues are the subject of contemporary academic research. Besides consultative disclosure being considered a rather costly policy that is in need of steady adjustment and oversight (Arellano-Gault 2008: 5), it is criticized for creating too much "white noise” (Florini 1999: 9). It is argued that under a situation of excess information actors are endangered to take the wrong decision due to being exposed to the paralyzing effect of the complexity of issues to consider (Arellano-Gault 2008: 5). With approximately 400-500 laws being annually introduced to the parliament for instance in Germany, this seems within the context of parliamentary lawmaking to be a manageable amount of procedural information which would have had to be disclosed. Furthermore Bac, reflecting on transparency, mentions the "connections effect" (Bac 2001: 88). By disclosing all affiliations and memberships of for instance MPs it would become even easier for businesses’ agents to connect to the corresponding individuals of interest (Bac 2001: 88). Looking only at the consultation phase itself, it can be assumed that parties which already possess expertise in terms of taking influence on certain political actors will only enjoy additional benefits to a very limited extent. In the light of the above, "full transparency" would ultimately enable civil society to challenge the lobbyism-establishment by getting access to structural knowledge and kinship patterns to which it usually required to command huge financial resources to hire the respective expertise via related consulting industries.

Furthermore Bac argues that:

"(transparency) may also improve outsiders’ information about the identities of key decision makers, thereby enhance incentives to establish “connections” for corruption. The connections effect may dominate the detection effect for local improvement in transparency and generate an increase in corruption, a prediction sharply in contrast with standard theories of transparency." (Bac 2001: 87)

Weakening Bac's argument that the number of connections an agent possesses is an important determinant of expected corruption (Bac 2001: 89), I argue that in regard to our case this is only partially true. We look at a case of transparency within the lawmaking process on a federal level of developed countries in which agents are permanently subject to a certain level of accountability on a legal basis. As an agent involved in a profession which has to handle multiple interests, higher vulnerability to bribery due to connection disclosure and being subject to press exposure and public scrutiny would somewhat cancel each other out. Despite this, fully transparent decisions can easily be verified and there is no secrecy concerning the rules and identities of decision makers (Bac 2001: 87). Further developing this theme naturally leads us directly to structural rules of procedures within our topic. Transparent conduct in parliamentary lawmaking would open up a whole new field of science which would not only contribute to the further elevation of the overall structural procedures' quality but also encourage previously not involved actors to seek participation which would result in overall increased pluralism which is supposed to be a basic cornerstone of parliamentary lawmaking anyways. In conclusion full transparency's major goal of combating secrecy, which partially gives rise to most immoral behavior would considering all benefits and costs overall provide a net gain to society.

4.2 The legislative status quo of "transparency legislation"

To illustrate the status quo of nation states having implemented a certain extent of mandatory transparency we examine "the catch word for the openness of the operations of the European Community to the public gaze" (Safire 1998) - The European Transparency Obligations Directive (ETOD) of 2005. Critiques condemn the ETOB as being a half-hearted approach to satisfy the growing demand of civil society for more openness in terms of EU lawmaking. Even though the launch of the 2007 online registration system for lobbyists is one of the first tangible results of this policy it is harshly criticized for its voluntary nature (ALTER). Voluntariness always makes those actors exclude themselves from it, whose participation would reciprocally diminish their ability to represent their interests as efficient as before. Consequently it highly doubtable that self-regulation is a proper means of ensuring efficiency of such a concept (EPHA 2006). Furthermore the EU also falls short of setting a "common code of conduct for all lobbyists" (EPHA 2006). In other words, without standardized procedures of interaction with MPs or advisory service application routines regarding comitology membership, the issue of lacking pluralism within the comitology phase remains unaddressed. Theorizing such regulation would be in place already, the final step in form of "a system of monitoring and sanctions" (EPHA 2006) also remains to be endorsed. Could all these simple sounding issues not be easily resolved achieving greater pluralism within the system itself? Morally overcoming established power structures representing special interest would be the first step. Nevertheless it often requires power to induce disclosure, either by coercion or by restructuring incentives (Florini 1999: 3). Clearly those profiting from existing [3] The consultation process on EU level is a fragmented and multilayered procedure which due to its complexity is commonly refered to as comitology (compare: EU Glossary 2010).

[...]


[1] The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing (FATF 2010).

[2] The European Transparency Initiative was introduced by the European Commission in 2005 in order to increase transparency, openness and accountability of EU governance processes (AER 2010).

[3] The consultation process on EU level is a fragmented and multilayered procedure which due to its complexity is commonly refered to as comitology (compare: EU Glossary 2010).

Excerpt out of 17 pages

Details

Title
Theorizing Full Transparency within Legislative Consultaion Procedures
Subtitle
Implications for Big Business
College
Berlin School of Economics  (IMB Institute of Management Berlin)
Course
Global Governance
Grade
1,0
Author
Year
2010
Pages
17
Catalog Number
V153423
ISBN (eBook)
9783640655861
ISBN (Book)
9783640656042
File size
679 KB
Language
English
Tags
Theorizing, Full, Transparency, Legislative, Consultaion, Procedures, Implications, Business
Quote paper
BA Philipp Stiebeling (Author), 2010, Theorizing Full Transparency within Legislative Consultaion Procedures, Munich, GRIN Verlag, https://www.grin.com/document/153423

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