Corporations hold enormous political power on the obscure issues that almost no one follows but nonetheless have an enormous impact on our economy. For example, the pharmaceutical industry has vigorously pushed for longer and stronger patent protection to increase its monopoly profits.
As a result, the amount we pay for prescription drugs has risen from 0.4% of the economy in 1980 to more than 2.2% of Gross Domestic Product today.
The difference comes to $400 billion a year or more than $3,000 per family. You could think of that as a car lease payment silently drained from your pockets to benefit Big Pharma.
It’s unlikely that even 1% of the population is familiar with measures like the Bayh-Dole bill. That’s a 1980 corporate subsidy law. It made it easy for corporations that used taxpayer funds in developing new inventions to enjoy all of the profits from those inventions. The law also allows the government to issue exclusive use licenses to inventions owned by the government, another little-known subsidy.
Hardly anyone has even heard of the TRIPS provisions of the World Trade Organization, which meant a fortune for the drug industry.
TRIPS stands for Trade-Related Aspects of Intellectual Property Rights. That 1994 agreement expanded protections for intellectual property rights, such as the formula for a drug, to international trade.
The pharmaceutical industry’s lobbyists were all over these and other measures, which meant transferring tens of billions of dollars each year from the rest of us to the drug industry.
This is the typical story with a wide range of legislation.
Many of the wealthiest people in this country benefit from the special tax treatment for “carried interest.” It allows hedge fund and private equity partners to pay a tax rate of just 20% on their millions, tens of millions or even hundreds of millions of earnings. Many of the super-rich pay income taxes at rates below the marginal tax rate paid by many schoolteachers and firefighters.
Their lobbyists fight like crazy to preserve their special treatment. At best, the public is faintly aware of this handout to the country’s richest people. And very few feel they are empowered to change any of the subsidy, patent and tax rules that favor the wealthiest Americans.
There are endless other tales like this of lobbyists getting special interest legislation through for the financial, oil and every other industrial group or major special interest group you might name.
This is why the Left complains about the excessive power of large corporations. They are not wrong.
Dean Baker co-founded the Center for Economic and Policy Research in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer."