By Arnold Kling
In their favor-seeking, all of the lobbyists visiting Capitol Hill are bound by House and Senate ethics rules that cap most individual gifts at $50 per elected official or staffer, with an annual limit of $100 per recipient from any single source. But local governments, public universities and Indian tribes are exempt from the limit, so they are able to shower members and their staffs with such goodies as luxury skybox tickets to basketball games and front-row concert tickets.
…Universities and colleges spent at least $75 million in 2005 on lobbying according to a study by USA Today. The Chronicle of Higher Education reports that $2 billion in grants flowed into higher education in 2003.
The latter is an interesting data point for the discussion of whether faculty tenure is a market phenomenon.
The point I would make here is that an even greater privilege than being tax-exempt is to be regulatory-exempt. For example, in the 1970’s, when Freddie Mac was chartered, the only competitive tool it had with respect to the Savings and Loan industry was its exemption from regulations that kept the S&L’s from attracting money from out of state. Today, the S&L’s are pretty much dead, and Freddie Mac, along with Fannie Mae, dominates the mortgage market.
One reason that Medicare ought to be more efficient than private health insurance is that Medicare does not have to comply with mandates from 50 different state regulators about what to cover. Again, regulation-exemption matters.
Colleges and universities have the best deal of all. Potential new entrants are much more heavily regulated than incumbents. They get Federal subsidies plus tax exemptions. And, as Fund points out, when they lobby to keep these benefits, they do not face the same restrictions as private-sector supplicants.