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Econ 050

Jul 26, 2019

What is the difference between lobbying and buying influence? Since 2002, it has been legal in the United Kingdom for sitting politicians to hold board positions at private companies and serve on committees or propose legislation that could directly impact those companies. The reasoning given for these political hires is that familiarity with the inner workings of an industry make them a better informed politician, and that the skills that many politicians develop – strong networks, working together with different shareholders – make them a good fit for corporate board membership. But the companies that have a sitting MP on their board are likelier to have higher than average profits, and those that hire ex-politicians don’t experience the same bump. Assistant professor Swarnodeep Homroy looked into just how much a closer professional relationship between politicians and industry can be beneficial for those companies, and whether or not that’s a good idea.