Since the United States Supreme Court’s “Citizens United” decision, whichprohibited the government from restricting independent political expendituresby corporations and unions, concern about business interests’ influence over USelections has been growing. But political contributions are only one reason whybusiness interests have so much power. When it comes to lobbying, money is noteverything: ideas play a big role, too. Unfortunately, rather than leveling the playing field, the battle of ideasmay skew US politics even further in favorof big business.

The importance of ideas can be seen from the simplest things.Congressional bills aimed at benefiting powerful constituencies are generallygiven appealing (and misleading) names. For example, a tax holiday to repatriate foreign earnings was called the“American Job Creation Act.” It is easier to sell a bill that (allegedly)benefits everyone in society, not just a small group of its most privilegedmembers.

More importantly, the lobbying of the quasi-governmental mortgage lendersFannie Mae and Freddie Mac would not have been so successful without the ideaof the “ownership society.” How could anyone oppose turning every American intoan owner? It is precisely the appeal of suchideas that can make them so dangerous politically.

If ideas are like weapons in lobbying, it is important to appreciate thepossible distortions in the market for their creation and diffusion. New ideasare like new drugs. While some pharmacologistsdedicate their lives to searching for the cure for cancer, regardless of anymonetary incentives, many are driven by the hope of securing a lucrativepatent.

Even if researchers themselves are motivated by only the noblest of goals,their need for funding forces them to take into account profitability. That iswhy we have so-called “orphan drugs,” fromwhich not enough money can be made because they cure rare diseases or diseases(like malaria) that affect people who cannotafford to pay for them.

The process of creating new economic ideas (or new evidence about oldideas) is not that different. Researchers do not get patents, but they getcitations, recognition, and promotions. While some researchers dedicate theirlives to the search for truth, regardless of any personal gain, many are drivenby the hope of academic stardom and themoney that comes with it.

Even if researchers themselves are motivated by only the noblest of goals,their need for funding forces them to take into account the demand for ideas.And, if funding is not a major issue, the mechanism of amplification of an idea(and thus its ultimate diffusion) nonetheless depends upon how appealing it isto some lobbying effort.

Consider a great researcher in my field, Michael Jensen. In 1990, heco-wrote a paper about executive pay, arguing that it was not sufficientlylinked to performance. Although the authors used an untenablebenchmark to determine that the sensitivity of pay to performance was too low,the article was published in a top economic journal, prominently discussed inthe Harvard Business Review, and is one of the most cited papers ineconomics. Fifteen years later, Jensen wrote a paper about the costs ofexcessive sensitivity of pay to performance. The paper was published in a minorjournal and is not very well cited. Why?

Business loved the first paper, because it shifted the conversation fromhow much executives were paid (a verycontroversial topic) to how they should be paid (a more technical andless contentious issue). And, since companies cannot make executives pay out oftheir pockets for bad performance, the shift in focus ended up justifying anincrease in pay. There was no similar love for the second paper, which languishes almost unknown, despite its importantinsights. Jensen, a researcher of the highest integrity and fame, is free towrite on both sides of this issue. But the two papers’ asymmetriccitation payoff is a warning for youngscholars: if they want to get ahead professionally, the position that theyshould take is clear.

From venture capital to telecommunications, from the construction industryto teachers’ unions, there is plenty of demand for evidence that celebrates thebenefits of these industries and justifies (implicitly or explicitly)government subsidies to them. There is no equally organized and active demandfor evidence that all of these subsidies are distortionary, waste money, andmake companies less rather than more competitive.

Here is perhaps the biggest orphan idea:pro-market does not necessarily mean pro-business. A pro-business agenda aimsat maximizing the profits of existing firms; a pro-market agenda, by contrast,seeks to encourage the best business conditions for everyone. Who benefits fromevidence that an industry is too concentrated, its profit margins are too high,and consumers are being ripped off?

As with malaria drugs, millions of people would benefit from such an idea,but their ability to pay is limited. And, sure enough, in most of what weeconomists write – and, more important, in what we teach in business schools –it is hard to tell the difference between being pro-market and beingpro-business. The battle against cronycapitalism starts in the classroom, and we professors are inevitably implicated. If we are not part of the solution, weare part of the problem.