Could someone review my logic?
Let's consider a policy I believe would benefit people, such as a sugar tax. Typically, under such a tax, the cost is usually passed on to the consumer (literature shows ~70% of tax is passed on). Now, imagine there's an entity, like a company or interest group, that strongly opposes this policy because it would cut their profits by an amount represented as $X in Net Present Value (NPV). Ordinarily, they would be willing to spend $X on lobbying efforts to sway lawmakers and prevent the policy's implementation. In reality they spend less than $X because 1) there is an opportunity to free-ride other similar companies 2) there is a chance that they spend $X and the government still passes the policy.
Let's say I am a wealthy billionaire with a vision for social good. I offer the aforementioned interest group $X, and together we proceed to implement the policy. However, is it reasonable to assume that the interest group would utilize the $X payment to lower the soda's price? It seems unlikely. A rational profit-maximizing company would likely still shift the burden of the tax onto consumers. This is because, despite the cash infusion of $X, the company's optimization behavior under the tax remains consistent with what it would have been without the payout.
So, how does this play out in reality? Rough estimates indicate that the food and beverage industry spent an extra $50 million on lobbying against a national sugar tax in 2009. According to a 2012 Health Affairs article, a tax of one cent per ounce on sugary beverages could prevent around 26,000 premature deaths over a decade. Assuming a constant rate of 2,600 lives saved annually, and applying a social discount rate of 3.5% (chosen somewhat arbitrarily), the cumulative lives saved due to the soda tax would be 74,285. This leads us to a cost of $50 million divided by 74,285 lives, resulting in approximately $673 per life saved.
Consequently, it appears to be highly cost-effective to simply buy out the soda and beverage industry. Although we haven't factored in the consumer surplus lost due to the sugar tax, even after considering this aspect, the policy seems to be a significant improvement for overall welfare. This is especially true considering the high price elasticity of sugar.
If a policy is opposed by a small interest group but would benefit the entire world, then it appears optimal to just pay off the small interest group so that we can implement the policy. First approximation for sugar tax shows a cost-effectiveness of $673 per life saved in the US, and likely lower for elsewhere in which there is a smaller beverage lobby.