As soon-to-be departing Treasury Secretary “Tiny” Tim Geithner surveys a doubtless array of plum job offers in investment banks, we liked this article this morning on the revolving door that has been allowed to swing both ways so freely between government and business. This is an embarrassment and an affront to democratic processes and especially in western countries who seek to lead the free world. There simply has to be a law put in place that if you take a job in government you are not then allowed to go back to employment as a lobbyist in a related area in the private sector for at least 5 years. Similar idea to a “non-compete” agreement. Read: When a Congressman becomes a Lobbyist he gets a 1452% raise (on average). To wit:
“Selling out pays. If you’re a corporation or lobbyist, what’s the best way to “buy” a member of Congress? Secretly promise them a million dollars or more in pay if they come to work for you after they leave office. Once a public official makes a deal to go to work for a lobbying firm or corporation after leaving office, he or she becomes loyal to the future employer. And since those deals are done in secret, legislators are largely free to pass laws, special tax cuts, or earmarks that benefit their future employer with little or no accountability to the public. While campaign contributions and super PACS are a big problem, the every day bribery of the revolving door may be the most pernicious form of corruption today.”
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Ms. Park brings up an extremely important topic, because the corrupting influence of money in politics (either through campaign financing, intense lobbying, revolving door payoffs, etc.) is at the very heart of the difficult economic problems we face. It initially facilitated the financial excesses that led to the crises by undermining reasonable regulations (ie. repealing the Glass-Steagall Act, making the SEC underfunded and toothless, etc.). It also undermined the industrial base and concomitantly, the Middle Class consumer base, by allowing the unfettered entry of imports from countries that do not observe reasonable labour, human rights, and environmental standards. And now it contributes to obstruct and/or water down necessary reforms and regulations.
Ms. Park wrote: “There simply has to be a law put in place that if you take a job in government you are not then allowed to go back to employment as a lobbyist in a related area in the private sector for at least 5 years.” Unfortunately the political will power is not there to pass such laws at the moment for obvious reasons. If anything the situation has gotten worse since the recent Supreme Court decision that rolled back limits on political contributions by corporations.
Powerful vested interests in the west dodged a bullet in 2008 when the financial system nearly collapsed. Thanks in part to the existing corruption, massive private losses were shifted onto the public balance sheet, preserving the status quo (at least for now). But the underlying (untenable) dysfunctions have not been eliminated and will likely inevitably reassert themselves at some point. These pending reckonings will probably eventually compel the necessary reforms that the crash of 1929 and the subsequent Great Depression demanded following the last major period of corruption and excess. Unfortunately it appears that it will require a lot more pain to inspire the changes required today. (That is of course unless the system has become too corrupt and is actually too far gone.)