Jordi Blanes i Vidal, Mirko Draca, and Christian Fons-Rosen write,
Lobbyists with experience in the office of a US Senator suff er a 24% drop in generated revenue when that Senator leaves office. The eff ect is immediate, discontinuous around the exit period, and long-lasting. Consistent with the notion that lobbyists sell access to powerful politicians, the drop in revenue is increasing in the committee assignments power held by the exiting politician.
The published version is available to subscribers. The link is to an draft.
What should be done about the revolving door? My instinct is that the door does not revolve rapidly enough. But I need to articulate that.
I think an example to the private sector would help. If an agent fails to fulfill his duty of loyalty to principal A (current employer) because of an offer by principle B (alternative future employer), then principal A can sue for damages. Assuming, of course, principal A even knows what’s going on, can prove it the satisfaction of a jury, and if so that the deterrence and compensation benefits exceed the litigation costs.
There’s just no equivalent for this in the case of a politician essentially being bribed or tempted to betray the public trust for the benefit of himself and his future employer. Handing out uncompetitively lucrative positions to politicians and their family members has become the defacto “open-secret” way to legally bribe and buy influence and “prosecutorial discretion-insurance”.
Rahm Emmanuel cleans up millions at a Hedge Fund between government gigs. Peter Orszag does the same at Citigroup and gets to write in Bloomberg. Michelle Obama made a third of a million a year as a diversity consultant so indispensable in her value-creation and compliance-assurance that when she left the hospital felt no need to replace her.
Other than requiring politicians and their families to take a vow of middle-classness, it’s hard to see what one can really do about this.