What is the Revolving Door?
The ‘revolving door’ refers to the cyclical movement between the government and corporate employees. Many legislators, regulators, and Congressional staffers become lobbyists and consultants for the industries they used to oversee. Some executives or lobbyists receive jobs creating legislation or regulating the industry they advocated for.
In 2019, 59% of recently retired or defeated U.S. lawmakers landed lobbying jobs.
In one direction, a legislator or regulator active in the pharmaceutical industry, for example, leaves office and takes a lucrative job as a pharma lobbyist. In the opposite direction, a pharma lobbyist leaves their job and becomes a legislator or regulator for the pharmaceutical industry.
DID YOU KNOW?
In Japan, the revolving door is an institutional practice known as amakudari, where senior bureaucrats essentially retire into high-level positions in the private and public sectors. The government has worked to phase out amakudari since the 1990s.
The Revolving Door Debate
Advocates of the revolving door argue that it brings experts to public departments, ensuring better policy gets proposed and enacted. Critics claim that it establishes a corporatocracy, a government that promotes business/moneyed interests rather than public interests.
The Zero Theft Movement is dedicated to eradicating the rigged layer of the economy. We achieve this with your help in researching, debating, and voting on which specific areas of the U.S. financial system are rigged, how much is being ripped off from the public, and by whom.
In this article, we will cover how the revolving door might be allowing crony capitalists to rig the U.S. economy against the public by controlling politics and legislation.
Tax avoidance creates a grey area where the powerful can unethically, though legally, get out of paying a good chunk of their taxes. Find out if the system is rigged against the general public…
The Fundamental Concern of the Revolving Door
Regulatory capture refers to the economic theory that argues industries or special interests ‘capture’ agencies charged with regulating their actions. Regulatory entities that have come under the influence of the industry they oversee are known as ‘captured agencies.’ It was proposed by George Stigler, a Nobel laureate in Economic Sciences.
Regulatory capture is exactly what critics believe the revolving door creates.
Lobbyists, from their time in office, have established personal connections to those working in the political sphere. That network alone carries weight and influence. Couple those relationships with money, and you have a great deal of persuasive power.
Legislators and regulators have spent years operating in favor of the industry they are now trying to oversee. Unknowingly or knowingly, they may prioritize the industry’s interests—especially if they are looking to step down and secure a lobbying job. As you might have learned from our article on anti-corruption organization RepresentUs, politicians spend much of their time seeking out support. In the form of campaign contributions (i.e. Pay to Play) and votes. That makes sense when the political candidate with the most money historically wins ~80%-90% of elections.
How can the public really trust politicians when conflicts of interest exist? When the revolving door continues to spin?
The Lesser Known Piece: Congressional Staffers
The party involved in the revolving door that, perhaps, does not receive so much attention is Congressional staffers. Due to policymakers’ campaign financing priorities, increasing workloads, and a limited workforce, congressional staffers often lead legislation development. In other words, they are an important target for lobbyists (and they know it too).
Professors Michael E. Shepherd and Hye Young You published a 2020 paper examining how post-government career considerations influence their legislative decisions. Shepherd and You created a dataset including every person to work for a member of Congress or congressional committee between the years 2001-2014. 4,520 among them left the government to work as a lobbyist.
Notable findings
- Employing a future lobbyist tends to result in significantly higher legislative productivity, as they wish to showcase their aptitude
- Future lobbyists focus their legislative efforts on the prioritized lobbying areas—healthcare, commerce, and the environment
- Congressional staffers who become lobbyists tend to grant lobbyists greater access to their offices, suggesting they are networking but also being directly influenced
Shepherd and You demonstrate that lobbying firms provide Congressional staffers with jobs due to their connections in government, legislative aptitude (i.e. high legislative productivity), and favoritism towards businesses. Congressional staffers, too, show interest in becoming lobbyists and know they are, in a sense, auditioning for a future job.
Legislative productivity can prove beneficial, as long as it does not end up creating bills that favor corporations and rip off the public. The concern is the extent industry lobbyists are shaping legislation via staffers, as well as the political representatives themself.
Congressional staffers are potentially as important as legislators and regulators as they take on a big share of the policymaking. However, as staffers work behind the public-facing politicians, they remain virtually anonymous and immune. This makes the U.S. legislative process all the more questionable. Just think about it, the public cannot really get rid of a staffer via an election, right?
Thirty brokerage firms paid about $900 million to settle the civil suit contending they “schemed with one another for years to fix prices on the NASDAQ stock market,” the New York Times reported. They allegedly did so by not using odd-eighth NASDAQ quotes. See what the ZT community has uncovered about the matter.
Revolving Door Politics in the Patent and Trademark Office
The U.S. Patent and Trademark Office (USPTO) claims to protect new ideas, innovation, and creativity through legal means. The agency has a little over 8,000 patent examiners under its employ.
Haris Tabakovic (Harvard Business School) and Thomas G. Wollmann (University of Chicago Booth School of Business) published a joint paper examining whether there is a revolving door in the USPTO. Tabakovic and Wollmann studied over 10,000 patent examiners and 1 million applications from 2001-2015. During the fourteen-year period, about 1,000 patent examiners transferred from the USPTO to become patent practitioners.
They discovered that revolving door examiners (those who came from or went to the private sector) granted more patents than their peers, particularly to the businesses that eventually hired them.
Notable quantitative findings
- Revolving door examiners grant 7.1-7.4% (4.4-4.6 percentage points) more patents overall
- They grant about 12.6-17.6% (8.5-11.9 percentage points) more patents to firms that later hire them than to those that do not.
- Patents awarded to future employers receive 21-27% fewer citations (fewer citations mean lower quality), while those awarded to firms in the same ZIP code and city as the future employer receive 6-8% and 6-11% fewer.
Wollmann argued that revolving door examiners showing partiality to businesses in their location (city and state) serve as evidence of the revolving door. Not that patent examiners receive direct requests to approve a certain patent from prospective employers. Wollmann believes a harmful industry convention gets established where examiners factor in their career aspirations when reviewing patents.
Jamming the Revolving Door
Preventing the revolving door has proven difficult in many of the world’s largest democracies. Even with the detailed rules governing the employment of ex-government officials in the private sector.
More recently, Congress has made attempts to address the revolving door, as well as campaign finance laws. H.R. 1, or the For the People Act, looks to establish stricter rules in order to make politics much more transparent. One relevant reform is a proposed update to the definition of ‘lobbyist.’ Ex-legislators have been able to circumvent the one-year ban on lobbying by acting as a consultant, for example. H.R. 1, as of now, has passed Congress.
There are also anti-corruption groups such as Move to Amend and us (The Zero Theft Movement) seeking to minimize corporate control over politics. Our approach to jamming the revolving door begins and ends with you, the public. The ZT community investigates, debates, and votes on whether crony capitalists are rigging an area (e.g. drug prices) of the U.S. economy. This way we can collectively pinpoint the responsible parties, expose them, and get them out of office (i.e. voting for the better candidate).
We all stand to profit from an ethical, powerful, and safe financial system if we stand up against the crony capitalists.
Standard Disclaimer
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.