The revolving door between Government and Big Business

The New York Times reported earlier in December that Peter Orszag, Obama's first budget director, joined Citibank's investment banking group as a vice chairman.  Mr. Orszag joins a long list of former White House officials who have moved from government and into the board room's of America's largest corporations.

Mr. Orszag’s actual duties are murky at best. He is expected to draw on his deep knowledge of public sector financial issues and his experience overseeing the federal budget to counsel Citi’s clients on various policy actions. He is also expected to be something of a corporate rainmaker.

The Economist magazine evaluates the transaction and considers the entire situation an unsuitable arrangement that enforces perceptions of Washingtonian corruption.

Not only is the revolving door between Washington and Wall Street unseemly, its frictionless gliding action suggests corruption is built right into the interface between our government and our great profit-seeking institutions.

James Fallows over at The Atlantic magazine is quoted by the Economist and relays is own thoughts on the matter.

But in the grander scheme, his move illustrates something that is just wrong. The idea that someone would help plan, advocate, and carry out an economic policy that played such a crucial role in the survival of a financial institution—and then, less than two years after his Administration took office, would take a job that (a) exemplifies the growing disparities the Administration says it's trying to correct and (b) unavoidably will call on knowledge and contacts Orszag developed while in recent public service—this says something bad about what is taken for granted in American public life.

When we notice similar patterns in other countries—for instance, how many offspring and in-laws of senior Chinese Communist officials have become very, very rich—we are quick to draw conclusions about structural injustices. Americans may not "notice" Orszag-like migrations, in the sense of devoting big news coverage to them. But these stories pile up in the background to create a broad American sense that politics is rigged, and opportunity too.

The system as I have elaborated in a number of previous posts (ex. here, here, here, here, and here) is corrupt.  Here is a man with all the necessary knowledge on how to circumvent and manipulate whatever limited and existing impediments there are and will use that to his new employer's maximum benefit.  Robert Rubin, former Treasury Secretary under Clinton, joined Citibank to become a senior adviser and board member, with a $10 million a year paycheck with no management responsibility.  Carlos Gutierrez, a former commerce secretary under President George W. Bush, will join Citibank alongside Mr. Orszag, "to counsel Citi’s clients on various policy actions."

It is clear that the government is run by persons whose only interest is in using government to get rich quickly. We need to stop wasting our time asking whether the system is broken; it is.  The real question is how much worst is it going to get before the whole corpulent mess implodes?