Wednesday, February 22, 2012

The One Percent's Revolving Door

In Defining the One Percent, I explained that big government and big business work together to their advantage, while occasionally pretending to be mortal enemies. Then I provided a definition of the One Percent.
The One Percent is composed of both those who would seek to influence those who write the laws to create legislation that prevent competition and force business their way, and those politicians and bureaucrats who gladly pass and enforce the legislation that provides those benefits.

The One Percent includes both Crony Capitalists and Crony Politicians. We ignore their collusion at our peril.
In On Law and Sausages - SOPA, PIPA and Cronyism, I explained how these two groups work together to create legislation that ends up benefiting a particular industry or a particular corporation at the expense of consumers and the small businesses on Main Street. But they have plenty of other tricks up their sleeves to maintain their hold on the reins of power.

One of the favorite tricks of crony politicians is to appoint a well-connected industry insider who was particularly helpful to their election campaign to a high government position. Quite often it turns out to be a position where they're responsible for regulating the industry they just departed. This generally results in a few murmurs from members of the opposition party, quelled by a lot of head-nodding over the common wisdom that it takes people with an intimate knowledge of an industry to effectively regulate that industry.

Show of hands, please. How many in the audience would recommend to their local bank that they hire bank robbers as security guards?


I really expected to see some hands. After all, who has more intimate knowledge of bank security than those who've made a career out of circumventing it?

Isn't it rather mean-spirited to assume that once they got into a position to control the security, they'd find some way for their gang to walk off with a huge stack of cash?

The door from industry to government swings both ways, of course. Whenever the Red team hands off to the Blue team, or vice-versa, the migration of upper-level government bureaucrats into cushy private-sector jobs in the industries they were so recently charged with regulating resembles the annual migration of swallows returning to Capistrano.

Sometimes, if they can manage to do a particularly good job of regulating an industry to the benefit of a particular firm, they don't even have to wait for the mass migration to land that luxurious corner office with a view of the ocean and the gratuitous salary attached.

There's a long and sordid history of well-connected people who have shuffled back and forth between government agencies and the corporations they claim to regulate. I've often thought that I should take the time to document some examples.

But while I may be a tireless agorist, I am also a lazy one. Luckily enough for me, I waited around long enough to find out about Geke.US, where Stephanie Herman has created 16 Venn diagrams naming some of those individuals who have made a career out of having their cake and eating it too. Here are two well-known examples, Goldman Sachs and GE.

The Venn Diagram Memes (Stephanie Herman, / CC BY-NC-ND 3.0

GE Gov
The Venn Diagram Memes (Stephanie Herman, / CC BY-NC-ND 3.0

Here are the 16 corporations or industries covered, linked to the appropriate diagram.
The Venn Diagram Memes (Stephanie Herman, / CC BY-NC-ND 3.0
Fannie Mae
General Electric
Goldman Sachs
Green Energy
Defense Contractors
Keystone Pipeline
Big Oil
Planned Parenthood
Social Networking Sites
The Venn Diagram Memes (Stephanie Herman, / CC BY-NC-ND 3.0
There are other interesting categories of work at Geke.US as well. Take a look around.

So the next time you wonder why legislation passed for the purported purpose of helping out the little guy and reining in the abuses of the mega-corporations never seems to work out that way in the long run, don't just put it off to incompetence, or to obstructionism by one party or the other. Remember Stephanie Herman and her instructive Venn diagrams.

...and that's all I have to say about that.


  1. Yes, I must say I really appreciate They make very clear the extent of the revolving door. I would like to see them do something similar for other democracies, to show it's not just the US.

  2. This is exactly why I am so against government (as anyone who knows me would say I am), in a nutshell...