Prevent Corruption among Federal Regulators
Government jobs don’t pay as well as high-level private sector jobs, which leads to a revolving door between government and industry. Often, industry will pay a government employee 5 to 10 times their salary after they leave office. This makes it very natural for regulators to go easy on the companies they regulate. We need to immunize those in charge of government from market forces by compensating them at higher levels and then making it so they can’t go back to their old jobs.
Corruption in this case would be diminished by paying government officials more. The government has a printing press – it should be using it to empower regulators to act on behalf of the people instead of relying upon officials ignoring their own economic interests.
Problems to be Solved
- The respect people have for the Office of President is damaged by the view that presidential policies are, sometimes subconsciously, motivated by a desire to have lucrative offers and good relationships after leaving office
- Regulators have an economic incentive to “take it easy” on the industries they’re regulating
As President, I will…
- Increase salaries for government officials that operate in a regulatory capacity to much higher levels
- Bar anyone serving in a regulatory capacity from working as a lobbyist or within the industry they were regulating after leaving their position
- Pledge to accept no speaking fees or board positions for personal gain after leaving office
- Request that the next President receive a raise to $4 million but then be barred from any speaking fees or board positions for personal gain after leaving office
An Excerpt from The War on Normal People
Leaders Beyond Money
I was on the warm-up panel once for an event headlined by a duo of ex-Presidents, Bill Clinton and George W. Bush. They were speaking to a room of wealthy clients of a financial institution. The event was very benign – the two didn’t exactly share state secrets. They told funny stories about their time in office and their take on current events. The two had clearly become very friendly. They each had a Secret Service detail who made the whole thing much more cinematic with their crewcuts and headsets. Afterwards, the assembled clients got in line for a photo-op with the two smiling ex-presidents.
There was a time not so long ago when this would have been unthinkable.
Harry Truman, when he left the office of the Presidency in 1953 was so poor that he moved into his mother-in-law’s house in Missouri. All he had to live on was his pension as a former army officer of $112 a month. He refused to trade on his celebrity, turning down lucrative consulting and business arrangements. “I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency,” he wrote. His only commercial gain from office was when he sold his memoirs to Life magazine.
For a long time, former Presidents tended to recede from public and commercial life. This practice started changing with Gerald Ford joining the boards of American Express and 20th Century Fox after leaving office in 1977 and has mushroomed ever since. Bill Clinton has amassed $105 million in speaking fees since leaving office. George W. Bush has collected a relatively modest $15 million. The going rate for one of the former Presidents is $150,000 to $200,000 for a speaking engagement plus various expenses.
The irony is that back in 1958, President Eisenhower and Congress felt so bad for Harry Truman that they passed the Former President Act, which authorized a lifetime pension that today pays former Presidents $250,000 a year and gives them a budget for staff, health insurance and the like. The money-making activities of former Presidents surged after we started taking care of them.
Is it possible that even a President might go easy on various parties because he or she might be getting paid $200,000 or even $400,000 to speak to them a few years later? One of the reasons why we’ve lost our way as a society is that the market has overrun our leaders.
And it’s not just presidents. Elites in general have gotten too cozy. We all went to the same colleges, have children in the same prep schools, live in the same neighborhoods, attend the same conferences and social functions, and often get paid by the same companies. There’s a very powerful set of incentives to get along.
In order for Humanity to trump Capital, the State must represent the public interest above all. The goal should be to create a leadership class that can welcome the hatred of others with no fear of getting frozen out of opportunities afterwards.
We should start at the top. We should give Presidents a raise from their current $400,000 to $4 million tax-free per year plus 10 million Social Credits. But there would be one condition – they would not be able to accept speaking fees or any Board positions for any personal gain after leaving office. This would keep them free and clear of any need to make powerful people happy. We should do the same for members of the Cabinet and the heads of all regulatory agencies.
It’s tough working in D.C. Most of the public servants I know are motivated by the right things. You go in hoping to make a difference. But you quickly get jaded by the system. You become quite influential in your own way, yet you interact with people who are making much more money than you at every turn. Many of them are classmates of yours. Your time in government runs out. Then what? Most government employees make about $100,000.
Private industry may offer you 5 to 10 times as much. Industry implicitly becomes one of your most appealing options.
I have friends who have experienced versions of this. Government service can easily make you feel like a chump 4 years later. It’s highly irrational for any regulator to come after industry too hard, because industry is waiting with the big paycheck afterwards. At least one friend of mine swore up and down to me that he’d never become a lobbyist, only to become a lobbyist several years later. I don’t blame him one bit – he’d spent years building up relationships and currency that people wanted to pay him for. And his options outside of D.C. were uncertain.
Sheila Bair, the former head of the Federal Deposit Insurance Corporation, lived through this conflict herself. She now advocates a lifetime ban on regulators working for the institutions they regulated in return for an increased government salary to $400,000. “It would change the regulatory mindset,” said Ms. Bair and would remove the “upside down” incentives for regulators to keep companies happy to command high salaries afterwards.
For Human Capitalism to take hold, we need leaders who can truly ignore the market. That’s the first step.