How to close the revolving door
© Greg Nash

The political process is fraught with openings for interested parties to buy influence. Corporations often hire politicians who legislated on areas related to the company's interests. As one example, former Rep. Robert Andrews, Democrat from New Jersey. While in office, he chaired a House subcommittee handling pensions and helped design the Affordable Care Act. In May of 2014, Andrews abandoned his elected position and soon began lobbying on pension issues.

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Andrews exemplifies the phenomenon known as the "revolving door," where individuals move to and from government, business and interest groups. Ex-politicians are able to use their insider knowledge to benefit their new employer. The revolving door threatens one of the fundamental purposes of government: serving the general welfare. Legislators, like Andrews, often use the revolving door to advance their personal interests over the public's welfare. As long as government picks and chooses winners and losers, there will always be an incentive to exploit political connections.

Institutions, like a system of governance or a constitution, structure incentives in political systems. Different styles of governance may hasten or slow the revolving door. To determine how different forms of government affect the revolving door, we collected biographies of ex-legislators from Congress and the House of Commons (the elected house in the British Parliament) and found that the revolving door is five times more common in the U.S. than in the U.K.

Our preliminary explanation for this drastic difference is that the United Kingdom's system concentrates power into the hands of a small group of politicians, the Cabinet. The American governing style, however, grants power to many members of Congress to alter legislation. Fewer pressure points to use in Parliament means there are fewer people whom it is advantageous for businesses to lobby and may explain why we found fewer cases of the revolving door in the United Kingdom than in the United States.

One possible solution is a lifetime ban on legislators working in areas for which they wrote regulation while in office. However, effectively legislating on complex issues requires politicians with specialized knowledge of the field — knowledge usually found in members of the industry. A lifetime ban would therefore discourage people with the necessary understanding from becoming politicians and would result in less effective governance.

Regulations in the United States require a cooling-off period for members of Congress. The timeout is intended to prevent the exploitation of political contacts. Well-intentioned as the rule may be, it has the sinister and unintended consequence of making lobbying less transparent and has created a practice known as "shadow lobbying," where politicians will not register as lobbyists but still found and run lobbying firms. Legally barred from directly lobbying politicians after leaving office, former members of Congress instead manage teams of lobbyists who use the reputation of their manager to gain access to congressional offices.

What both of these reforms fail to realize is the incentive problem at the heart of the revolving door. There will always be a powerful pull to use the coercive power of government for private advantage whenever and wherever government has the power to pick winners and losers by providing tax benefits or writing legislation that favors certain groups. Solving the problem means removing government from many of the areas it controls and rendering the political influence that Big Business purchases from retired politicians, like former Rep. Andrews, useless. Preventing political plunder is as simple as removing the power to plunder from the politicians.

Yonk is executive director of academics at Strata Policy. Smith is a student research associate at Strata Policy.