I’m pretty sure Glenn suggested the 50% surtax on people leaving gov’t for the private sector at least partly in jest, but the more I think about the idea the more it seems to deserve serious consideration. There is a huge problem in Washington with regulatory capture; it affects everything from Fannie and Freddie to the SEC to the FDA to the EPA. This won’t solve every problem, but it should reduce the incentive for certain kinds of abuse considerably.
The only valid argument I can see against the policy is that it would tend to discourage qualified people from working in government, but I think that’s a) outweighed by the need to fix a broken system, and b) sort of the point anyway — we want to discourage people from seeing gov’t work as a pedestal from which to do favors that will be rewarded by industry.
This problem also strikes me as a classic example of Virginia Postrel’s struggle between dynamicists and stasists — rentseeking behaviors like regulating away the competition or offering de facto bribes to avoid unfavorable regulatory rulings are, unfortunately, generally a great investment, much better than betting on a risky new technology that threatens someone else’s lucrative status quo. That’s probably a large part of why this is the weakest recovery we’ve ever seen, and over the longer run also may help explain Tyler Cowen’s Great Stagnation, particularly the troubling decline in TFP growth.
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12 responses to “Taxing Regulatory Capture”
Is it worth pointing out that Canadian civil servants would be much more apt to view a jump to private practice, especially in an industry they were regulating, as a repudiation of their public service careers?
Jumping back and forth is hugely common in the USA, but not so much in other countries. Is that a cultural thing, and what does it mean?
A smaller government, say, dump Education, HUD, EPA, BATFE and some other agencies…and this would be less of a problem.
I could go on at length, but this is your blog, not mine, so I’ll try to remain succinct by resorting to sarcasm. Maybe I’ve missed the actual point of your and Glenn’s idea, but here’s how it seems to me.
You want a valid argument against a ‘punish you for leaving the government’ tax? How about ‘I like having a military?’
PVT Snuffy: “What’s that, SSG Recruiter? A four year term of service with the Army followed by five years of half pay even if I work as a burger flipper making minimum wage? Sure, that sounds GREAT! Sign me up; I want to be all I can be!”
The only people left will be those with the inability to plan into the future (an EXCELLENT trait to have in our nation’s military, to be sure) and those who from the outset believe that they’re going into it for a career (and I have seen enough of those flame out for stupid reasons to doubt the sanity of someone who wants to make a career of it from day one).
There are certainly ways around this problem (excluding the military from the tax, only applying it to people above a certain pay grade, etc), but I can’t see any that look ideologically consistent. Then again, libertarians and conservatives proposing theft by government doesn’t look that consistent in the first place.
…by the way I just noticed this but in your comment feature there’s a D missing in the “Mail Address” field. It says “Mail Adress*:”
“Then again, libertarians and conservatives proposing theft by government doesn’t look that consistent in the first place.”
Regulating the ranks of government itself is extremely libertarian, and very much in the American conservative tradition.
Two questions: Is 50% enough to actually create the effect desired? It seemed to me that Prof. Reynolds was simply encouraging a kind of (political) class warfare (and not unprovoked) rather than suggesting the tongue in cheek benefits very seriously.
And wouldn’t it simply result in a more brazen form of the undesired behavior as it’s become legitimized (“What’s your problem? I’m paying higher taxes on this loathsome income of mine!”). If you really want to discourage this kind of stuff you should eliminate the benefit to lobbying by reducing the environment where it can be effective like Robert suggests above me here. If we could eliminate the high from narcotics people would stop selling and buying them. Making sure that the City Council gets it’s contact high as well does nothing to discourage the behavior.
I think Ben missed the part about the 50% tax applies to the difference between the govt salary you left, and the sweetheart deal you’re going to.
A PFC who musters-out for a “burger flipping job” would have no worries.
You can’t fix a society where its only wrong if you get caught. A society where a sense of right and wrong has been lost. A society where large numbers who are capable of working live off the public purse with no sense of shame. Even worse is friends and relatives tolerate if not approve of such behavior. A society where handing back change to a clerk who made a mistake in your favor is greeted with shock because honesty is so rare.
There are certainly ways around this problem (excluding the military from the tax, only applying it to people above a certain pay grade, etc), but I can’t see any that look ideologically consistent. Then again, libertarians and conservatives proposing theft by government doesn’t look that consistent in the first place.
I think that the easy answer is to limit it to those with some sort of decision making authority. Thus, for example, it would be limited to, say, O-5 or O-6 and above in the military, and maybe GS-15 on up plus political appointees, on the civilian side.
Ben
The Department of Defence and its members,from the Secretary on down, are part of the Government of the United States. However, I think a close examination of the regs will show that the Army of the United States, the United States Navy and the United States Air Force are separate, and not government.
Cheers
Back in the 1980s, there was a notorious case where an Air Force general overruled the recommendations of his staff and ordered the inclusion of a particularily expensive piece of equipment on the B-1B bomber. He then retired and went to work (at a megabucks salary) for the supplier of that particular piece of equipment. The problem was that the equipment didn’t work and it cost billions to fix what he did. After that, laws were written stating that military members in contracting positions were prohibited from working for a defense contractor for two years.
As it is, the bureaucracy is a revolving door to megasalary corporate positions dealing with the things they did as bureaucrats. Set the same standard for them as for the military – make them wait two years before taking that civilian job. Do it for the same reasons as the military – to avoid the conflict of interest.
‘lanched.
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