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It’s a major conflict of interest to go from writing the regulations to being paid by the companies you regulated. What if it becomes understood that you get a
by mikeash 8y ago
It’s a major conflict of interest to go from writing the regulations to being paid by the companies you regulated. What if it becomes understood that you get a high salary for an easy job if and only if you write regulations that are favorable to the companies?
How do you stop this without limiting fundamental human freedoms? I have no idea. But that doesn’t mean this situation is good or that we should stop pointing out the problems. The lack of a solution does not imply the absence of a problem.
- yellowstuff 8y agoMatt Levine looked into these competing theories and came up with more evidence for the view that harsh regulators get hired by banks more than lax regulators: https://www.bloomberg.com/view/articles/2014-06-26/strict-regulation-makes-the-revolving-door-spin-faster#footnote-2 https://www.bloomberg.com/view/articles/2014-06-26/strict-re...
- jderick 8y agoWas he then hired by a bank? :)
- graedus 8y agoOther way round - he's Goldman alum
- PurpleBoxDragon 8y agoWhat's the possibility that harsh regulators are hired more to create a kind of regulatory capture. The harsher the regulation, the more you need the expert to know how to navigate it, and the less likely competition will be able to navigate the regulation.
- abalone 8y agoLevine’s stuff is great but this one conflates strictness with complexity. You could have simple regulation which is harsh on banks.
- nostrademons 8y agoIncumbents usually prefer harsh regulations to lax regulations because only the incumbents have the resources to comply with them. This is doubly so if you need to hire the author of the regulator to make sense out of the regulations. Business is a parimutuel system: something that harms your company can actually be beneficial if it utterly demolishes your competitors. Many regulations are of this form. They are expensive and difficult to comply with for big companies, but they are impossible to comply with for small companies, and thus keep competing startups out of the market entirely.
- stale2002 8y agoThis is a reasonable argument, but I sincerely doubt that people who worry about the "revolving door", are worried about regulations being too harsh. Usually, people make the opposite argurment. That laws won't be harsh enough. And the evidence proved that wrong.
- CryptoPunk 8y agoPlenty of libertarian arguments couple concern about the revolving door between government and the private sector with concern about harsh regulations. There wouldn't be 16,000 registered lobbyists in DC and its environs if there weren't hundreds of thousands of federal regulations managing the economy.
- DougN7 8y agoConflict of interest happens if you are, or know you will be, compensated by those you are regulating. If you get hired after the regulations are in place I don’t see the problem.