Some mainstream political journalists are very upset. Their happy world has been turned upside down. I'm a bit behind on this story, but it seems that Peter Orszag, the former head of Obama's Office of Management and Budget (OMB), has joined Citigroup. This quote is from Will Wilkinson at the Democracy In America blog—
LAST July Peter Orszag stepped down from his post as the head of the Office of Management and Budget. As budget director, Mr Orzsag helped shape the first stimulus package and, more visibly, the health-care reform legislation. Apparently, the market values this sort of experience. Last week, Mr Orszag accepted a senior position at the investment-banking arm of Citigroup, an institution that exists in its present form thanks to massive infusions of taxpayer cash. Exactly how much Citigroup pay Mr Orszag is not public knowledge, but swapping tweed for sharkskin should leave him sitting pretty. Bankers who spoke to the New York Times ballparked his yearly salary at $2-3m.
James Fallows rightly observes that not only is the revolving door between Washington and Wall Street unseemly, its frictionless gliding action suggests corruption is built right into the interface between our government and our great profit-seeking institutions...
I love that word! — unseemly. Wilkinson believes the revolving door suggests that corruption is "built right into" the Wall Street/Washington nexus. Similarly, the tendency for apples to fall down to the ground rather than float up into the air suggests that gravity is a powerful force on the Planet Earth. In both cases, perhaps we should wait for additional experiments to verify what everyday experience suggests. We certainly wouldn't want to jump to any conclusions.
Wilkinson quotes The Atlantic editor James Fallows, who apparently has only now gotten his first clue about how the world works. In anyone's life, that first clue is a big one and a very bitter pill to swallow, so Fallows is (almost) unrestrained in criticizing this betrayal—
Shocking, in the structural rather than personal corruption that it illustrates. I believe Orszag (whom I do not know at all) to be a faultlessly honest man, by the letter of the law. I am sorry for his judgment in taking this job,* but I am implying nothing whatsoever "unethical" in a technical sense.
But in the grander scheme, his move illustrates something that is just wrong. The idea that someone would help plan, advocate, and carry out an economic policy that played such a crucial role in the survival of a financial institution -- and then, less than two years after his Administration took office, would take a job that (a) exemplifies the growing disparities the Administration says it's trying to correct and (b) unavoidably will call on knowledge and contacts Orszag developed while in recent public service — this says something bad about what is taken for granted in American public life.
One wonders what Fallows has been doing during the many years of free exchange of personnel between the Treasury, Goldman Sachs, Citigroup and the Federal Reserve. Did he just not notice this revolving door? Surely he knows who Bob Rubin is.
Note that Fallows distinguishes between "structural" corruption and "personal" corruption. This is a good point which I've made from time to time myself. Orszag has simply moved from one position within The Money World to another. (And see part II). For those walking the corridors of money and power, there need not be any personal motivation, although there is always some. Such moves are as natural as breathing for those running the Empire. At an insightful level of abstraction, there is little actual difference between the OMB and Citigroup.
It is highly entertaining to watch these liberal political types squirm on the heels of Orszag's move. In addition to Fallows and Wilkinson, both Ezra Klein and James Kwak felt compelled to "explain" it and all the bad stuff it signifies, or perhaps I should say all the bad stuff it suggests.
Orszag's move poses an existential crisis for these people. They want to believe in the political system, and they take it very seriously indeed. They spend a substantial part of their lives commenting on America's political life. They make their living doing so. They are heavily vested in the primacy and righteousness of American politics. But then this Orszag guy turns around and joins Citigroup, making a mockery of everything they want to believe. Ultimately, Orszag mocked the very way they define themselves in the world. No wonder they are upset.
Wilkinson struggles mightily with the meaning of it all.
Mr Fallows hits the nail on the head, but what this structural injustice means, politically and ideologically, remains unclear. In my opinion, the seeming inevitability of Orszag-like migrations points to a potentially fatal tension within the progressive strand of liberal thought. Progressives laudably seek to oppose injustice by deploying government power as a countervailing force against the imagined opressive and exploitative tendencies of market institutions. Yet it seems that time and again market institutions find ways to use the government's regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect.
Though he does not use the term, Wilkinson is referring to rent-seeking (see here and here) whereby private institutions (i.e. the TBTF banks) seek competitive advantage in the political arena. He then goes through a painful discussion (for him) in which he reassesses first principles about the balance of power in our so-called Democracy. Nothing less than the death of liberalism—what progessives espouse—is on the line. Wilkinson has only questions at the end—
So what is to be done about the structural injustice spotlighted by Peter Orszag's passage through the revolving golden door? How exactly do we tweak the unjust structure? If the system is rigged, how exactly do we unrig it? In which direction can we muddle without making matters worse?
Just off the top of my head, the first step to Consciousness is to read DOTE. And send money!
But seriously, how exactly do we tweak the unjust structure? The short answer is: you don't. How exactly do we unrig the system? You don't. In which direction can we muddle without making matters worse? There is no direction to go in. And so on.
Once a person has seen the truth—has gotten that all-important first clue—there are basically two ways to go. If you are a well-known and respected figure like James Fallows or Ezra Klein, once you have fully absorbed the truth and thus painfully acknowledged that your "successful" career is based on a lie, you can continue to do what you're doing, but with a radical change in tone. You can rail about corruption, become marginalized, and ultimately go down in flames. Alternatively, you can follow an entirely different life path which is more personally satisfying, thus leaving our corrupt politics behind.
Of course, there is a third alternative, which is the road most frequently traveled: you can forget that this unseemly thing happened and keep on doing what you're doing.
Mr. Fallows, Mr. Klein, Mr. Kwak, Mr. Wilkinson: the choice is yours.