The Tools of Regulatory Capture

Obama to Press Centrist Agenda in His Address

—NYTimes Headline

You may actually wade into the miasma of this article, but the last thing the article is about is a centrist things-to-do-list. The article is really about who decides what being a centrist is. For the content of the SOTU speech is irrelevant. The Times, sensing which way the wind blows the median voter, will label any speech O gives as centrist at this point. Whatever tower of bureaucratic Babel the speechwriters of O erect and dance around, the Times will send out the centrist PR. Likewise, consider this gem:

Obama Sends Pro-Business Signal With Adviser Choice

—NYTimes

Oh, what’s this story of O about? The Times will tell you:

SCHENECTADY, N.Y. — President Obama, sending another strong signal that he intends to make the White House more business-friendly, named a high-profile corporate executive on Friday as his chief outside economic adviser, continuing his efforts to show more focus on job creation and reclaim the political center.

Here in the birthplace of General Electric, Mr. Obama introduced the new appointee, Jeffrey R. Immelt, the company’s chairman and chief executive officer, who will serve as chairman of his outside panel of economic advisers.

So by “pro-business” did you mean “creating greater power for GE’s preferred regulatory regime”? Or maybe by “pro-business” you meant “creating opportunities for GE to obtain subsidies on high speed rail and wind farm construction”. Or maybe you meant Immelt will join forces with O to erect as many barriers to entry as GE can against its incipient rivals. Again, if you have to tell us that O sent a strong signal, then he didn’t send a signal. That’s why you’re trying to convince us what the signal is.

Immelt is really the reverse Orzag. We should expect more of this crony capitalism flowing both ways. (“Crapitalism” as someone put it.)

On that note, I found this delicious morsel buried in the newest Economist:

In the most corrupt countries the rulers simply help themselves to public money. In mature democracies power is abused in more subtle ways. In Japan, for example, retiring bureaucrats often take lucrative jobs at firms they used to regulate, a practice known as amakudari (literally “descent from heaven”). The Kyodo news agency reported last year that all 43 past and present heads of six non-profit organisations funded by government-run lottery revenues secured their jobs this way.

In America, too, ex-politicians often walk into cushy directorships when they retire. This may be because they are talented, driven individuals. But a study by Amy Hillman of Arizona State University finds that American firms in heavily regulated industries such as telecoms, drugs or gambling hire more ex-politicians as directors than firms in lightly regulated ones.

Things that used to make Mancur Olson go hmmmmmmm.