LSE Research: Washington’s Revolving Door
9 July 2010
Former political staff turned lobbyists in the US claim their high salaries reflect their abilities, but critics complain they are merely exploiting political connections. Mirko Draca explains who’s winning the argument…
Lobbying is big business in US politics, and getting bigger. Many commentators have voiced suspicions about the ties between lobbying firms, private sector businesses, and politics. They allege that a “revolving door,” which sees employees moving from public office to private companies and back again, potentially jeopardises the public interest.
Often highly paid, these lobbyists claim their salaries simply reflect their high ability, but critics complain those exiting the revolving door are attractive to lobbying firms because they can exploit their political connections.
In this film Mirko Draca explains how he and his colleagues, Christian Fons-Rosen and Jordi Blanes i Vidal, measured the extent to which former political staff who become lobbyists benefit from their ties to government.
This involves separating the issue of ability from the issue of political connections. Fortunately, the political system contains conditions for testing this: periodic elections mean that political contacts are vulnerable. By looking at what happens to a lobbyist’s earnings when their former employer leaves political office, Draca and his colleagues have been able to measure the value of being politically well connected.
The party of the crony capitalists
Friday 24th March 2017
SOLOMON HUGHES takes a close look at the revolving door between Westminster, lobbyists and big businesses
DAVID CAMERON predicted the scandal of George Osborne’s jobs back in 2010. A few months before becoming prime minister, Cameron gave a speech about “the next big scandal waiting to happen.”
Cameron said this forthcoming scandal was about “ex-ministers and ex-advisers for hire, helping big business find the right way to get its way.”
Cameron said this “corporate lobbying” was as bad as shameful MP’s expenses. Cameron called the jobs-for-the-boys scandal a feature of “crony capitalism,” part of “the far-too-cosy relationship between politics, government, business and money” that has “tainted our politics for too long.”
Osborne and a host of special advisers clearly read Cameron’s speech and took it as more of a recommendation than a warning.
Cameron said: “We must be the party that sorts all this out.” Cameron’s pals must have thought: “We must be the people that sort ourselves out.”
Osborne’s BlackRock and Evening Standard jobs show that he thinks the “relationship between politics, government, business and money” should be more than “cosy.” It should be incestuous. He heard Cameron say this “tainted” politics and probably thought: “Taint me baby, yeah.”
Osborne has a £650,000 a year job with Wall Street and City financial firm BlackRock, dwarfing his £75,000 MP’s salary.
Clearly the financiers will come ahead of his constituents. Money counts more than votes.
BlackRock, a huge investment company that was strengthened by the bank bailouts, which profits from our low tax, low regulation economy, was arguably rewarding Osborne for the way he backed the bailouts and neoliberal economics when chancellor. Of course, any future chancellor will regulate the City with an eye on that salary.
The BlackRock job was the bigger scandal but Osborne brought the issue to the fore with his new job editing the Evening Standard, owned by the Russian oligarch Evgeny Lebedev.
The supposed “checks and balances” of democracy have all collapsed in Osborne’s greed. Ex-chancellors become servants of financial firms. Newspapers are directly run by the ruling party. MPs are employed by oligarchs. The media is run by Wall Street’s servants. But Osborne is far from the only “ex-minister and ex-adviser for hire.”
Here are just a few examples: Sue Beeby was Osborne’s special adviser until July 2016.
Before that, she spent three years as Health Secretary Jeremy Hunt’s special adviser (or spad). In September 2016, she became an “associate director” of Lexington, a lobbying firm.
Lexington represents big banking and health interests. The giant vampire squid of banking Goldman Sachs is a client. Lexington also represents a host of big drug firms, including Pfizer.
This December, financial regulators fined Pfizer a record £84.2 million for an unjustified “drug price hike to the NHS.”
Lexington says it can help companies who are “seeking to input into policy or engage with government decision makers” or “navigate complex regulatory challenges.”
So having a former adviser to ministers on board is good for them. But it is, in Cameron’s words, “crony capitalism,” and so bad for us.
Thea Rogers was an Osborne spad before becoming his chief of staff until July 2016.
This January, she became chief spin doctor of Deliveroo — the food delivery company which pretends its lowpaid staff are “self employed.”
Complaints against unfairness by “gig economy” firms like Deliveroo are so strong that even Theresa May is promising to consider regulation. So now is a key time for Deliveroo to go full on crony capitalist.
The company has appointed a lobbying firm called Teneo to help it make its case.
Teneo is a US firm with a British outpost, which lobbies for Deliveroo and many other firms. The company says it can help its corporate clients to beat back “the threat of harsh regulation.”
Teneo was founded by a man called Doug Band, who previously ran former US president Bill Clinton’s charitable foundation.
Leaked emails from 2011 show Clinton’s daughter Chelsea visited Britain and found Teneo was trying to get political influence for its clients with British MPs in underhand ways that were causing her “serious concerns” and would “horrify” her father.
Cameron’s former “director of politics and communications” was a man called Craig Oliver. After Cameron bowed out of British politics following the EU referendum debacle, Oliver found himself a job with Teneo in its “government relations” department, a service that can “map and engage stakeholders at all levels of government.”
Nick Seddon was Cameron’s spad on health from 2013 to July 2016. In November 2016, Seddon became an executive vice-president of Optum, a division of US health giant UnitedHealth Group.
Seddon was seen as one of the most pro-privatisation members of the Cameron camp.
He argued the NHS should be replaced by an insurance system, with “healthcare largely funded by government” but “organised outside of government, by insurance companies and other organisations”.
Enormous private health companies are chasing huge NHS privatisation contracts. UnitedHealth Group is just the kind of firm who should not get NHS work because the company is repeatedly fined in its native US for misbehaviour.
Last July, UnitedHeallth Group/Optum paid an $18m fine in the US to settle charges they deliberately put non-terminal patients into their hospices, because the firm could make more money from US government health schemes by this nasty plan.
Elderly, but non-terminal patients with conditions like Alzheimer’s or dementia were put in hospices in order to harvest higher rates of government finance. This is one of a chain of fines for the firm. In 2014 California’s insurance commissioner fined UnitedHealth a massive $173m for “unfair business practices” relating to health insurance.
It should be kept as far away from the NHS as possible. But it has bagged a British insider to help their business.
Alex Morton was David Cameron’s housing spad. Last April, Morton joined Field Consulting. This lobbying firm represents luxury property developers that want to “influence a political decision.”
The company represents Berkeley Homes — the property developer which made its small number of social tenants enter its otherwise luxury Tower Bridge high rise through separate “poor doors.”
The list goes on and on. Osborne is at the top of a pyramid of paid-for politicians, of the capitalist cronies, of the ex-ministers and ex-advisers for hire. Below him are layer after layer of insiders taking the money.