James Fallows writes that while former budget director Peter Orszag may be the epitome of an honest man, personally, the impression cast by his move from the President's cabinet to the Citigroup advisory group is both damaging and shocking:

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.

When we notice similar patterns in other countries -- for instance, how many offspring and in-laws of senior Chinese Communist officials have become very, very rich -- we are quick to draw conclusions about structural injustices. Americans may not "notice" Orszag-like migrations, in the sense of devoting big news coverage to them. But these stories pile up in the background to create a broad American sense that politics is rigged, and opportunity too. Why do we wince a little bit when we now hear "Change you can believe in?" This is an illustration.

Certain protections are in place in these situations.  Ethics rules prevent Orszag from having direct contact with federal officials, for example.  Still, the impression cast is damaging, not only to Obama's image -- you can imagine how many Republican 2012 hopefuls are bookmarking Orszag as budget director YouTube clips right now -- but to the faith of the electorate in their political institutions at large.  If you want to understand the increasing fickleness of independent voters shifting from one party to the other, the incestuous relationship between the stateroom and the boardroom might be a good place to start. Orszag's move may not be technically unethical, is by no means unusual, but is another step in a pattern that is dissolving confidence in the justice in or integrity of our institutions.

Solutions?  Via The Economist, there may be no better option but to just muddle through:

The monstrous offspring of entangled markets and states can be defeated only by the most thorough possible separation. But public self-protection through market-state divorce can work only if libertarians are right that unfettered markets are not by nature unstable, that they do not lead to opressive concentrations of power, that we would do better without a central bank, and so on. Most of us don't believe that. Until more of us do, we're not going far in that direction. And maybe that's just as well. Maybe it's true that markets hum along smoothly only with relatively active government intervention and it's also true that relatively active government intervention is eventually inevitably co-opted, exacerbating rather than mitigating capitalism's injustices.



Tags: Peter Orzag, Citigroup, revolving door, cabinet (all tags)


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