There is now nothing odd about former politicians making vast amounts of money. How did this happen?by Tom Streithorst / July 9, 2013 / Leave a comment
Less than five years after bailing out the investment banks and only six months after leaving the US Treasury Department, Tim Geithner is earning hundreds of thousands of dollars giving speeches to business groups.
Three speeches have already earned him about $400,000, twice his base pay as Treasury secretary. This is not illegal, nor is it uncommon. In Washington it is called “punching your ticket”: a few years as a relatively low paid public servant, and then, upon leaving government, a well-paid sinecure at one of the firms you used to regulate.
In the two years between service in Clinton’s West Wing and getting elected to the House of Representatives, Rahm Emanuel made $18m as an investment banker. Bill Clinton has earned more than $100m himself in the 12 years since he left office, speaking at conferences. Gerald Ford made his fortune serving on corporate boards. Who would have guessed that among all of their other talents, Tim and Bill would be such good speakers, Jerry would so capably understand corporate governance and Rahm (without any training or background in finance) would be such a brilliant investment banker.
It didn’t use to be this way. A New York publisher offered General George Marshall, after he retired from his long and exemplary career in government, $1m for his memoirs—that would be $10m in today’s money. The General refused, saying that it would be wrong to profit from service intended for the public good. That behavior was noble 50 years ago. Today, it is unfathomable. One cannot imagine Winston Churchill, Charles De Gaulle or Franklin Delano Roosevelt selling their good name for mere lucre, yet today, it is hard to think of a politician who wouldn’t.
Jane Jacobs wrote in Systems of Survival that governing and trading require very different moralities. She argues that merchants must shun force, since no one wants to do business with someone who might pull a gun. Rulers, on the other hand, must shun trading. Again, this makes sense, since no population would vote for a prime minister who would sell them out to the highest bidder. Jacobs deduced two complementary moral systems, one for commerce, the other for those whom she termed “guardians.”
Jacobs believed that society works best…