Regulating the Revolving Door of Regulators: Legal vs. Ethical Issues

Journal article

Elise S. Brezis
Economies, vol. 12(1), MDPI, 2023 Dec

DOI: 10.3390/economies12010005

Published article

Cite

APA Click to copy
Brezis, E. S. (2023). Regulating the Revolving Door of Regulators: Legal vs. Ethical Issues. Economies, 12(1). https://doi.org/10.3390/economies12010005

Chicago/Turabian Click to copy
Brezis, Elise S. “Regulating the Revolving Door of Regulators: Legal vs. Ethical Issues.” Economies 12, no. 1 (December 2023).

MLA Click to copy
Brezis, Elise S. “Regulating the Revolving Door of Regulators: Legal vs. Ethical Issues.” Economies, vol. 12, no. 1, MDPI, Dec. 2023, doi:10.3390/economies12010005.

BibTeX Click to copy

@article{elise2023a,
  title = {Regulating the Revolving Door of Regulators: Legal vs. Ethical Issues},
  year = {2023},
  month = dec,
  issue = {1},
  journal = {Economies},
  publisher = {MDPI},
  volume = {12},
  doi = {10.3390/economies12010005},
  author = {Brezis, Elise S.},
  howpublished = {Online},
  month_numeric = {12}
}

Abstract

This paper analyzes the effects of the revolving door, concentrating not only on the dynamics between regulators and firms but also on whether regulating the revolving door is optimal from the point of view of society.

The study explores the trade-off between two interconnected aspects related to the revolving door: the ‘lack of competence’ and ‘greed’ of regulators. On the one hand, the revolving door facilitates the recruitment of highly qualified regulators by the government, drawn by the prospect of lucrative future compensation packages.

On the other hand, it allows regulators to succumb to greed, enabling them to receive revenues after their term in office. This paper emphasizes that this propensity toward greed can manifest through two distinct channels: ‘regulatory capture’, which is illegal, and ‘abuse of power’, which, while legal, is unethical.

This paper highlights that distinguishing whether the behavior of the regulator is either unlawful or unethical is of utmost importance for analyzing the optimal policy concerning regulators. On one end, the capture models advocate for regulated oversight of the revolving door to prevent corruption. On the other end, models of abuse of power, characterized by regulators generating ‘bureaucratic capital’, contribute to the acceptance of the revolving door practice.

Keywords: bureaucratic capital, compensation package, corruption, ethics, legal system, revolving door, social norms