Bryan Caplan  

Jackals in Retirement

Is the United States a Police ... Pay for Performance...
Democracy is also a form of religion.  It is the worship of jackals by jackasses. - Mencken
Almost everyone likes to make fun of politicians.  But Don Boudreaux has an amazingly clear argument confirming that politicians deserve our derision.  Consider, Don asks, what Mencken's jackals do when they retire:

Why do virtually none of these politicians, when they leave office, found their own non-political firms - firms that specialize neither in granting clients access to incumbent politicians nor in projects that depend upon getting subsidies or other favors from those same politicians?

This question occurred to me a few days ago upon hearing that former president Bill Clinton... His career now is to make lots of money as a sort of high-brow social healer - to emit platitudes, attend state funerals, and (pardon my switch of imagery) be a show-pony for politically correct causes.  The post-Oval Office careers of every other recent president - to the extent that they haven't simply retired to the golf course or the study - have been largely the same...

But surely if, say, President Jimmy Carter was as smart and as full of correct foresight as he would have had to be in order for sensible people to take seriously his late-1970s pronouncements on the future of America's energy economy, he could have made a personal fortune, starting at 12:01pm on 20 January 1981, launching and running an energy company (or, more precisely, a synthetic-energy company).  Yet he didn't even try...

And what of Pres. Obama?  Even if he wins a second term in the White House, he'll be only 55 years old when he leaves office.  Will he found and run a health-insurance company?  How about a 'green' energy firm?  Or will he, perhaps, found and run a firm specializing in offering middle- and low-income Americans better and more fully disclosed access to consumer credit?  Will he create a successful automobile firm?

Don nobly proposes a bet:

I'll bet (seriously) a good deal of money that he'll do none of these things.  He'll not even try.  And for good reason: not only does he know nothing about these matters, he knows nothing about finding investors willing to stake their own funds, or about finding skilled workers and managers willing to cooperate together in such upstart enterprises, so that such enterprises become realities with real prospects for success.

He knows no more about the economic matters upon which he pronounces than does a soap-opera actor portraying a physician know about cardiology or obstetrics.

Of course, retired presidents make big money.  But they do so as entertainers, not sages:

[Obama's] comparative advantage is as a talking show-pony, to trot out onto the public stage to mouth platitudes, to declaim the splendid ideas of his party, to decry the squalid ideas of the opposing party, and, after he is relieved of the burdens of office, to make millions so that people destitute of critical faculties can get cheap thrills - for which they'll pay big bucks - by sitting for a few minutes in the same room as a former president of the executive branch of the United States government.

I've said it before, and I'll say it again: I can imagine being a liberal or a conservative.  But I can't imagine being a Democrat or a Republican.  With apologies to Groucho Marx, I don't care to belong to any club that would have a talking show-pony as a member - much less a leader.

COMMENTS (15 to date)
Henry writes:

What is wrong with utilising your comparative advantage? After all, the very definition of comparative advantage says nothing about your absolute skills in an area. Perhaps Obama would make a very good executive, but being a professional speaker would be even more lucrative and/or a nicer lifestyle for him.

But in any case, "working out what's best for the macroeconomy" is a distinct skill-set from "working out what customers" want.

This is not so say that Obama is necessarily good at any of that, but that Boudreaux's argument doesn't prove otherwise.

rapscallion writes:

But this isn't an argument that the show-pony/politician deserves derision; it's an argument that voters themselves deserve derision.

Pandaemoni writes:

So his point is that politicians in general do not know as much about the businesses and industries they regulate as the business people do.

Welcome to Obvioustown! Population: Everyone who has ever served in any government, ever.

Is the fix for this "problem" to abandon all government and hope that (despite most people's incredulousness on this point), that anarcho-capitalism will work. Even then, most consumers know almost nothing about the technical details of the products they buy, and yet their decisions "regulate" the anarcho-capitalist world.

So perhaps there is no solution at all to the the problem (if it is one), except perhaps to establish a very robust technocracy, where experts pass laws related to their areas of expertise. I don't know how such a technocracy would be structured, but in principle it addresses the issue.

Grant Gould writes:

Of course this is only for democracies. In autocracies the major occupation of retired autocrats is to get sudden crippling illnesses that prevent them from facing trial (cf, Pinochet, Mubarak, Milosevic).

I suggest that the health-care-expert politicians retiring in the democratic world put their obviously considerable skill toward curing this strange disease that seems to afflict all of their less democratic counterparts.

I think it's worse than that: even *if* a politician can be successful at business, he/she has no clue as a politician. There are plenty of examples of ex-businessmen that go into politics and do not act any different than other career politicians once in power. Actually they might even be worse, because managers have a tendency to micromanage.

DaveVanV writes:

Don't politicians go into soothsaying/lobbying because those are the most discrete ways for firms to pay them off?

Hasdrubal writes:

The first line of Boudreaux's post clarifies what he's talking about:

Here’s a quick question for anyone who takes seriously politicians’ pronouncements about what particular industries are “vital” or are “of the future” or are “crucial to meeting consumers’ needs”:

He's not so much talking about whether or not politicians should be better business managers than non-politicians. The issue is that politicians talk and throw money at and make legislation supporting certain sectors of the economy because they're so vital that we can't afford to leave them to themselves.

The issue is that the same politicians completely forget about these supposedly vital sectors as soon as they leave office. They use their political power to direct our resources to these sectors, but they don't follow up and put their own money where their mouths were once they leave politics. If it were so vital or obviously profitable, why aren't they getting a piece of it themselves?

That's the hypocrisy he's exposing.

Pandaemoni writes:

@ Hasrdrubal:

That an industry is important or profitable does mean that a politician has the skills needed to move into it. Given their training, it would seem odd is they did. Lawyers, like Obama, might practice law, but he's unlikely to want to invest the time and money needed to become an engineer, or to get his MBA.

If I say the military is important, but do not join the military, that's not really hypocrisy. A thing can be important in my view, and yet there can be compelling reasons for me not to take part in it.

There are, of course politicians (though perhaps not Presidents) who take other careers after they leave office. Unsurprisingly they tend to gravitate towards careers they are well positioned for. Many former politicians (especially at the state and local level) and regulators do wind up in law firms in non-political positions. The Governator seems likely to continue making movies certainly.

For most though, their most valuable asset happens to be their extent political connections and their knowledge of government. I don't see the hypocrisy in their seeking the highest paying jobs they can get, rather than retooling and moving into an area where those assets will be wasted.

I can see why we might want to eliminate that sort of rent-seeking, but I don't see it as hypocritical.

mark writes:

The simple answer to Don's questions "Why don't they ..." is, as all Masonomics devotees should be able to spot immediately, is that most politicians are status seekers. Having served as President, the specific ones cited no longer need pursue wealth as a path to high status. Further, having achieved high status, they are not willing to put it at risk by embracing a project that might lead to a decline in status due to its failure.

Matt writes:

specialization; comparative advantage.

wd40 writes:

Yes, presidents would, in general, make poor businessmen, and, by a similar logic, businessmen would make poor presidents. And by the same token, most, but not all, economists would not know how to run a business, but, for sure, almost no businessman (or woman) knows macroeconomics or how to steer the macroeconomy.

Arthur_500 writes:

I have often altered a quote from Marx, "Politics is the opiate of the morons."

Many people get involved in politics so their miserable lives can shake hands with exaulted leaders. They feel important.

But many (most?) of these 'leaders' are more capable of playing the political game than they are at real leadership. so what happens when they retire? It is not unlike a retired basketball player.

Many of our athletes are really only good at one thing. Once their career is over they can't get paid for dribbling or tackling. Instead they become ad-men pitching one thing or another.

I can see President Obama pitching diapers. "Look at how much more of my policies this brand holds than that of any other President. You should buy Waste-Away brand diapers. Available in election booths nationwide."

Davis writes:

Why are VP's different? Al Gore has a career in venture capital and silicon valley boards. Dick Cheney left politics, became a CEO, and came back.

for that matter a great many governor/cabinet secretary types end up as college presidents, foundation heads, etc. the economy isn't all about entrepreneurs, it also requires people who can administrate large, bureaucratic private-sector organizations.

Scott Sumner writes:

George McGovern started a hotel business in 1988. It failed in 1990. He blamed excessive government regulation. Ironically, he was a liberal Democrat before getting into business.

Michael writes:

What exactly has W been up to since retiring? He's also young enough to do something with himself. I had read an article containing a rumor that he had purchased tens of thousands of acres of agricultural land in Paraguay (yes, Paraguay). The spin was that he's 'fleeing', but there's a powerful industrial agricultural revolution going on in So America right now. Are there any other rumors as to what he's up to?

Similarly, as Davis points out, Cheney has bounced between business and politics, but particularly in the Energy business, they're probably mostly exploiting his connections and personal relationships to government officials, domestic and foreign. What has he been doing lately, other than writing his memoirs?

Gore is a different story though. Technically, he's become a venture capitalist, but I think it would be more accurate to put him in the PR/communications/entertainment business, including CurrentTV and with promoting environmental causes, which his VC work has centered on. He has managed to capture a weird synergy between political activism and business.

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