The Revolving Door Isn't the Real Scandal — The Judgment That Created It Is

Every election cycle, some enterprising politician or pundit revives the outrage machine aimed at the revolving door. A former senator cashes in as a lobbyist. A top regulator walks from the agency into a seven-figure job at the very industry she was supposed to oversee. The headlines scream about corruption, and the progressive reformers trot out their standard cure: longer cooling-off periods, lifetime lobbying bans, more ethics bureaucracy. It sounds righteous. It is also a classic case of treating the symptom while leaving the disease untouched. The revolving door is not a failure of character or a hole in the ethics rules. It is an economic and constitutional inevitability that follows from one simple fact: the federal government now controls so much of the economy that the knowledge of how to navigate that control is extraordinarily valuable. The only way to stop the door from spinning is to shrink the building it is attached to.

Let us be honest about what makes a former regulator worth a million-dollar salary. It is not his deep understanding of widget manufacturing or his brilliant ideas for improving consumer products. It is his intimate knowledge of the maze, the discretionary waivers, the unwritten deadlines, the back-channel conversations that determine who gets a permit and who gets denied. The late Thomas Sowell taught us to look at incentives, not just intentions. When government writes thousands of new regulations each year, when it doles out trillions in subsidies, when it tasks agencies with interpreting vague statutes into binding rules, it creates a class of people who hold the keys. The private sector will always pay handsomely for those keys. That is not corruption in the moral sense. It is rational behavior within a distorted system. Think of it this way: if the government owned the only highway and charged arbitrary tolls, the person who knew the toll-collector's schedule would be worth a fortune. The problem is not that he is selling that knowledge. The problem is that the highway should never have been owned by the government in the first place.

The Founders understood this dynamic with remarkable clarity. James Madison warned in Federalist No. 10 that an overreaching government would create factions that feed on its power. The revolving door is the purest example of that dynamic at work. The Constitution gave us a government of enumerated powers, a short list of specific authorities that the federal government could exercise. There was no general license to regulate the economy, no blank check to create agencies that write rules with the force of law, no power to pick winners and losers with tax credits and subsidies. The design was intentional: make government small enough that its inside knowledge would be nearly worthless. That design has been abandoned, and the revolving door is one of the consequences.

The standard progressive response is to pile more ethics rules on top of the existing ones. Longer waiting periods, stricter disclosure, maybe even a constitutional amendment to ban former officials from lobbying entirely. But here is where Henry Hazlitt's one lesson becomes essential: we see the immediate benefit of the new rule, but we do not see the longer-term effects that no one intended. A lifetime lobbying ban sounds tough until you realize it creates a permanent class of unelected bureaucrats who hold enormous power over industry and face zero competition from knowledgeable outsiders. Who will write the rules that govern the ban? The same political class that benefits from the current system. Who will enforce them? The same agencies that already run the maze. The result is what Friedrich Hayek called the knowledge problem: no central planner, no matter how well-intentioned, can possibly gather the dispersed information needed to design a better system. More regulation of lobbying just means more power for the insiders who already know how to play the game.

The real world evidence against more rules

Consider what happened after the 2007 Honest Leadership and Open Government Act. It extended the cooling-off period for senators from one year to two. Did the revolving door stop? No. Former members simply waited twenty-four months instead of twelve, or they took consulting roles that did not technically count as lobbying. The incentives did not change, only the calendar. As Milton Friedman might have said, you cannot repeal the laws of economics with a statute. The same pattern repeats with every new ethics reform. A ban on direct lobbying becomes a boom in strategic advising. A restriction on gifts becomes a loophole for campaign contributions. The more rules you write, the more valuable becomes the expertise of the people who know how to navigate them. The revolving door does not slow down. It speeds up, and the toll goes up with it.

The real solution is radical and original. The Founders gave us a government of limited, enumerated powers. Article I, Section 8 lists what Congress may do, and it is a short list. There is no general authority to regulate the economy, no blank check to create agencies that write rules with the force of law, no power to pick winners and losers with tax credits and subsidies. The Constitution was designed to make government small enough that its inside knowledge would be nearly worthless. If we returned to that original design, if Congress wrote clear, stable laws instead of delegating broad rulemaking power to alphabet agencies, if the federal government stopped trying to manage every industry from pharmaceuticals to energy to education, the entire incentive structure would collapse. A former EPA regulator would have nothing to sell because the permit process would be a simple, transparent form that any citizen could file in an afternoon. A former Senate staffer would have no inside track because tax policy would be simple, stable, and predictable, not a thousand-page bill rewritten every year.

This is not a pipe dream. It is the constitutional baseline that Antonin Scalia defended his entire career: the text means what it says, and it says the federal government has limited powers. The living Constitution approach that allows Washington to expand into every corner of American life is what created the revolving door in the first place. Originalism is the cure, not more rules. The judgment of the Founders was sound. The judgment of the progressive reformers has been disastrous.

Anticipating the standard objection

The usual response to this argument goes something like this: so you are saying we should just let former regulators cash in? That is a surrender to corruption. No. I am saying that the corruption is the discretionary power, not the post-government paycheck. Ban the second without shrinking the first, and you will just drive the activity underground or into more creative forms. The honest solution is to make the door to government smaller. Reduce the number of permits, simplify the tax code, sunset old regulations, and force agencies to operate under strict rules that leave no room for favoritism. Then the insider knowledge is worth about as much as the phone book, which is to say, nothing.

What this means for the ordinary American

When you see yet another story about a former senator becoming a multimillion-dollar lobbyist, do not just shake your fist at him. He is acting rationally within the incentives that the Leviathan state created. The real scandal is the size and scope of the government that makes his knowledge worth millions. The revolving door is not a bug of capitalism. It is a feature of crony capitalism, the unholy union of big government and big business that Hayek and later George Gilder warned about. The more government controls, the more it pays to be connected. The less government controls, the more it pays to be competent. That is the choice we face.

We do not need more ethics rules. We need a government that keeps its promises to the Constitution, small, limited, and too weak to make anyone's inside knowledge worth corrupting. Shrink the state, and the revolving door stops spinning on its own. That is not a pipe dream. That is the Founders' plan, and it still works. The judgment required is not about crafting clever new regulations. It is about returning to the original constitutional framework that made such regulations unnecessary in the first place. That is the only judgment that will actually solve the problem.