Susan Walsh/AP Photo
Antonio Weiss, left, counselor to Treasury Secretary Jacob J. Lew, testifies on Capitol Hill in Washington, April 13, 2016, before the House Natural Resources Committee.
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
It’s time for corporate influence to make a comeback—at least, according to Matt Yglesias. Proffering advice to the Democratic Party in Bloomberg Opinion and his own Substack, Yglesias recently called for more executive branch positions to be filled by tech and finance executives, in explicit rebuke to the Biden administration’s increased independence from the business world as compared to previous Democratic administrations. But rather than express what he intended, Yglesias’s recent output demonstrates, unusually vividly, why those pushing for wealthy business types to reclaim Washington have nothing in the bank to justify it.
Yglesias frames one piece around a misunderstanding of the 2014 nomination of Wall Streeter Antonio Weiss to be undersecretary of the Treasury for domestic finance. Weiss eventually withdrew after a lengthy holdup by progressive senators, including Elizabeth Warren. (He ended up taking a counselor position within Treasury that didn’t require Senate confirmation and had a similar portfolio.)
“Weiss, a liberal Democrat in good standing as far as anyone could tell, was deemed unacceptable for the role simply because he was a successful investment banker before coming under consideration for a government job,” Yglesias claims. But contemporaneous reporting (including Yglesias’s own writing) shows that isn’t true.
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As Politico wrote at the time, progressives feared that “Weiss did not have enough regulatory experience,” while even Yglesias noted other important issues, including Weiss’s leading role in helping U.S. companies avoid paying taxes and Weiss’s expected $21 million “parting payment” from his bank employer.
Simon Johnson, the former chief economist of the IMF, noted at the time that Weiss’s career was focused on mergers and acquisitions, not bond markets. “The treasury job requires knowledge of sovereign credit, experience with the practicalities of public debt sustainability, and an understanding of the intricacies of our national budget,” Johnson stated. “From the public record and otherwise available information, Mr. Weiss has no substantial knowledge or expertise on any of these issues.”
Weiss was an affable and bright Democratic donor who wanted his first job in public service to be at an incredibly high level. Warren and others simply pointed out that not all financiers are necessarily qualified for the top domestic gig at the Treasury Department. Yglesias is still angry about this result.
The federal government employs countless talented civil servants with subject matter expertise, regulatory experience, and an understanding of how government operates.
Yglesias’s insistence that pushback to Weiss stemmed from an opposition to anyone who has worked in the private sector ignores the many officials with private-sector careers whom the left has rallied around. Progressives have supported SEC Commissioner Gary Gensler (a former Wall Streeter), Assistant Attorney General for Antitrust Jonathan Kanter (a former partner at two BigLaw firms), and Rohit Chopra, the director of the CFPB (a former employee of consulting firm McKinsey & Co.). The left has even applauded Transportation Secretary Pete Buttigieg (another former employee of McKinsey & Co.) in recent months after he hired dedicated consumer advocate and trustbuster Jen Howard and reversed course in spectacular fashion. Ron Klain was a venture capitalist before becoming Biden’s chief of staff and Airbnb’s legal counsel afterward; his record in office in between made him suitable for a high-level policy position.
It also ignores the actual reality of the Biden administration, among whose Cabinet members you can find Obama’s Federal Reserve chair, Obama’s Supreme Court nominee, Obama’s chief of staff, and Obama’s agriculture secretary (as agriculture secretary). You can also find a foreign-policy team that largely came from a bespoke corporate lobbying firm. I’ll leave it to the reader to explore whether that team is delivering good results for the American people.
Yglesias argues that “by over-indexing on academics and NGO types,” Biden fixated on corporate conflicts of interest while ignoring other potential conflicts. For example, he intimates that Biden’s student debt cancellation efforts were a result of hiring out of the academy. This misunderstands student debt relief, because the universities were already paid when the debt was issued; what is done with the debt after doesn’t change that. In addition, none of the Biden administration’s leaders came from university administration in the first place. You have to go 22 people deep into the line of succession to even get to someone who’s ever been a full-time academic in the last two decades: Council of Economic Advisers chair Jared Bernstein, who is nobody’s idea of a college president pandering for donations.
In fact, one has to go back to Obama NEC Director Larry Summers to find an honest-to-god university administrator in the White House, someone we at the Revolving Door Project have been extremely critical of for his other conflicts of interest. The truth is that most of Biden’s top people are career politicians or bureaucrats. Biden’s student debt policies were the result of decades of exhausting, frustrating activism, not a power play within the upper classes.
WE OPPOSE THE PROMOTION OF UNQUALIFIED corporate candidates above (1) civil servants and (2) those working in public-interest groups who’ve spent a lifetime focused on the issues relevant to the positions for which they’re nominated. Not only are public servants better suited to managing the public interest (as Yglesias himself has written), they also rarely have multimillion-dollar ethical hang-ups like Weiss. Vaulting someone from private industry over more experienced public servants without conflicts of interest isn’t giving fair treatment to those in private industry, it’s preferential treatment. And we think that actual experience in government, and what people did with their time, matters.
The federal government employs countless talented civil servants with subject matter expertise, regulatory experience, and an understanding of how government operates. For instance, one of the Biden administration’s most successful appointees, NLRB General Counsel Jennifer Abruzzo, worked her way up in the agency over the course of two decades. Since her appointment, the NLRB has become such an aggressive advocate for workers’ rights that Amazon, SpaceX, and Starbucks have been trying to remove her from atop the agency and get the structure of the agency ruled unconstitutional.
Notably, the current presidential race exemplifies the split between civil service and private enterprise: One party has nominated a career prosecutor and public school teacher, while the other has nominated a real estate developer-turned-media charlatan and a venture capitalist. Perhaps Matt can enlighten us as to which experience he feels is better preparation for government service.
Yglesias is also concerned that jamming the revolving door “skews the personnel pool toward grim ideologues and away from normal people” with broadly liberal views. But in what universe are finance and tech executives “normal people”?
The financial sector employs around 2 percent of the U.S. population, while as of February, the five “Big Tech” firms employ 0.6 percent of the population (and may employ less given recent large scale layoffs). In 2022, the broader app economy employed 1.7 percent of U.S. non-farm employees, according to the centrist Progressive Policy Institute.
We think that actual experience in government, and what people did with their time, matters.
Given these numbers, the overwhelming majority of Americans do not work in either of these fields, much less as its executives and CEOs. And both industries, especially at the elite level, have famously cloistered and self-obsessive cultures. Look at Wall Street’s fatal 100-hour workweeks, or Silicon Valley’s AI-as-God ideology of long-termist effective altruism. If Yglesias, who once described disgraced crypto con artist Sam Bankman-Fried as “for real” because he “was raised by a leading consequentialist moral theorist,” wants a Harris administration to reflect the views of “normal” Americans, then he should counsel Harris to hire retail cashiers, food preparation workers, and home health aides. That is, unless Yglesias isn’t pursuing normalcy, but an ideological framework he agrees with and believes can be found most commonly in these industries.
Yglesias only has two affirmative arguments for why corporate elites actually make good appointees: He claims they can be “a transmission belt for practical knowledge” in crises like the post-COVID shipping snarls and the Silicon Valley Bank collapse, and that their ranks “tend to employ a large share of the country’s smartest and hardest-working people.”
The first point is easily dismissed: You never know in advance where a crisis is going to come from, so you can’t hire in advance for that hands-on experience. Public servants are just as capable as business figures of making phone calls and gathering information, or even having expertise that comes from experience. They might also have a necessary new perspective: Yglesias intimates in both pieces that Biden only curbed high gas prices by brokering deals with the industry to pump more oil, but his best tool to manage the pump was deploying the Strategic Petroleum Reserve. That idea came from “NGO type” Skanda Amarnath.
Moreover, the only way to take advantage of a businessperson’s hands-on experience is to put them in charge of regulating a related industry. That’s exactly the situation Yglesias claimed to oppose in Bloomberg, when he wrote, “Of course, nobody wants a revolving-door administration staffed by officials regulating industries they used to work in.” Of course, his follow-up Substack post one week later was literally titled “Bring back the revolving door!” which shows how seriously to take that disavowal.
Yglesias’s second point is absurd, and deeply revealing. The whole idea that we can measure and identify “the country’s smartest and hardest-working people” in a coherent, reproducible way is ridiculous. And by what objective standard do finance and tech boardroom denizens fit this description?
These are the people who brought us NFTs and the metaverse, crypto ETFs and AI “art.” They’re people like Adam Neumann and Martin Shkreli. Subprime mortgages were once cutting-edge! These industries sometimes produce useful products, and they sometimes (especially recently) make expensive, pointless boondoggles. When it comes to governance, the tolerance for risk is not the same. The failure of Juicero might wipe out some investment. A similar failure by regulators can cause widespread misery.
What we know is that tech and finance executives tend to have more money, prestige, and connections. None of that makes someone a better regulator or government official. In many cases, it can be even more challenging to get a job in a federal agency or with a public-interest group than with a prestigious private-sector employer. And even those with good business sense often lack a suitable temperament for a public-service job. One need only look at Bill Ackman to see that personal advancement in finance doesn’t translate to common sense or critical thinking skills. If it did, would he be falling for conspiracy theories that Joe Biden never actually dropped out, or that there were really two shooters who attempted to assassinate Donald Trump?
Everyone needs capital, and everyone needs information technology. The firms that provide them are privatized critical infrastructure, or colloquially, too big to fail. That means they need to be overseen skeptically, stringently, and in the public’s interest.
If four years of ruminating has left Yglesias with such weak arguments for kicking out the populists and bringing back business as usual, then the rhetorical war for a public-serving administration is already won. But rhetoric isn’t really the battleground where Silicon Valley and Wall Street will try to make their plays for Harris administration jobs; that happens in back rooms. Harris should repudiate large donors and their attempted influence-purchasing. And the public should see this attempt to sanitize corruption as the silly sham it is.
