It's a Feature, Not a Bug: Revolving Doors and Capture in the Oil Industry

Great post by Steven Horwitz of "Coordination Problem."

"I'm always happy to use my favorite phrase ("It's a feature, not a bug") to describe the problems of corporate-state entanglements, and this AP report, which details the incestuous relationship between off-shore gas and oil companies and the regulatory agencies responsible for overseeing them, provides an opportunity. The revolving door here spins at least as fast as in the banking industry and with the same predictable problematic results, evidenced by the Deepwater Horizon disaster. Like the financial crisis, rent-seeking and capture explain a lot.

Despite the hopes of those who think this can be solved, as the AP report suggests, by better ethics laws or hiring "better" regulators, the revolving door that leads to capture is not a "bug" but a feature - the private sector benefits from being regulated and will always push to be at the table and influence the process.

The problem is not regulatory or ethical, but institutional. If you want to change the pattern of outcomes, change the rules. The only possible way to end the corporate control over the state is to reduce the state's sphere of influence down to as little as possible and ideally nothing. As long as there's the dead animal of the state (really: the citizenry) to feed on, the vultures of the private sector will keep showing up to get their share."