The man known as the top legal enforcer at the Securities and Exchange Commission a year ago saw an opportunity. He could go into the private sector. Specifically, he could go into the securities field on Wall Street. After all, he knows how the government regulation system works. That makes him valuable.
How valuable? Five million dollars a year.
Who could resist that kind of job change? Not Robert Khuzami.
He quit as the director of the Enforcement Division at the Securities and Exchange Commission six months ago. He joined a corporate law firm.
This is called the revolving door. People move from a regulated industry to government employment. Others move from government to private industry.
In academic economics circles, this is the process known as regulatory capture. The regulated industry over time provides the experts who work for the government as the regulators. Over time, regulation becomes beneficial to the existing firms in the industry. Regulation keeps out new competition.
This has been going on since approximately 1888 in the United States. Half a century ago, a Left-wing historian named Gabriel Kolko wrote a book on the history of federal regulation: The Triumph of Conservatism. From the beginning in 1888, with the creation of the Interstate Commerce Commission, this has been going on. Nothing has changed.
