It’s obvious that we don’t have the right incentive structure with the SEC, either. If you can make 20x more using the skills you’d need to investigate companies trading instead, the talent pool is reduced to those motivated by power/ideology. I’ve always thought financial regulators should have some kind of incentive structure that closes this gap but it’s not clear how to do that without skewing the enforcement priorities.
If Yellen were mostly interested in money, she has already chaired the Federal Reserve. 700K is a pittance compared to the millions she would earn in the private sector. Yet people begrudge her the 220K she does earn. Treasury Secretary and Chair of the Fed would be a multi million dollar a year jobs in the private sector.
700k might be a small sum (I don't think it is, but ok) for her, but she still accepted it.
Her taking up that offer is no surprise.
The type of people who would overlook crimes by others because the company that the criminals worked for once paid them to give a speech & attend a mixer is probably not the type that would work at the SEC for any meaningful length of time. The pay disparity is just too great.
Malicious people work for the SEC just long enough to understand the inner workings and/or collect critical intel that they can leverage into private sector jobs.
If Yellen lacked scruples, she would have gone into the private sector after leaving the Fed. But instead of collection a probably 8-figure paycheck, she opted to continue to work in government. Which indicates to me, that she takes pride in doing her job well.
1. She did go into the private sector. She got paid for speeches. That's not a public sector job.
2. It's not mutually exclusive to enjoy public sector work while also lacking scruples. The list of corrupt politicians is endless.
There are many people in this thread and others across the internet and media who are talking about the conflict of interest. However, there's little showing what potentially bad things she is doing.
Yellen has lots of experience with the regulatory and finance institutions and their inner workings. For sharing her perspectives on how things work, what pressures they face, and how best to engage with them, she should be paid quite well. That's what these Citadel talks look like, at least until someone can connect the dots better than they have been connected.
For example, what nefarious plot is there? What regulator capture is she engaging in? Somewhere else in the thread someone mentioned car import issues with Reagan; where is the equivalent with Yellen?
Until there is a salient point to be made about her conflicts of interest, doesn't it make sense to give her the benefit of the doubt?
Corporate America has taught us that even the potential appearance of bribes is a bad thing for the random employee.
We can’t accept a $30 gift card to Amazon without potentially having to talk to HR.
What you’re suggesting is that someone like Yellen is 50,000 times less interesting to consider as a possible point of corruption.
We're talking about that amount of money for just a few days of "work".
> Yet people begrudge her the 220K she does earn. Treasury Secretary and Chair of the Fed would be a multi million dollar a year jobs in the private sector.
That doesn't make any sense. These jobs don't exist in the private sector.
In any case, Treasury Secretary is not a lifetime gig. At most 8 years, probably less. And then Yellen will go back to the private sector, to cash in even more. These are ongoing, transactional relationships. Think of these speaking fees as a down payment.
Hmm?
Yellen was in public positions from 1977-1980, 1994-1999, and 2004-2018. She was a professor at Harvard from 1971-1976 and at UC Berkeley from 1980-1994. She's certainly made a lot of money from these sorts of speaking fees and there's criticism to be had, but she's spent far more time in academic or public positions than she has "in the private sector".
I don't think she's the same case as, e.g., someone who was employed by an investment bank for a long time, takes a federal position for a year or two, then goes back to working in banking.
True. Yellen clearly prefers public sector work.
However, I think there's a false dichotomy being presented. There's no inherent conflict between working in the public sector and being corrupt. The list of corrupt politicians is endless. Why not do what you love and cash in? Best of both worlds, from the corrupt politician's perspective.
If you have complexity you will have corruption. The more complexity, the more corruption. Some complexity is necessary, but most is not.
So instead of simplifying the system, you have to hire people that understand it to police it. Unfortunately the competent financial police are paid a small fraction of what they'd be worth in private industry, so now you have a mix of altruistic, incompetent, and opportunistic people. The latter pretending to be the former.
Heck, just any active codebase. Complexity is the default and is very very hard to fight.
You can a) reduce the incentives for abuse, b) reduce the complexity needed to hide abuses, c) both.
Since government is basically power, the incentives to abuse that power always exist. So look for complex government systems and you will inevitable find abuse (if you can navigate the system's complexity).
We need decentralized economics and finance.