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IPFS News Link • Legislation

Sen. Rand Paul Legislation Could Uncover Regulatory Corruption

• https://ronpaulinstitute.org, by Adam Dick

As a result, the businesses that do the capturing can obtain increased profits through the government bureaucracy taking actions such as providing them with favorable treatment and imposing barriers to competitors.

One mechanism aiding regulatory capture is the "revolving door." Regulators become aware that if they act in their jobs in ways that benefit certain businesses, they will later be rewarded in the regulated industry. When they leave their government jobs they can walk through the revolving door into the "for profit" world. And the door can keep revolving with workers going back and forth between government and business jobs, ascending to exercising more power and receiving more pay over time.

An even more flagrant instance of regulatory capture can occur when the capturing businesses pay regulators while the regulators are still in government employment and still empowered to regulate these businesses and competitors. This practice is illegal in many forms. But diligent people will seek means to work around such restrictions.

Sen. Rand Paul (R-KY) may help expose such concurrent payment to regulators via his Royalty Transparency Act (S 3664) that was approved unanimously by the Senate Homeland Security Committee on Wednesday. The legislation seeks to make public more information about royalties paid to executive branch officers and employees.

Christian Britschgi noted in an informative Reason article on Thursday that among the royalties the legislation could help uncover are those paid to US government drug regulators by the companies whose drugs they are regulating. Britschgi quotes Paul pointing out that the presence of these payments by drug companies indicates the importance of his bill:

"This is just basic 101 of conflict of interest. We're letting the billions of dollars that change hands over at [National Institutes of Health (NIH)] and between NIH and Big Pharma to be completely unscrutinized," says Sen. Rand Paul (R–Ky.), the author of the legislation. "This is probably the first reform bill that actually has a chance to correct some of the things that are rotten in the system."