Revolving door

The revolving door is the movement of personnel between regulatory agencies and the industries they regulate, creating a feedback channel through which regulatory expertise, institutional memory, and political access flow from the public to the private sector and back. The phenomenon is central to regulatory capture because it converts the regulator's human capital into an asset that the regulated industry can acquire, and it converts the industry's perspective into an asset that the regulator internalizes. The revolving door is not a conspiracy; it is a labor market equilibrium. The skills that make a regulator effective — technical expertise, institutional knowledge, relationship networks — are precisely the skills that the industry values most, and the industry can pay more for them than the public sector can.

The revolving door operates as a mechanism within the institutional feedback loop: the prospect of future industry employment changes the regulator's current incentives, even when the regulator has no conscious intention of seeking such employment. The effect is measurable in regulatory outputs that systematically favor the industry, in delayed enforcement actions, and in regulatory standards that converge with industry preferences. The door does not need to revolve frequently to have this effect; the mere possibility is sufficient to alter the incentive structure.

The revolving door is not a corruption problem. It is a market design problem, and it cannot be solved by ethics rules that ignore the market.