The problem of Citigroup Orszag (Atlantic)

Daniel Indiviglio - Daniel Indiviglio is an editor at the Atlantic, where he wrote on the credit markets regulation, policy monetary & tax, taxes, banking, trade, markets and technology. Before joining the Atlantic, he wrote to Forbes. He has also worked as an investment banker and a consultant. Daniel Indiviglio is a publisher of blogger and partner for the Atlantic Business Channel, where he provides insight, analysis and advice on the intersection of business, finance, economy and politics. Among its specific interests of writing: markets, regulators, policy monetary & tax, tax, banks, markets and credit technology. Before joining the Atlantic, he wrote to Forbes. Front of journalism, Daniel has spent several years as an investment banker and consultant for financial services companies. Prior to this, he gets graduated from Cornell where he triple lags in economics, philosophy and physics. He resides in Washington, D.C. metro area. December 2010 15, 4: 48 PM ET

In case you missed the news last week, former Office of management and Director Peter Orszag budget took a gig of millions of dollars in Citigroup. Some critics of the trajectory of the European Union between Washington and Wall Street, including James Fallows the Atlantic own condemned the move. Of course, the decision of the Orszag is regrettable public policy perspective: Citi was one of the largest bailout recipients and Orszag can have input on the aspects of his rescue during his tenure in the White House. But how to avoid this problem?

On one level, it is hard Orszag to blame. After all, he was peanuts OMB head with his big salary of Citi, and now he can buy this brilliant car sport, it is always sought and a picturesque apartment in Manhattan. Of course, it would have been nice to take a job in a company which was not a recipient laid siege to the rescue of Government during his time working for the President. And since the revolving door remains active, conviction public only obviously isn't slow it much.

Modelling behavioural Economist Karl Smith has a suggestion. He says that we must pay more competitive officials:

I hope that economically oriented folks are not suggesting that we use the moral suasion to bribery of Government control. People respond to incentives. If you do not want to sell you you have to pay more.

Indeed, if Orszag had a 7 million per year at the head of the OMB salary, it can still be used. Or it may still have left. It is possible that the money was not much to do with it. He may have found too stressful job and monotonous work. Or perhaps that he could not hold his boss. For these or other reasons, a salary of multimillion-dollar Government may not have kept him around.

The big move of the Orszag complaint isn't that seek greener pastures, but that particular grazing where he eventually stunk of conflict of interest. Better compensation not is not the clearest solution to this problem - a better would simply limit the employees of the Government to walk this path.

These prohibitions may be written into contracts of employment of these workers. This would be similar to how some companies prohibit their employees to take jobs with their customers for a certain period of time after their departure from the company. If Orszag had such deduction, was may not work at Citi, but instead of it might have settled for a job at a fund coverage or firm. Still, he could make more money, but avoids the unfortunate conflict.

The other problem with pay more competitive Government employees is simply the multi-million dollar concept of dozens of officials from high wage level. This would certainly help our misadventures of tax expenditures. And do we really want to attract money hungry people who may not care about public service away from the private sector to work for the Government?

We have sort of those in the field of public service to be the type of persons of concern than their wages. Questions of encouragement, but he matches just money - it is based on a broader measure of utility. It's a complex equation that should take a number of variables into account, and usefulness of each individual is different. In particular, the utility a job allows a person better cutting for the public service should depends on step entirely on how much money it offers: the impact in the world, they feel that they are of should also their importance. If Orszag was only out of money, while he was in the area of bad to begin with, and we should be grateful that he has left.

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