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Newsletter | Revolving Door Project Newsletter | March 1, 2023

What Makes a Good Executive Branch Official?

Congressional OversightConsumer ProtectionExecutive BranchFintechHealth

Hint: it’s not credulity.

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

If we had to make one overarching argument about what makes a good executive branch official, whether at a massive cabinet-level department, a medium-sized agency, or a tiny commission, it is this: a habit of skepticism about corporate claims. 

Employing basic skepticism of corporate claims will pretty much always serve you well. What’s the worst that can happen? You ask them to prove it, and they do? Wonderful. But maybe we shouldn’t just take corporations’ words for it when they say things like we’re committed to net-zero or we don’t employ children or we have no choice but to raise prices. With a superabundance of proof that corporations do not act ethically when 1) they are not forced to and 2) it doesn’t make them their maximum profit, regulators should expect this, no shocked surprise necessary, and design and enforce rules accordingly. 

These are some of the contexts in which we’d like to pass a heaping plateful of skepticism over to the regulators, and hope they eat every last bite. 

Forcing Safety on Railroad Companies

The Norfolk Southern train that derailed almost a month ago had a wheel that was overheating, which the crew was alerted to by the onboard safety system. But Norfolk Southern has a policy that crews can (read: are expected to) ignore those warnings. This is something rail workers explicitly raised concerns about during the peak of their contract negotiations last year; railroads frequently ignore safety concerns, practices, and even laws that put workers and the communities they travel through in danger. This type of blatant disregard for basic safety measures is the epitome of an industry in dire need of tight regulation. For years, the railroads have disinvested in their infrastructure and equipment, preferring to push it to the breaking point. East Palestine shows what happens when they push past it. 

Workers have complained for years to the Surface Transportation Board that the railroads retaliate against anyone who raises safety concerns, purposefully chilling would-be whistleblowers. Moving forward, more needs to be done to ensure that proper safety precautions are being followed, including additional rulemaking from the Department of Transportation that requires better braking technology and more strict oversight of trains with hazardous cargo.

– Dylan Gyauch-Lewis 

Approaching Technofixes And Shiny New Toys With Caution

The tech industry, perhaps more than any other, is famous for making grandiose promises about products ranging from underwhelming to actively harmful. Prominent examples include Facebook, Instagram, and other social media sites promising connection while actually harming consumers’ mental health, as well as Tesla’s self-driving cars contributing to predictedavoidable deaths. Though purporting to automate menial tasks, connect people, and make our lives easier and more enjoyable — with slogans like “Bringing the World Closer Together” (Facebook) to “The Future of Driving” (Tesla) — tech companies’ products often create new issues that must be addressed in turn, raising questions about whether the benefits of new tools justify new harms. 

Given this reality, lawmakers and regulators need to have a healthy suspicion of tech companies, particularly those employing artificial intelligence (AI) and related automation technology that has been shown time and time again to embed the biases of a racist, sexist, classist social reality into automated processes. They must develop an awareness of the technicalities of various products, rather than treating them as miracle solutions. Otherwise, they risk a repeat of the famous 2018 Mark Zuckerberg congressional hearings, during which it became clear many lawmakers had no idea how the tech giant’s revenue stream and basic features worked. 

Crypto is an ongoing cautionary tale. Rather than delivering on promises of a “decentralized future that benefits everyone,” cryptocurrencies and other blockchain-based products have merely offered a techno-utopian sheen to the enrichment of financial speculators, fraudsters, and the already-rich—at the expense of a purposefully misinformed public. Yet, in the midst of the crypto house of cards crashing down, attention has shifted to the tech industry’s next big thing: generative artificial intelligence. 

The immediate popularity of ChatGPT, an AI chatbot developed by OpenAI, has led to both a media hype cycle and an arms race between tech giants to conquer this new space. However, like crypto, the market presence of generative AI products have outpaced their regulation. With the unfilled promises and harmful effects of crypto fresh in our collective conscience, lawmakers and regulators would do well not to fall for the AI hype. Especially as the techno-optimist failures of the yesteryear’s grift, like OpenAI CEO Sam Altman, return to prominence today touting a shiny new “revolutionary innovation,” like old wine in a new bottle.

– Emma Marsano & Julian Scoffield

Puncturing Airlines’ Smugness

In 2016, Congress directed the Secretary of Transportation to investigate and “if appropriate” ban airlines charging families extra to sit with children under 13. Two successive Secretaries decided not to do so. Despite a law passed by Congress explicitly calling for this regulation, nothing happened for more than six years. Then, President Biden, as part of his crackdown on junk fees, called for airlines to stop treating children like “piece[s] of baggage.” This type of exploitative fee is exactly the type of thing that a good executive branch protects people from.

However, Secretary Buttigieg could have moved to ban this practice two years ago and simply didn’t. Similarly, airlines have been let off the hook for plundering billions of dollars from consumers by not providing legally required cash refunds. The only consequence for the airlines’ total collapse in the summer of 2022 was a stern letter. Airlines feel like the threat of any regulation isn’t worth fretting about, as shown by Southwest missing its deadline to refund customers for their holiday debacle while giving executives pay raises. This type of total disinterest in obeying the law comes when existing regulation is not vigorously enforced.

– Dylan Gyauch-Lewis

A Year Later, and the Same Risks with Baby Formula

Months before the worst of baby formula shortages commenced in the spring of 2022, the Food and Drug Ådministration had already failed to act promptly on a whistleblower report of contamination in an Abbott Labs baby formula plant. But surely once that plant was closed—a plant that manufactured nearly 20 percent of the nation’s baby formula—the FDA should have immediately known they would have to use executive powers to avoid a significant supply chain disruption. Right? Yet it took months after the Abbott factory shutdown before the Defense Production Act was invoked to ramp up domestic supply production and import formula from other countries. What was the administration doing all that time?

Allegedly, some challenges come from information sharing across the FDA. But the real issue remains in the concentration within the baby formula industry. Only 4 companies control nearly 95 percent of the supply of baby formula, so the shutdown of just one plant can have massive impacts on the supply chain. Combined with significant import restrictions on baby formula into the US, these structural conditions resulted in a catastrophic disruption, with some families unable to access baby formula for months. The administration’s response to the baby formula crisis was undoubtedly a failure — but it seems they haven’t learned from it either. 

Fielding criticism, the White House has maintained that they stepped in as fast as possible, despite acknowledgements at the FDA that regulators were too slow to act. The first suspicions at the FDA about a baby formula shortage began almost 2 years prior, at the beginning of the pandemic, yet and they sat idle with the information until some families were struggling to find adequate formula supplies for months. What’s more, despite recognizing the deeper root issues that led to the widespread shortages in the first place, the administration still hasn’t advocated for deconcentration in the industry. In the face of more recent recalls and risks of contamination, American families remain as vulnerable to a potential baby formula shortage as they were a year ago. When will the administration actually step in and intervene in this particularly dangerous instance of corporate concentration?

– Ananya Kalahasti

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

As Biden Takes On Airline Junk Fees, It’s Worth Asking Why Buttigieg Didn’t

Supreme Court Must Overturn Fifth Circuit’s Radically Pro-Corporate Attack On The CFPB

Public Investment Is At A Crossroads As Republicans in Congress Hold The Debt Ceiling Hostage

Buttigieg gets hit from right, left in East Palestine crisis

Consumer Advocates Say Supreme Court Must Rebuke ‘Harebrained’ Attack on CFPB

Sam Bankman-Fried’s donations may have been tens of millions more than we thought

The Supreme Court Will Review the Consumer Protection Agency’s Funding Structure

Biden Taps Former Mastercard CEO and Wall Street Insider Ajay Banga to Lead World Bank

Hanging in the Balance: Millions at Risk if the Supreme Court Denies Student Debt Cancellation

Supreme Court Takes Up Case That Could Kill Consumer Finance Protection Agency

‘Biden and Yellen Should Be Ashamed’: US Picks Ex-Wall Street Executive to Lead World Bank

Ajay Banga’s World Bank appointment shows that financial CEOs aren’t toxic anymore

Private Equity’s Senator Gets Big Payout

Biden nominates former Mastercard CEO Ajay Banga to head World Bank

Activists Blast Biden’s Pick of a Wall Street Insider for World Bank President

Congressional OversightConsumer ProtectionExecutive BranchFintechHealth

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More articles by Dylan Gyauch-Lewis More articles by Emma Marsano More articles by Ananya Kalahasti More articles by Julian Scoffield

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