The financial impact of these cozy relationships was studied this year by two political economists at the Swiss Economic Institute, who concluded after a rigorous examination of the Pentagon's revolving door across six administrations that investors widely expected that hiring senior defense officials would produce higher profits.
They found that American defense companies merely had to announce they had hired a top former Pentagon official to see their stock prices jump, a circumstance they observed in dozens of instances. It was particularly evident in cases where the officials joined corporate boards or became top company executives during Democratic administrations, when strong government-corporate ties are generally scarce.
"It is hard to think of other reasons for higher expected returns than conflicts of interest," said the scholars, Simon Luechinger and Christoph Moser.
After the London Sunday Times published an article last month revealing that retired British general officers were helping defense firms obtain contracts and boost revenues, British defense minister Philip Hammond told reporters that he was contemplating banning the retirees from the ministry building and rewriting any contracts found to have been tainted by such connections.
No similar outrage has erupted on this side of the Atlantic.
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