The Incentive Loop
Pick a field where a problem has lasted for decades and find the institution paid to solve it. Read how it is paid. In medicine, defense, politics and food the answer repeats. The institution is paid for volume or for the position it holds. It is overseen by parties it pays or that pay it. It is staffed from the firms it deals with. The rules it asks for tend to be granted. Each link is in the institutions' own filings, GAO and inspector-general audits, or peer-reviewed studies.
1 Income follows volume
The institution is paid for the amount of activity it carries out or for the position it holds: care delivered, contracts awarded, acres planted, fees collected. Solving the problem lowers the amount.
- MED-9.6 MedicineIn two randomized experiments, more generous insurance increased the use of care without measurably improving average physical health.
- AGR-3.1 FoodERS reports $27.9 billion in direct government payments to farm operations in 2025 and forecasts $47.4 billion for 2026, the largest nominal total in its series, which begins in 1933.
- POL-3.1 PoliticsMeta's annual reports state that substantially all of its revenue comes from selling advertising, and its 2017 report lists decreased user engagement and time spent as a risk to that revenue.
2 The payer funds the referee
The body that checks the institution is funded by, staffed by, or seated with the parties it checks. The records name the percentages, the directors and the committees.
- MED-6.1 MedicineIndustry user fees paid for 77 percent of FDA's prescription drug review program in fiscal year 2024.
- AGR-1.5 FoodOf the 451 GRAS notices FDA received from 1997 to 2012, 22.4 percent were decided by an employee of the manufacturer, 13.3 percent by an employee of a consulting firm the manufacturer selected, and 64.3 percent by an expert panel selected by the manufacturer…
- AGR-4.7 FoodA peer-reviewed analysis found that 19 of the 20 members of the 2020 advisory committee (95 percent) had at least one tie to an industry actor, counting 720 relationship-year instances, most of them research funding and board seats.
- POL-8.5 PoliticsGAO reported that JPMorgan Chase was both a borrower and a vendor in the Fed's emergency programs while its chief executive served as a Class A director of the Federal Reserve Bank of New York.
- POL-8.17 PoliticsGreg Becker, chief executive of Silicon Valley Bank, served as a Class A director of the Federal Reserve Bank of San Francisco from 1 January 2019 while the Fed supervised the bank.
3 The door turns
People move between the agency and the firms it deals with. The law limits what they may do for a year or two, and the agencies that count the moves report that their own counts are unreliable.
- DEF-4.3 DefenseIn 2008 the Government Accountability Office reported that 52 major defense contractors employed 2,435 former Defense Department senior and acquisition officials in 2006, and that seven of the firms employed 1,581 of them.
- DEF-4.4 DefenseIn 2021 GAO reported that 14 major contractors employed 1,718 former Defense Department senior and acquisition officials in 2019.
- DEF-4.5 DefenseThe DoD Inspector General concluded in 2014 that the Department's database of section 847 ethics opinions was "of marginal value" as a management control system.
- MED-6.3 MedicineFDA's vaccine review office has been directed since 2022 by a former Merck vaccine research executive, and in 2026 a National Security Council official left government to run the soybean checkoff.
4 The rules are bought and the return is measured
Firms spend on lobbying and on research, and peer-reviewed studies put numbers on what came back. The records also show what the money did afterward.
- POL-1.2 PoliticsThe 2004 repatriation provision taxed repatriated foreign dividends at an effective rate of 5.25 percent, and corporations repatriated $312 billion under it.
- POL-1.9 PoliticsAlexander, Mazza and Scholz report that firms lobbying for the 2004 repatriation provision had a return in excess of $220 for every $1 spent on lobbying.
- POL-1.6 PoliticsFirms that repatriated under the 2004 provision did not increase domestic investment, employment or research and development, including the firms that lobbied for it.
- POL-1.8 PoliticsA Democratic majority-staff report of the Senate Permanent Subcommittee on Investigations found that the top 15 repatriating corporations cut a net 20,931 U.S. jobs from 2004 to 2007 and raised stock buybacks 16 percent from 2004 to 2005 and 38 percent from…
5 The problem persists and the loop renews
Spending rises, the outcome does not improve, and the next budget, fee schedule or acquisition begins from the larger base. The records show this in regional spending, in private-equity ownership of hospitals, and in the accelerated-approval pathway.
- MED-9.7 MedicineMedicare patients in the highest-spending regions received about 60 percent more care and had no better survival, quality of care, access or satisfaction.
- MED-9.8 MedicineAfter private equity acquisition, hospital-acquired conditions rose at acquired hospitals and patient mortality rose at acquired nursing homes.
- MED-6.2 MedicineUnder accelerated approval, FDA licenses drugs before their clinical benefit is shown, and confirmation has taken years while patients and public insurers paid for the drugs.
The money, in the largest documented flows
These are the largest single flows in the register, one per payer and recipient. They differ in kind and period, so they do not add up, and a flow shows that money moved and not what it was spent on. The full map and table list all 122.
What the records do not show
The loop does not require a plan, and the records do not show one. They show a structure that pays for a result and people who respond to it. Two findings cut against a simple reading.
- POL-1.14 Politics Baumgartner and coauthors studied 98 issues, found that 60 percent of lobbying campaigns failed to change policy, and report that resources explain less than 5 percent of the difference between successful and unsuccessful efforts.
- DEF-4.10 Defense A 2024 study by the Institute for Defense Analyses, commissioned by the DoD Standards of Conduct Office, found no measurable effect of the post-government employment restrictions on recruitment and retention.
Most lobbying campaigns fail, and a 2024 study commissioned by the Pentagon found no measurable effect of the post-employment restrictions on recruiting. They show where the loop is weaker than its popular version.
When someone challenges it
The loop runs again when someone challenges it. The Response lists the acts: records withheld or destroyed, messengers sanctioned, sources discredited in public. An objection to an item on this page can arrive in that form.