For all the talk of Wolfowitz in the blogosphere, few have analyzed his romantic relationship with his partner, Shaha Riza. This event will define her reputation for the rest of her life, a'la Monica Lewinsky. But unlike Lewinsky, she was already talented at work and quite accomplished. So the tarnishing of her name seems like a real shame. Should he not have resigned quite early, over romantic "duty" to her? Presumably we are to think she has encouraged him to fight on. Shouldn't he have quit anyway? Shouldn't her (supposed) obligingness have made him quit early all the more?
But he fought long and hard.
Is there any chance they simply split up over this episode? Are there any scenarios under which this has improved their relationship? Would an early quitting have caused them to split up, or suffer several very hard years, due to the feeling of asymmetric sacrifice? How does that compare to the asymmetric sacrifices they must suffer now?
I've thought far more about these issues than all that conflict of interest stuff or whether W. was ever a good World Bank president. Does that make me crazy? Why is no one asking whether Coase Theorem applies within their relationship?
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They broke up, though press reports are unclear if it was during or before the scandal. If before, then perhaps Wolfowitz's pugnaciousness was a particularly subtle form of revenge, though I suspect the fact that Wolfowitz realized that this was his last political position and that he was not a repeat player meant he had no incentive not to maximize his rents from this job once it was plain he could not survive.
There are a couple of ways this could have played out.
1) She wasn't in fact all that 'obliging' from the get-go, and it was in fact her demands that complicated Wolfowitz's accession to the Bank anyway--had she not felt so aggrieved about being asked to leave, there probably never would have been any "guaranteed" raises and promotions, since many people take secondments or leaves of absences from the Bank without any such guarantees. So she upped the ante a long time ago, he took the bait, and they have both suffered damage to their reputations.
2) The speculation is that Riza intends to come back to the Bank now, so it could be argued that in fact she is suffering less than he is--since she has already received some of the guaranteed raises, and it's unlikely the institution will make her give up those raises. So as a bump up in your income stream, I'd say that's pretty good. In the court of public opinion, of course, there are all sorts of other ramifications about how she is perceived, but in hard cash terms I'd say she hasn't suffered.
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