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It would be great if (a) elected officials could hold only cash, bonds, and index funds, specifically bonds and index funds that are open the general public an
by tasty_freeze 7y ago
It would be great if
(a) elected officials could hold only cash, bonds, and index funds, specifically bonds and index funds that are open the general public and have at least $XX assets, to prevent engineering an index fund available only one one or a few people.
(b) pay them better to make up for the loss of gravy. Sure, the pay raise would not be sufficient to make up for the lost income, but it should be high enough that none of them could complain they can't live on the salary. Paying the senate majority leader under $200K / year is not enough, considering they often have living expenses in Washington and their home state. Lower ranking members get paid less. Pay the leader $1M/year and everyone else $500K/year and then prohibit anything but vanilla investments.
- maxcan 7y ago100% agree. I'd be fine with 7 or 8 figure salaries for members of congress, the president, and top executives along with very strict rules on investments: treasuries with a small allocation to broad market, long only ETFs: S&P500, MSCI World, etc.
- Moodles 7y ago7/8 figures seems a bit much no?
- deleted 7y ago[deleted]
- BurningFrog 7y ago535 members of congress, each making $10M/year adds up to about $15/year per American.
- Moodles 7y agoThat seems like a lot to me though. You can make many expensive things look not that expensive if you put it in terms of “per American”. It’s just the there are many things and they all add up. E.g can’t you just pay them 1 million and use the 90% savings to buy X nurses? I don’t have any data to inform my decision on what would be the best number though so I should shut up.
- BurningFrog 7y agoIt's not a lot for any individual American. The reason to oppose it can't be "I can't afford it". It's more "those bastards don't deserve it". And that's not how mature adults should think about things. Compared to the impact the federal government has on all our lives, it's nothing. If it resulted in 1% better governance, it would be a really well spent $15.
- Moodles 7y agoRight, I'm just saying it's not clear to me where the 10 million figure came from? And it seems very high for a government salary. Obviously if it's justified to work then I'm for it.
- BurningFrog 7y agoSomeone said "7/8 figures seems a bit much no?". $10M is 8 figures. I agree it's high :) $1M might be enough.
- chii 7y agoif the fact that paying them more results in a better society, it may be worth it. The absolute amount is irrelevant if the return on this investment is greater. A higher paid politician is also less likely to be corrupt (since the agent causing the corruption will need to beat their high salary, which is risk free). A higher paid politician will not need to worry about blowbacks from policies that are good for society but bad for existing entrenched players. And a higher paid politician may encourage people, even if they were poor initially, to work to become a career politician (and study it, the same way a neurosurgeon or any other professional trade would). High pay almost always equate to high intelligence, and i would hope that an intelligent person is also someone who can run things better.
- lern_too_spel 7y agoThe prime minister of Singapore has a salary of more than 2 million US dollars, and being a competent POTUS is a much more demanding job.
- maxcan 7y agoNot relative to their responsibilities. The US federal government takes in about $3.5T per year and employs about 2m people. Private sector executives routinely get 8 and 9 figure comp for running organizations 1/10th or even 1/100th that size. Also, remember that this is "in exchange" for anyone who assumes office to mostly forgo income from individual investments and I'd add things like book deals and honoraria after office. Someone mentioned Singapore and that's my example case here.
- Thriptic 7y agoExecutives get that kind of salary because their tenure is short, they are under pressure, and they are (at least in theory) held accountable for performance by multiple stakeholders (employees, shareholders, the board, customers, etc). Members of Congress have a sky high re-election rate, have a much less stressful lifestyle, and are generally not held to such an account for their activity. We want to disincentivize choosing politics as a career, not encourage it.
- carbocation 7y agoPerhaps these races would be more competitive if there were a few million more reasons to win.
- frei 7y agoWhy do we want to disincentivize career politics? I feel like raising the incentives will improve the ability of the average politician.
- TylerE 7y agoPeople don't go into politics for the paycheck. This wouldn't change if the salaries went up 10x, or even 100x. Influence is worth far more than cash ever could be.
- bearcobra 7y agoOne of the problems that creates is only certain types of people can afford to go into politics. Improving the pay for staffers might go a long way to reduce some of the revolving door cycles that many people find so distasteful
- TylerE 7y agoI don't see how it helps. The expensive part is GETTING elected, not serving. If you don't have the resources to win, the salary doesn't help you.
- deleted 7y ago[deleted]
- SilasX 7y agoI think it was Steven Landburg that had the idea that politicians and administrators should hold a broad-based index of their country's real estate, on the theory that better policies lead to land within the country being more valuable, and so it aligns incentives.
- zzzzzzzza 7y agoAs a georgist I think this idea is very flawed. (not building housing can increase existing house prices... but is not necessarily a good move)
- SilasX 7y agoWhy? Georists support taxation of land rents, also in the expetation that good governance leads to higher (ground) rents (and thus higher government revenues). Edit: If anything, the Landsburg policy is just a tepid approximation of Georgist finance.
- BurningFrog 7y agoHouse prices and land prices are quite separate things. NIMBY policies increase house value, but decrease land value.
- djannzjkzxn 7y agoI don’t think we have a problem in this country where the interests of landowners are underrepresented.
- SilasX 7y agoThat’s not the problem that that system is solving, and it’s not the typical kind of landownership that causes anti democratic effects; I think you’re just pattern matching there.
- mehrdadn 7y agoHow would you deal with their family, friends, etc.?
- ScoutOrgo 7y agoSame way SEC deals with everyone else.
- mehrdadn 7y agoThen why can't SEC have the authority to deal with congresspeople too, though?
- brianwawok 7y agoBecause obviously the congresspeople don’t want to pass such a law
- mehrdadn 7y agoI mean isn't that a problem with the original proposal too?
- mike_d 7y ago> why can't SEC have the authority to deal with congresspeople too Because congress wrote the law.
- mehrdadn 7y agoBut they somehow wrote the original proposal?
- H8crilA 7y agoLong only is actually a pretty terrible choice if you want a "solid" portfolio with risk hedging. I work in "tech" and I'm substantially net short "tech" as a hedge for potential layoffs, via options. Unfortunately I can't hedge via my employer's stock directly (like most companies my employer very explicitly disallows it, plus I'd be running a high risk of an insider trade accusation; I think it's understandable and acceptable). A better idea might be to force people's allocation way ahead of time, say any change must be pre-announced 6-12 months ahead of time. That's how responsible executives (for example Bill Gates) sell their stock - via long term stock sale programs. Once signed - has to happen, whether good news or bad news.
- garmaine 7y agoYou’re missing the point. These people have (some, limited) control over the economy. Their financial incentives should be restricted to long-term, gradual growth only, so that they attempt to achieve that.
- H8crilA 7y agoI understand, skin in the game. All I'm saying is that maybe it's a little restrictive, and perhaps not even working as intended. It's pretty easy to cheat the system with a long only portfolio, if you're truly controlling the system: cause a deflation -> long treasures will be awesome (TMF just went +100% in the corona-crisis), cause inflation -> gold and maybe also stocks and real estate. There's no single parameter that you can hook a leader to to assure progress. That's what voting is for. It is a very hard, very old, and probably impossible to solve problem: https://www.investopedia.com/terms/a/agencyproblem.asp https://www.investopedia.com/terms/a/agencyproblem.asp Things like this site from OP may work wonders. We need more disclosure and more pesky people prodding at leaders and executives, analyzing their every step. Journalism, serious journalism, even if done by non-professionals. Remember that since Markopolos & Madoff the SEC is giving substantial cash awards to whistleblowers (proportional to the penalty), which is fantastic. And they're paying out money all the time, so if you know of any fraud do yourself and the society some good: https://www.sec.gov/whistleblower https://www.sec.gov/whistleblower
- fg6hr 7y agoTBH, $10M per senator per year is only $1 billion/year - a rounding error for America. And when a senator has F-U money, there is little incentive for him to take dirty money (true sociopaths will take both, of course).
- forrestthewoods 7y ago> pay them better to make up for the loss of gravy You went the wrong way. If anything they should take a vow of poverty. What’s that? Then no one will want to be a Senator? Good.
- kevingadd 7y agoFunctionally impossible. Even if they aren't allowed to own anything, you can't stop people from doing them favors of one sort or another. You'd basically be making it a rule that their reward for their work is getting discreet favors from special interests. It'd be hard to establish a set of rules airtight enough to stop it from happening entirely, companies would find ways around whatever basic regulations are put in place just like they do now.
- forrestthewoods 7y ago> You'd basically be making it a rule that their reward for their work is getting discreet favors from special interests. So you’re saying today’s state of affairs is unavoidable and there’s absolutely nothing we can do. How defeatist!
- kevingadd 7y agoThere are options other than an impossible-to-enforce vow of poverty.
- forrestthewoods 7y agoI’ll be generous and they can keep their current salary. But no additional income streams allowed. And all investments must be held double-blind and only invest in broad index funds. That’d be a good start. An unforceable but public vow of poverty upon swearing in would still be good.
- cortesoft 7y agoThey will just get hired as 'consultants' at large companies after they are out of politics
- tasty_freeze 7y agoThat problem already exists. My half-baked proposal doesn't claim to solve all the hazards. :-)
- siruncledrew 7y agoI think if representatives in the Senate and Congress were focused on a salary payday, they would have chosen another career besides politics. It’s the bennies and perks of being a representative that outweigh making $200k/yr. Plus so many of them already have cushy incomes by time they are in office, being a representative is really the cherry on top the cake.
- paulgb 7y ago> Plus so many of them already have cushy incomes by time they are in office, being a representative is really the cherry on top the cake. Right, but I think the argument behind paying them more is that you shouldn't have to already have a cushy job to become a representative. We complain on here from time to time about how representatives don't understand technology, but it's no surprise when most folks who understand technology would be taking a pay cut to become a representative. Same with fields like medicine and management.
- 0x8BADF00D 7y agoBoth of these options are wrong. Not so long ago, the people who entered government did so purely for civic duty. They didn't need to profit off of it.
- harikb 7y agoCivic duty shouldn't mean their family and kids don't get the same opportunity as those of a software engineer. It is not "profit". It is a salary so that smart people don't have to sacrifice their family to do their civic duty. I am not saying any Senator is necessarily sacrificing, but that is where all these shady actions come in.
- 0x8BADF00D 7y agoYou still don't understand. It has nothing to do with material things like money. It is something much greater than that. Civic duty is the highest honor one can achieve in their life.
- kingbirdy 7y agoThat's a great ideal, but the reality is that if you slash the salaries for being in elected office down to something token like $50k, you won't get more "civic minded" people in elected office, you'll get more rich assholes because they're the only ones who can afford to quit their job to campaign and hold office, fly back and forth to DC, and maintain two residences on that salary.
- Gibbon1 7y agoI've come around to the idea that we'd be way better off just paying them a lot more. I also think people should be able give their congressman a tax deductible 'tip' up to $20. Put a line on the Form 1040.
- myvoiceismypass 7y agoAhh it would be fair for citizens to be able to bribe politicians the way lobbyists do.
- m0zg 7y ago> pay them better Nancy Pelosi's net worth is $160M. You can't pay her "better" to compensate for loss of "gravy".
- ta999999171 7y agoBut perhaps we can avoid the next generation Pelosis?
- JMTQp8lwXL 7y agoNancy Pelosi's estimated net worth is $16M, not $160M. https://en.wikipedia.org/wiki/List_of_current_members_of_the_United_States_Congress_by_wealth https://en.wikipedia.org/wiki/List_of_current_members_of_the...
- m0zg 7y agoHer husband + her net worth is about 160M. Which is the same thing - you can't pay her enough to compensate her for the cessation of movement on the gravy train. If you're suggesting that having a wife who's been in congress for decades in no way helps her husband's endeavors, I have some wonderful Florida swampland for sale.
- aganame 7y agoIt seems like you’re suggesting to pay them better to make up for the loss of an ability to insider trade without any risk. Allowing that behavior totally breaks the stock market system. Elected officials should be forced to let go of all their assets to a neutral 3rd party asset manager who they’re allowed zero communication with during the time of their service.
- gitgudnubs 7y agoHe's suggesting we pay them better to make up for depriving them of vehicles private citizens can use. It's not unreasonable to strip them of those vehicles to prevent insider trading. It's not unreasonable to compensate them for losing those vehicles.
- gok 7y agoAll their assets? How about their homes?
- tobessebot 7y agoThis seems like it would suffer from the principal-agent problem.
- roguas 7y agoZero communication is unfeasible. They can communicate public and express investment intentions through that.
- Non24Throw 7y agoYou’re solving the wrong problem Getting what you just proposed (or any of the many other obvious ways to prevent insider trading) through a senate full of insider traders is the problem Solve that one
- pyuser583 7y agoWhy not just insist on a firewall between themselves and investment decisions? Lots of ways that could be implemented. A wealthier congressman could employ a firm to manage their money. On common way to protect against insider trading is to make irrevocable trades fat in advance. For example, irrevocably say you buy $500 of an index fund every month.
- BonesJustice 7y agoAs someone who worked at investment bank for years, and would have had to go to the trouble of getting preapproval for any individual trades, it was far less troublesome just to rely on managed accounts. So, yeah, just make them use managed accounts.
- cryptonector 7y agoNo! Greenspan famously held only treasuries. Result? A long treasury bull market. Seriously, the way it should work is that elected and appointed government officials, as well as civil servants with potential access to material non-public information (MNPI) should all be required to use only investment accounts managed by a manager with full discretion and with whom the official does not communicate.
- rflrob 7y agoThe question is, what if they want to build an elevator for their car at their vacation home in Aspen and need to pull out some cash, and just happen to do so immediately prior to a recession they received a briefing about? Surely “give me cash” and “invest some cash” are acceptable communication to an investment manager, but still could abuse the MNPI.
- akiselev 7y agoThey can borrow money using the portfolio as collateral, interest free or pegged to inflation, to be repaid either when the stock is released or over time. Although, it'd be a bit more complex than standard collateral since there'd have to be a "margin call" mechanism, where assets in the portfolio have to be sold to cover the debt if they drop too far.
- cryptonector 7y agoThe risk here is low. After all, the manager could easily have sniffed the coming recession and hedged against it. All assets do not lose value in a recession, you know. Knowing only the returns the manager has yielded over several years tells the official very little about how the manager will perform in a recession, in a boom, or in a boring year.
- cryptonector 7y agoBy the way, that's how it works in financial companies. There's no reason it shouldn't work that way for government officials.
- 3fe9a03ccd14ca5 7y agoStocks are a sideshow. It’s not how members get rich. It’s not how someone worth nothing leaves office worth millions. Look at book deals and board seats.
- dsr_ 7y agoLet me make a different suggestion: Keep your part A. Throw away your part B. Nobody deserves to make more money because they either screwed their country or refrained from screwing their country.
- govHlthcareLol 7y agoIndex funds are still too aggressive. You buy some defence contractor and vote for war.
- ashtonkem 7y agoA) Still requires a blind trust. One can inside trade index funds if you know about news that’ll shake the entire market. B) If you look at the salary of public officials inflation adjusted, the president would be making a few mil a year if they still made Washington’s salary. We’ve let public salaries atrophy badly.