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Please correct me, but here's a provocative hypothesis I spent three minutes thinking through. Couldn't you say that speculating with insider information on pub

Please correct me, but here's a provocative hypothesis I spent three minutes thinking through. Couldn't you say that speculating with insider information on public markets can be a way for public officials to make a lot of money without marrying themselves to any particular interests? In that case, couldn't it be potentially a mechanism we can exploit for good? Disclaimer: not American, no strong opinion on these people.

jliptzin 6y ago
Your hypothesis assumes that all elected officials must engage in some form of bribery or pay for play. In an ideal world we’d find leaders who put the interests of the country ahead of their finances.
- Tenoke 6y ago
  Or alternatively we can just pay them a lot more since they'll make money anyway, disallow them from earning money in other ways and at least have their profits have no additional negative effects. Not that I expect people would be comfortable paying politicians more (see how many complain about e.g. CEO pay) so I guess we are stuck with incentives for corruption instead.
  - kennywinker 6y ago
    I don't think we need to PAY them more to eliminate corruption - I think we need to change how campaigns are financed. Needing to raise millions every few years to keep your job makes you beholding to whoever has the money
jlarocco 6y ago
I guess I don't see where the "good" is there? Being a representative isn't supposed to be a "get rich quick" scheme. They already make a lot of money and IMO if they're going to invest in stocks they should play by the same rules as everybody else. Edit: On second thought, considering how much they can influence stock prices, maybe they should have stricter insider information regulations. It's a huge conflict of interest.
sorbits 6y ago
Personally I think that the conflict of interest posed by stock holding lawmakers is bigger than the advantages they gain from trading on information that only they are privy to. For example will a lawmaker holding a large portion of their wealth in Apple shares want to introduce legislation that forces Apple to allow alternative app stores (costing Apple the 15%-30% cut of all the app store sales)?
tshaddox 6y ago
Sure, speculating on insider information on public markets is a great way for anyone to make a lot of money. It's also highly illegal, although there does seem to be some fairly prominent views that allowing insider trading would actually help get relevant information priced into the public markets. But even if you're one of those proponents of insider trading, surely this is clearly different and worse than that, because prominent politicians surely have some power to influence winners and losers.
- stereolambda 6y ago
  Well, the laws around insider trading and similar practices changed throughout history. Many things used to be considered okay, look up Joseph P. Kennedy's biography for example. You are right that if the officials actually cared about companies, it would not make sense. I was thinking more like hedge fund-like cold speculation. As people guessed correctly, the point is to make the job very appealing but with little ties to powerful interests. Of course is not a serious scheme, but I'm amused by the concept I guess.
adolph 6y ago
In most situations this is called insider trading and is considered unfair in public markets since the trades of insiders may be concealed, like through a family member. Within an organization making a decision that advantages oneself is unethical since the purpose of the most organizations is not to fulfill the personal interests of its employees. It would make some sense to convert all property holdings of a government employee to financial instruments related to the health of the government such as treasury notes. That way their personal interests are at least aligned with those of the government. To the degree that the instruments measure aspects of the government that are not totally aligned with the governed is a problem however.

jliptzin 6y ago

Your hypothesis assumes that all elected officials must engage in some form of bribery or pay for play. In an ideal world we’d find leaders who put the interests of the country ahead of their finances.

Tenoke 6y ago
Or alternatively we can just pay them a lot more since they'll make money anyway, disallow them from earning money in other ways and at least have their profits have no additional negative effects. Not that I expect people would be comfortable paying politicians more (see how many complain about e.g. CEO pay) so I guess we are stuck with incentives for corruption instead.
- kennywinker 6y ago
  I don't think we need to PAY them more to eliminate corruption - I think we need to change how campaigns are financed. Needing to raise millions every few years to keep your job makes you beholding to whoever has the money

jlarocco 6y ago

I guess I don't see where the "good" is there? Being a representative isn't supposed to be a "get rich quick" scheme. They already make a lot of money and IMO if they're going to invest in stocks they should play by the same rules as everybody else. Edit: On second thought, considering how much they can influence stock prices, maybe they should have stricter insider information regulations. It's a huge conflict of interest.

sorbits 6y ago

Personally I think that the conflict of interest posed by stock holding lawmakers is bigger than the advantages they gain from trading on information that only they are privy to. For example will a lawmaker holding a large portion of their wealth in Apple shares want to introduce legislation that forces Apple to allow alternative app stores (costing Apple the 15%-30% cut of all the app store sales)?

tshaddox 6y ago

Sure, speculating on insider information on public markets is a great way for anyone to make a lot of money. It's also highly illegal, although there does seem to be some fairly prominent views that allowing insider trading would actually help get relevant information priced into the public markets. But even if you're one of those proponents of insider trading, surely this is clearly different and worse than that, because prominent politicians surely have some power to influence winners and losers.

stereolambda 6y ago
Well, the laws around insider trading and similar practices changed throughout history. Many things used to be considered okay, look up Joseph P. Kennedy's biography for example. You are right that if the officials actually cared about companies, it would not make sense. I was thinking more like hedge fund-like cold speculation. As people guessed correctly, the point is to make the job very appealing but with little ties to powerful interests. Of course is not a serious scheme, but I'm amused by the concept I guess.

adolph 6y ago

In most situations this is called insider trading and is considered unfair in public markets since the trades of insiders may be concealed, like through a family member. Within an organization making a decision that advantages oneself is unethical since the purpose of the most organizations is not to fulfill the personal interests of its employees. It would make some sense to convert all property holdings of a government employee to financial instruments related to the health of the government such as treasury notes. That way their personal interests are at least aligned with those of the government. To the degree that the instruments measure aspects of the government that are not totally aligned with the governed is a problem however.