6 ms·

Why not just prohibit members of Congress of owning stock? They are some of the most powerful people in the world. Why is it so much to ask that a Senator or es

Why not just prohibit members of Congress of owning stock? They are some of the most powerful people in the world. Why is it so much to ask that a Senator or especially Representative serving in the most powerful legislative body in the world just take a cash position for 2-6 years?

diebeforei485 6y ago
I agree. Their wealth should be in a blind trust (unless they run the company or farm or whatever).
- frankfrankfrank 6y ago
  I am not at all opposed to this strategy either, but as you seem to imply, it would really need to be hardened against other corruption and schemes like that the blind trust has to be run by the same government office. It is why I like the fact that they just have to announce their stock trades ahead of time, it still allows them autonomy, but also there is no sense in front running them if they are not trading on insider knowledge. Their performance should essentially be in line with the market, not like Mr. Gottheimer that seems to have tripled his net worth in FY2020.
klyrs 6y ago
I fully agree, and I'd like to extend it to their families as well. But... you ask "why not" and the simple reason is that only they could enact such a law. And even when the laws are in place -- Trump ran roughshod over the foreign emoluments clause, and there were zero consequences. Why would the richest and most powerful Democrats set such a precedent, only to have it turned around when they're in power and stand to profit?
- somethoughts 6y ago
  Yes - it definitely seems like it should be more or a "let's hope we can see both" type thing rather than an "either or type" thing. I think publicizing existing holdings is huge in that it can be done based on existing data sets as unusualwhale has shown and it is something that "we the people" can do, today - perhaps just by sharing this article. Eradicating politicians doing insider trading is a much longer slog that we are mostly just hoping "those with the power" will enact against their own self interests.
- ummonk 6y ago
  Are you advocating that if a relative of mine runs for office and is elected (whether I supported their candidacy or not), I should be prohibited from owning stock?
  - alexanderdmitri 6y ago
    It could work the other way around, ie if your close relations have stock that may affect your governing decisions and they refuse to commit to re-investing more generally in the event of your election, then you are prohibited from running for office. Obviously there would be complications, but are you advocating society shouldn't strive to clearly separate governance of the public from private, conflicting pecuniary interests? I can't tell if you're dismissing the problem or saying there's a better solution ...
  - klyrs 6y ago
    I'm mostly thinking of spouses, parents and children, and I think that a blind trust should probably suffice (you could own stock, just not have direct control over it).
  - dcist 6y ago
    The rule sounds fair for direct family members (wife, husband, children under 18, etc.).
efitz 6y ago
I oppose this idea simply because most people’s’ retirement is held in investments now; I even think that congressional pensions have been dialed way back IIRC. I much prefer the “notify publicly well in advance” approach.
jkepler 6y ago
I think they're too aware that with real dollar inflation probably running at least 10% per year (per Michael Saylor), they'd loose too much value for them to consent to holding only cash for 2 to 6 years. For every $100K they had, they'd end up holding something near $81K down to $53K in real purchasing power... and that's assuming they were content to only stay in power one term.
- coltsfan 6y ago
  that's exactly the point. it's almost a game for rich people to pump up their legacies or because they're just bored. you want them gone. When they are gone, there will be plenty of people left that choose never to buy another stock again for the rest of their lives. No law, just a personal code. Because the influence and power obviously last after you leave office. Monks and samurai can exist. Then so can a congressional Bushido. You just have to stop voting for people who think about their stocks all day while sitting at meetings.
xienze 6y ago
> Why is it so much to ask that a Senator or especially Representative serving in the most powerful legislative body in the world just take a cash position for 2-6 years? I agree in principle, but a lot of these people literally serve until they drop dead, which is a different problem with congress. Might be a bit much to tell someone not to invest for 40+ years.
- egypturnash 6y ago
  I submit that this would kind of help stop the "sit in the same position until death" problem.
FabHK 6y ago
I think it would be perfectly fine to let them have their money in broad index fund, or maybe an actively managed fund which should also be open to every citizen. Allow withdrawals etc. only once a month or so to avoid market timing.
cpwright 6y ago
That is bad policy. There is a segment of middle/upper class Americans who own stock; anyone with a retirement plan that funds it. Forcing middle/upper class legislatures into a cash position instead of stocks would make them less, not more connected to similarly placed people. If they can't own stock does that mean they'll just instead invest in real estate which can be even more conflicted? Of course, if they held widely diversified Index funds there would be fewer conflicts - but not zero as evidenced by legislators trading around COVID briefings.
godelski 6y ago
Because investments are still a great way to hold your savings. The problem here isn't that they have investments (e.g. a 401k), it is that they are acting on insider information. Which is illegal to everyone else. At _minimum_ they should be held to the same standards. Though I think most people agree that they should be held to _higher_ standards, which gives suggestions like a blind trust. And obviously strict rules of if they break the blind part that they get jail time.
- dan-robertson 6y ago
  It’s not insider information. You might consider it material non-public information, which you can’t trade on in Europe, but in the US insider trading has a much more narrow definition: roughly it has to come from the insiders of the company. If your friend at Microsoft tells you that they won some massive contract, you can’t trade on it. If you overhear that news in a café, you can. If your friend at the government tells you they’re going to agree on a big contract with Microsoft, I don’t know if you’d be allowed or not but if you weren’t allowed I don’t think it would be insider trading. Anyway, that obviously isn’t legal advice. And I agree that people should expect legislators to act with high integrity, but that’s not really how they vote.
  - BurningFrog 6y ago
    Honest question: If I work at Microsoft and I know we'll launch a product that will kill competitor X, am I allowed to short the X stock? That more analogous to the politician trading. They do have inside information, but it's not from inside the company they're trading.
    - iudqnolq 6y ago
      No, because that would be considered "stealing" from Microsoft. (I think it's a stupid way to define it.)
  - godelski 6y ago
    Thanks! I actually appreciate the nuanced correction. I used insider trading as the term not specifically because the information was non-public but that it feels like they have inside knowledge since they are able to directly affect the markets. Maybe there is a better term for this? I don't think this still falls under what you said.
BurningFrog 6y ago
Too harsh. A blind trust would be quite enough.

diebeforei485 6y ago

I agree. Their wealth should be in a blind trust (unless they run the company or farm or whatever).

frankfrankfrank 6y ago
I am not at all opposed to this strategy either, but as you seem to imply, it would really need to be hardened against other corruption and schemes like that the blind trust has to be run by the same government office. It is why I like the fact that they just have to announce their stock trades ahead of time, it still allows them autonomy, but also there is no sense in front running them if they are not trading on insider knowledge. Their performance should essentially be in line with the market, not like Mr. Gottheimer that seems to have tripled his net worth in FY2020.

klyrs 6y ago

I fully agree, and I'd like to extend it to their families as well. But... you ask "why not" and the simple reason is that only they could enact such a law. And even when the laws are in place -- Trump ran roughshod over the foreign emoluments clause, and there were zero consequences. Why would the richest and most powerful Democrats set such a precedent, only to have it turned around when they're in power and stand to profit?

somethoughts 6y ago
Yes - it definitely seems like it should be more or a "let's hope we can see both" type thing rather than an "either or type" thing. I think publicizing existing holdings is huge in that it can be done based on existing data sets as unusualwhale has shown and it is something that "we the people" can do, today - perhaps just by sharing this article. Eradicating politicians doing insider trading is a much longer slog that we are mostly just hoping "those with the power" will enact against their own self interests.
ummonk 6y ago
Are you advocating that if a relative of mine runs for office and is elected (whether I supported their candidacy or not), I should be prohibited from owning stock?
- alexanderdmitri 6y ago
  It could work the other way around, ie if your close relations have stock that may affect your governing decisions and they refuse to commit to re-investing more generally in the event of your election, then you are prohibited from running for office. Obviously there would be complications, but are you advocating society shouldn't strive to clearly separate governance of the public from private, conflicting pecuniary interests? I can't tell if you're dismissing the problem or saying there's a better solution ...
- klyrs 6y ago
  I'm mostly thinking of spouses, parents and children, and I think that a blind trust should probably suffice (you could own stock, just not have direct control over it).
- dcist 6y ago
  The rule sounds fair for direct family members (wife, husband, children under 18, etc.).

efitz 6y ago

I oppose this idea simply because most people’s’ retirement is held in investments now; I even think that congressional pensions have been dialed way back IIRC. I much prefer the “notify publicly well in advance” approach.

jkepler 6y ago

I think they're too aware that with real dollar inflation probably running at least 10% per year (per Michael Saylor), they'd loose too much value for them to consent to holding only cash for 2 to 6 years. For every $100K they had, they'd end up holding something near $81K down to $53K in real purchasing power... and that's assuming they were content to only stay in power one term.

coltsfan 6y ago
that's exactly the point. it's almost a game for rich people to pump up their legacies or because they're just bored. you want them gone. When they are gone, there will be plenty of people left that choose never to buy another stock again for the rest of their lives. No law, just a personal code. Because the influence and power obviously last after you leave office. Monks and samurai can exist. Then so can a congressional Bushido. You just have to stop voting for people who think about their stocks all day while sitting at meetings.

xienze 6y ago

> Why is it so much to ask that a Senator or especially Representative serving in the most powerful legislative body in the world just take a cash position for 2-6 years? I agree in principle, but a lot of these people literally serve until they drop dead, which is a different problem with congress. Might be a bit much to tell someone not to invest for 40+ years.

egypturnash 6y ago
I submit that this would kind of help stop the "sit in the same position until death" problem.

FabHK 6y ago

I think it would be perfectly fine to let them have their money in broad index fund, or maybe an actively managed fund which should also be open to every citizen. Allow withdrawals etc. only once a month or so to avoid market timing.

cpwright 6y ago

That is bad policy. There is a segment of middle/upper class Americans who own stock; anyone with a retirement plan that funds it. Forcing middle/upper class legislatures into a cash position instead of stocks would make them less, not more connected to similarly placed people. If they can't own stock does that mean they'll just instead invest in real estate which can be even more conflicted? Of course, if they held widely diversified Index funds there would be fewer conflicts - but not zero as evidenced by legislators trading around COVID briefings.

godelski 6y ago

Because investments are still a great way to hold your savings. The problem here isn't that they have investments (e.g. a 401k), it is that they are acting on insider information. Which is illegal to everyone else. At _minimum_ they should be held to the same standards. Though I think most people agree that they should be held to _higher_ standards, which gives suggestions like a blind trust. And obviously strict rules of if they break the blind part that they get jail time.

dan-robertson 6y ago
It’s not insider information. You might consider it material non-public information, which you can’t trade on in Europe, but in the US insider trading has a much more narrow definition: roughly it has to come from the insiders of the company. If your friend at Microsoft tells you that they won some massive contract, you can’t trade on it. If you overhear that news in a café, you can. If your friend at the government tells you they’re going to agree on a big contract with Microsoft, I don’t know if you’d be allowed or not but if you weren’t allowed I don’t think it would be insider trading. Anyway, that obviously isn’t legal advice. And I agree that people should expect legislators to act with high integrity, but that’s not really how they vote.
- BurningFrog 6y ago
  Honest question: If I work at Microsoft and I know we'll launch a product that will kill competitor X, am I allowed to short the X stock? That more analogous to the politician trading. They do have inside information, but it's not from inside the company they're trading.
  - iudqnolq 6y ago
    No, because that would be considered "stealing" from Microsoft. (I think it's a stupid way to define it.)
- godelski 6y ago
  Thanks! I actually appreciate the nuanced correction. I used insider trading as the term not specifically because the information was non-public but that it feels like they have inside knowledge since they are able to directly affect the markets. Maybe there is a better term for this? I don't think this still falls under what you said.

BurningFrog 6y ago

Too harsh. A blind trust would be quite enough.