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The more committees you are on, the more opportunities you have for informed medium term trading that escapes insider-dealing scrutiny. It's a fundamental probl

The more committees you are on, the more opportunities you have for informed medium term trading that escapes insider-dealing scrutiny. It's a fundamental problem with government and it is why politicians should be required to put their stocks in a blind trust. But it still doesn't solve the problem of blind trusts not being truly blind when you know what went into them.

embedding-shape 10mo ago
> it is why politicians should be required to put their stocks in a blind trust Don't these people get a salary already? If "serving the people" isn't enough as an incentive, maybe they shouldn't be in a position for serving the people? Outlaw politicians owning stocks at all, it makes no sense they ever could in the first place, when the incentives are so obviously misaligned. It simply lives too much room for misbehaving actors, no matter how much bandage you put on top.
- _heimdall 10mo ago
  It makes more sense when the government isn't as powerful as it is today. If we didn't ask or expect our governments to do so much the politicians would have much less advantage over the average person.
- bluGill 10mo ago
  I don't want people in congress as a career. Do it for at most 2 terms and get back to the real world. When that is the reality it means we cannot take away their ability to have stocks because when they return "to the real world" they will need that savings. Though while in office they should be limited to buying and selling from blind trusts and such things where they cannot know what happens except the economy in general. However if they own stock before it isn't fair to make them sell it: this is a really hard problem and there probably isn't an answer I will be happy with.
  - mothballed 10mo ago
    I would use straight up sortition rather than voting for congress. Propel people into the job from obscurity, by the time they've learned how to game the system it is time to leave.
    - lordnacho 10mo ago
      Don't we get the same problem? You win the lottery, now you're a senator, and by the way, I have nice brown bag for you.
      - mothballed 10mo ago
        Only if you theorize that power corruption is a step function, and that there isn't survivor bias and influence during the process of getting to the point where you can even win an election. Running an election campaign as anyone but a filthy rich person means you have to accept a brown bag at the beginning with a lot of implied conditions. Sortition means it's at least possible you get someone who isn't looking for the brown bag.
        greedo 10mo ago
        Lord Acton has a few words about power etc. I don't think most people selected ala Cincinnatus for greatness have the ability to demure when venturing into government at high levels. Quid Pro Quo...
        lordnacho 10mo ago
        That's a good point actually.
        mrguyorama 10mo ago
        >Sortition means it's at least possible you get someone who isn't looking for the brown bag. I mean sure, but sortition has tons of it's own problems, and it's actually pretty easy to reduce the requirement to take a bag before you can run a campaign, because this is something every other democratic country manages. The US is the only country that allows you to run campaign adverts years ahead of time. That's expensive. The US has no limits to campaign contributions in the first place, and no ceiling on campaign spending. The US has loudly declared that it is right and just that the mega rich oil Baron can pay for literally every single campaign if they want, and unilaterally control who has access to his funds for getting elected. The US Supreme court has declared that it is a good thing that the oil baron can always outspend average people to get their needs heard. Maybe fix the part of our country where we allowed the supreme court to insist that more money should give you more access and control over government. Maybe fix the part where half the country insists that we should elect "Businessmen" who will run a country like a "Business" because that's somehow a good thing, and that having someone who has direct business interests that are contrary to the interest of the general public run said government is a good way to do things. It's like thinking that Pharma adverts are bad and so we should destroy the pharma industry. Like, no, chill, just ban pharma adverts like the rest of the world.
- micromacrofoot 10mo ago
  it's not really possible considering that most retirement accounts are stock portfolios — it also doesn't matter too much on an individual level because an individual ban just gets pushed to sharing stock tips with extended family (already happens), family bans get pushed to friends, etc... I really think the best and maybe only way to avoid this wealth building nonsense are much harsher term limits — public service should be severely limited to prevent people from being in decades long positions to abuse it. Term limits also prevent the incessant campaign fundraising to some extent, because say you're limited to 2 terms... there's not much point in personal fundraising on your last one
  - zucked 10mo ago
    Agree -- strict term limits would be a gamechanger in a lot of ways.
- zucked 10mo ago
  I have a hot take on this that I think could actually make some headway: - We raise the congressional salary. Say, maybe double them across the board. BUT in exchange, you, your immediate family, and any business, LLC, or other similar vehicle you are a named party to as a consultant, beneficiary, owner, or investor must divest of specific investments and can only hold the equivalent value of an index fund that tracks the general market. Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson. Problem solved? Probably not, but it's an interesting thought experiment. I'm sure there are a bunch of loopholes I haven't fully through through, too.
  - kspacewalk2 10mo ago
    > Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson. The problem with "blind trusts" is that even blind men wink and nudge. It's quite hard to police a veritable horde of Congressmen who pinky-swear to never pass information along to friends, relatives and various other associates, employed by them or otherwise.
    - matwood 10mo ago
      Which can be solved with insider trading enforcement of political figures and their associates. This SEC already does this to 'normal' people.
      - kspacewalk2 10mo ago
        It can be. But it's quite hard. And frequently unsuccessful. The concept of "insider trading" sounds great and unambiguous until some examination, but becomes quite ripe for loophole-finding exercises afterwards.
    - zucked 10mo ago
      I honestly don't know how you put a cone of silence around congresspeople such that insider trading anywhere in their sphere of influence is impossible. My intent would be to make it difficult for the congressperson to directly benefit from passing along insider info and compensate them enough such that it isn't a practical path. Sure, they could still tell friends to buy/sell, but if the friend *does* act on that, it's sure going to raise eyebrows when they try to wire $1M worth of proceeds to the congressperson for "movie & pizza night". And I know that the next stone to be cast is "yeah, but if they help friends/business associates beat the market, congresspeople can still benefit with board seats and jobs when they're done with congressional terms". That's totally valid, and I have no idea how to combat that.
- alistairSH 10mo ago
  If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress. 1 - $174,000 is the current salary. With that, they have to maintain two households (one in DC, one in home district/state). That salary is far from unusual for white collar workers in major metro areas.
  - embedding-shape 10mo ago
    Yes, like every other profession in the US seemingly, Congress is also underpaid. But letting them individually fight for getting as money as they possible can before they retire via means the typical person doesn't have access to, isn't right either. I agree they should be paid appropriately, so they also can survive on their salary, but still think they shouldn't be able to do certain things others can, because of their position.
    - alistairSH 10mo ago
      Agreed. I'd prefer they were required to use a blind trust. Or, possibly immediate reporting on trades.
  - FridayoLeary 10mo ago
    Give them spending rights. You need a second home in DC? Ok, if you pass a means test we reimburse your rent and travel costs. There's no sense in giving them additional excuses for not doing their job. 174k is plenty of money to live off.
  - BurningFrog 10mo ago
    I would bump it to $10M/year. In terms of importance, this is still vastly underpaying these jobs. That should take the edge off any money seeking schemes. It's hard to bribe the wealthy! For 435 congress people and 100 senators, that adds up to $5.35B, which is about 6 hours of federal spending.
    - wqaatwt 10mo ago
- ralferoo 10mo ago
  Your argument seems to be that those in public service should only survive on their salaries, because "doing it for the people" is enough of a reward that they don't need to worry about such trivialities as money. There's no good reason to stop anyone from owning stocks. It's part of any sensible person's retirement strategy. The issue is whether there's a conflict of interest there, and blind trusts or broad market ETFs are two good ways of addressing that issue. Other alternatives include announcing their intention to trade in specific stocks several months in advance of doing so, so that even if they know about specific long-term future advantages a company might have, it's public knowledge and others can also trade in a similar way. But the easiest solutions by far are blind trusts and broad market ETFs.
  - ImPostingOnHN 10mo ago
    > There's no good reason to stop anyone from owning stocks. It's part of any sensible person's retirement strategy. Congrescritters already have a retirement strategy provided to them for free courtesy of the American people: a pension. On top of that, many of them never retire, they just hold power and keep collecting paychecks until the day they die.
- wat10000 10mo ago
  Their salary is not nearly enough. FAANG SWEs make several times more money for something that's quite a bit less important. Their pay is pretty good, but they also have a job which requires them to stay away from home (for most of them) for long periods of time. The pay is not really enough to maintain a household and a second living space comfortably. I get the sentiment that they shouldn't be in it for the money. But money is important even for idealists. Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Would you say that this person doesn't want to serve the people enough, and shouldn't run? Maybe you would, but the problem is that you mostly won't get people who want to serve even more. By paying a relatively low salary, you'll end up getting: 1. Idealists with poor prospects in the job market. 2. Extreme idealists with good job prospects. 3. People who think they can leverage the position to make enough money to offset the difference in pay. 4. People rich enough not to care about piddling W-2 income. In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/ https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million. And of course people don't tend to attain substantial net worth without having an eye for ways to make money, so it's very likely that those people will abuse their position to make money as long as they think they can get away with it. I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
  - LunaSea 10mo ago
    > The pay is not really enough to maintain a household and a second living space comfortably. Who's talking about a second living space? They can move like most Americans do for work when the commute is too much. > Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Then they can go work for Facebook. Who cares what they would like to have. > Would you say that this person doesn't want to serve the people enough, and shouldn't run? Yes. > Maybe you would, but the problem is that you mostly won't get people who want to serve even more. Source? > In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/ https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million. Before or after they started their career? > I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. Ordinary people don't have the expectation of needing to be payed $1M to serve their country. > That would create a lot more competition for those positions and push out some of the extremely wealthy ones. The wealthy ones just use their wealth to get ahead.
falcor84 10mo ago
Could we just not prohibit lawmakers from investing in particular stocks, but rather to only invest in the market as a whole (e.g. via ETFs) and/or in government bonds?
- miohtama 10mo ago
  Yes but politicians would need to agree. Why would they?
  - Jensson 10mo ago
    In a decent democracy you could vote those out, sadly USA ain't that.
  - ferguess_k 10mo ago
    That's why populist movements raise its head from time to time. It's the human's self-cleansing mechanism -- very damaging, and usually burn much more than necessary, but whatever.
  - Aurornis 10mo ago
    More importantly, why would you want to restrict public servants only to low interest rate government bonds? That would select out most people with decent financial sense from taking the job. The point is to level the playing field, not to become so restrictive and punishing that the job only appeals to politicians who are so self-sacrificing that they don’t exist as much as people want. Stocks also aren’t the only place where politicians could leverage their positions for personal financial gain.
    - program_whiz 10mo ago
      Unintended side benefit -- those with power are incentivized to raise bond interest, creating a safe investment for others to use.
  - Uehreka 10mo ago
    Because this topic makes people mad and makes politicians who oppose it look bad, which hurts electability. Not to mention it seems like non-elite politicians wouldn’t be affected, so for them this is an easy publicity boost.
Scubabear68 10mo ago
I agree that blind trusts don't fix everything, but it is a start. The situation right now isn't just corrupting, congress-critters are labeled as idiots by their own if they don't actively take advantage of "perks" like free stock tips that would be illegal in any other context. The "everyone does it" excuse is what keeps this house of cards up. And it is not partisan, both D's and R's inevitably become rich if they stay in the house for more than a couple of terms.
rgblambda 10mo ago
Wouldn't they just trade through their relatives? Or does the insider trading immunity not stretch that far?
- ekianjo 10mo ago
  That's also insider trading.
drob518 10mo ago
Force them to buy nothing but SPY. If you’re in Congress, you’re allowed to get the market return. Or a government bond fund, or cash. That’s it.
threethirtytwo 10mo ago
Ideally we should remove the incentive all together. Limit it so Politicians can only buy index funds that don’t target any specific industry. Fundamentally you can classify modern society into two groups: government and commercial citizenry. The incentives of these two groups are misaligned and that is essentially the origin of all corruption. The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible. The government, his goal is to be fair, to enforce and follow the rules, and to guard citizens. When you combine these two groups the incentives collide. You get government officials who are supposed to be fair but instead they are incentivized by commercial interests so they make biased laws, take bribes and do all that shit. To reduce corruption you really need to create societies made up of two different groups with two different sets of incentives. Dictators are more immune to this effect because all of their commercial incentives are pretty much completely fulfilled as they own the whole country. In a democracy the closest sort of thing I’ve seen to this is priesthood. Buddhism or becoming a monk is similar but these are not elevated leadership positions like priests. Basically when you become a government official it should be like becoming a priest. You are removing yourself from commercial society. It changes everything. Your incentives are different and it even filters out all the bad actors. Such a society can realistically exist. I think the unrealistic part is converting our current society into something like this.
- radlad 10mo ago
  The primary challenge I see is that at least in the US, government positions are often elected and termed, meaning there is no guarantee your cash flow from your government job will continue long-term. This is why you must continue to operate as a private citizen, with a government job. The second potential issue is one of pay - the best of society can make far more in a commercial setting than in a government setting - barring corruption, of course.
  - threethirtytwo 10mo ago
    For your second potential issue, I’m saying that’s the point. Nobody becomes a priest for money. These people who become priests do so for other reasons and they largely want to exit the commercial economy. That’s the type of people government should be made of. Under this system pretty much 100 percent of politicians wouldn’t have even become a politician.
CWuestefeld 10mo ago
I'm not particularly concerned about unfair gains made possible by insider knowledge. The economy is large enough, and the set of lawmakers (not to mention leadership-level lawmakers!) small enough, that that the overall effect on anything is going to be negligible. My concern would be that the "skill" we're seeing isn't with using insider information, but with using their power to alter outcomes to make whatever investments they'd previously chosen become profitable post hoc. If they're causing our regulatory landscape to be change to pad their wallets, that's going to have a much greater effect on our overall system than just being able to make a trade a day earlier than the rest of us.
- pixelatedindex 10mo ago
  > I'm not particularly concerned about unfair gains made possible by insider knowledge. I am. I work at a company that trades publicly. My wife works at a firm. I can’t do anything with my stocks outside of three weeks a quarter. I can never buy options. My wife has to clear her positions with whatever department. If I have these obstacles, congress should absolutely have them — maybe more. Ideally they can trade index funds and that’s about it.
  - pessimizer 10mo ago
    > If I have these obstacles, congress should absolutely have them This jealousy is a minor issue, though. There's no reason for you to believe Congresspeople should have exactly the same limitations and opportunities that you have. This is in fact a discussion that involves limiting them from doing things that you would retain the right to do. The problem is how they govern.
    - deleted 10mo ago
      [deleted]
    - pixelatedindex 10mo ago
      It’s not jealousy, it’s equality. If insider trading is illegal, then it should be illegal for everyone and Congress should be no exception. They have even more opportunities and insider knowledge, about many more companies than I do. It absolutely affects how they govern, they tend to be more corrupt because they don’t have to abide by the same regulations that a civilian does.
ryanmcbride 10mo ago
That's why I don't think they should be able to trade stocks at all. Why are they under less scrutiny than low rung engineering employees at one of the big 4?
toss1 10mo ago
Yes, that is one solution, but history has shown it is very hard to effectively police it, as there are a million ways to get around it. The SEC enforcement of Insider Trading laws is also simultaneously both ineffective and created high-profile wrong cases which get people with influence to further weaken it. Seems to me the best solution to all of the above is to simply require ALL trades to be open and transparent with the ultimate beneficial owner and the trade available in real-time. Pharma scientists & execs start buying/selling their stock unusually? Easy to setup trackers so we know it in the same second and can also take advantage of their knowledge that their new drug trial succeeded/failed, and it will eliminate much of the insider-trading edge. A congressperson buys/sells a bundle of shares of a company in his state? Again, we see they're likely getting/losing contracts soon, and again, much of the margin disappears. Traders would rapidly setup hedge funds and ETFs to ensure this happens in milliseconds, and much of the advantage and problems of insider trading being unfair disappear, along with a lot of enforcement cost. Obviously just a concept, what are the holes?
shadowgovt 10mo ago
Personally, I think there's a fundamental flaw in insider training law in the same category as the fundamental flaw in copyright and patents. You are trying to stop people from using knowledge for gain... In a system that is fundamentally designed to reward using knowledge for gain. Fully enforcing insider trading law requires slicing of categories and resolution of ambiguity that creates the same problems it does in the other knowledge market law: decisions that feel unfair even if the letter says they aren't, people getting away with things that feel wrong on a technicality, and the whole category Congress people fall into where it's impossible to do their job and not obtain enough market knowledge to be leverageable. I don't have enough historical knowledge to know if this was always a problem and we just weren't sensitive to it or if past generations were more modest or magnanimous and either didn't take advantage of what they knew or took advantage of it and spread the wealth around, but I think we might be trying to fundamentally solve the wrong problem. It is entirely possible that the problem is the asymmetry is the market creates themselves. There may simply be no better, more efficient solution than taxing the hell out of the rich, no matter how they got there.

embedding-shape 10mo ago

> it is why politicians should be required to put their stocks in a blind trust Don't these people get a salary already? If "serving the people" isn't enough as an incentive, maybe they shouldn't be in a position for serving the people? Outlaw politicians owning stocks at all, it makes no sense they ever could in the first place, when the incentives are so obviously misaligned. It simply lives too much room for misbehaving actors, no matter how much bandage you put on top.

_heimdall 10mo ago
It makes more sense when the government isn't as powerful as it is today. If we didn't ask or expect our governments to do so much the politicians would have much less advantage over the average person.
bluGill 10mo ago
I don't want people in congress as a career. Do it for at most 2 terms and get back to the real world. When that is the reality it means we cannot take away their ability to have stocks because when they return "to the real world" they will need that savings. Though while in office they should be limited to buying and selling from blind trusts and such things where they cannot know what happens except the economy in general. However if they own stock before it isn't fair to make them sell it: this is a really hard problem and there probably isn't an answer I will be happy with.
- mothballed 10mo ago
  I would use straight up sortition rather than voting for congress. Propel people into the job from obscurity, by the time they've learned how to game the system it is time to leave.
  - lordnacho 10mo ago
    Don't we get the same problem? You win the lottery, now you're a senator, and by the way, I have nice brown bag for you.
    - mothballed 10mo ago
      Only if you theorize that power corruption is a step function, and that there isn't survivor bias and influence during the process of getting to the point where you can even win an election. Running an election campaign as anyone but a filthy rich person means you have to accept a brown bag at the beginning with a lot of implied conditions. Sortition means it's at least possible you get someone who isn't looking for the brown bag.
      - greedo 10mo ago
        Lord Acton has a few words about power etc. I don't think most people selected ala Cincinnatus for greatness have the ability to demure when venturing into government at high levels. Quid Pro Quo...
      - lordnacho 10mo ago
        That's a good point actually.
      - mrguyorama 10mo ago
        >Sortition means it's at least possible you get someone who isn't looking for the brown bag. I mean sure, but sortition has tons of it's own problems, and it's actually pretty easy to reduce the requirement to take a bag before you can run a campaign, because this is something every other democratic country manages. The US is the only country that allows you to run campaign adverts years ahead of time. That's expensive. The US has no limits to campaign contributions in the first place, and no ceiling on campaign spending. The US has loudly declared that it is right and just that the mega rich oil Baron can pay for literally every single campaign if they want, and unilaterally control who has access to his funds for getting elected. The US Supreme court has declared that it is a good thing that the oil baron can always outspend average people to get their needs heard. Maybe fix the part of our country where we allowed the supreme court to insist that more money should give you more access and control over government. Maybe fix the part where half the country insists that we should elect "Businessmen" who will run a country like a "Business" because that's somehow a good thing, and that having someone who has direct business interests that are contrary to the interest of the general public run said government is a good way to do things. It's like thinking that Pharma adverts are bad and so we should destroy the pharma industry. Like, no, chill, just ban pharma adverts like the rest of the world.
micromacrofoot 10mo ago
it's not really possible considering that most retirement accounts are stock portfolios — it also doesn't matter too much on an individual level because an individual ban just gets pushed to sharing stock tips with extended family (already happens), family bans get pushed to friends, etc... I really think the best and maybe only way to avoid this wealth building nonsense are much harsher term limits — public service should be severely limited to prevent people from being in decades long positions to abuse it. Term limits also prevent the incessant campaign fundraising to some extent, because say you're limited to 2 terms... there's not much point in personal fundraising on your last one
- zucked 10mo ago
  Agree -- strict term limits would be a gamechanger in a lot of ways.
zucked 10mo ago
I have a hot take on this that I think could actually make some headway: - We raise the congressional salary. Say, maybe double them across the board. BUT in exchange, you, your immediate family, and any business, LLC, or other similar vehicle you are a named party to as a consultant, beneficiary, owner, or investor must divest of specific investments and can only hold the equivalent value of an index fund that tracks the general market. Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson. Problem solved? Probably not, but it's an interesting thought experiment. I'm sure there are a bunch of loopholes I haven't fully through through, too.
- kspacewalk2 10mo ago
  > Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson. The problem with "blind trusts" is that even blind men wink and nudge. It's quite hard to police a veritable horde of Congressmen who pinky-swear to never pass information along to friends, relatives and various other associates, employed by them or otherwise.
  - matwood 10mo ago
    Which can be solved with insider trading enforcement of political figures and their associates. This SEC already does this to 'normal' people.
    - kspacewalk2 10mo ago
      It can be. But it's quite hard. And frequently unsuccessful. The concept of "insider trading" sounds great and unambiguous until some examination, but becomes quite ripe for loophole-finding exercises afterwards.
  - zucked 10mo ago
    I honestly don't know how you put a cone of silence around congresspeople such that insider trading anywhere in their sphere of influence is impossible. My intent would be to make it difficult for the congressperson to directly benefit from passing along insider info and compensate them enough such that it isn't a practical path. Sure, they could still tell friends to buy/sell, but if the friend *does* act on that, it's sure going to raise eyebrows when they try to wire $1M worth of proceeds to the congressperson for "movie & pizza night". And I know that the next stone to be cast is "yeah, but if they help friends/business associates beat the market, congresspeople can still benefit with board seats and jobs when they're done with congressional terms". That's totally valid, and I have no idea how to combat that.
alistairSH 10mo ago
If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress. 1 - $174,000 is the current salary. With that, they have to maintain two households (one in DC, one in home district/state). That salary is far from unusual for white collar workers in major metro areas.
- embedding-shape 10mo ago
  Yes, like every other profession in the US seemingly, Congress is also underpaid. But letting them individually fight for getting as money as they possible can before they retire via means the typical person doesn't have access to, isn't right either. I agree they should be paid appropriately, so they also can survive on their salary, but still think they shouldn't be able to do certain things others can, because of their position.
  - alistairSH 10mo ago
    Agreed. I'd prefer they were required to use a blind trust. Or, possibly immediate reporting on trades.
- FridayoLeary 10mo ago
  Give them spending rights. You need a second home in DC? Ok, if you pass a means test we reimburse your rent and travel costs. There's no sense in giving them additional excuses for not doing their job. 174k is plenty of money to live off.
- BurningFrog 10mo ago
  I would bump it to $10M/year. In terms of importance, this is still vastly underpaying these jobs. That should take the edge off any money seeking schemes. It's hard to bribe the wealthy! For 435 congress people and 100 senators, that adds up to $5.35B, which is about 6 hours of federal spending.
  - wqaatwt 10mo ago
ralferoo 10mo ago
Your argument seems to be that those in public service should only survive on their salaries, because "doing it for the people" is enough of a reward that they don't need to worry about such trivialities as money. There's no good reason to stop anyone from owning stocks. It's part of any sensible person's retirement strategy. The issue is whether there's a conflict of interest there, and blind trusts or broad market ETFs are two good ways of addressing that issue. Other alternatives include announcing their intention to trade in specific stocks several months in advance of doing so, so that even if they know about specific long-term future advantages a company might have, it's public knowledge and others can also trade in a similar way. But the easiest solutions by far are blind trusts and broad market ETFs.
- ImPostingOnHN 10mo ago
  > There's no good reason to stop anyone from owning stocks. It's part of any sensible person's retirement strategy. Congrescritters already have a retirement strategy provided to them for free courtesy of the American people: a pension. On top of that, many of them never retire, they just hold power and keep collecting paychecks until the day they die.
wat10000 10mo ago
Their salary is not nearly enough. FAANG SWEs make several times more money for something that's quite a bit less important. Their pay is pretty good, but they also have a job which requires them to stay away from home (for most of them) for long periods of time. The pay is not really enough to maintain a household and a second living space comfortably. I get the sentiment that they shouldn't be in it for the money. But money is important even for idealists. Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Would you say that this person doesn't want to serve the people enough, and shouldn't run? Maybe you would, but the problem is that you mostly won't get people who want to serve even more. By paying a relatively low salary, you'll end up getting: 1. Idealists with poor prospects in the job market. 2. Extreme idealists with good job prospects. 3. People who think they can leverage the position to make enough money to offset the difference in pay. 4. People rich enough not to care about piddling W-2 income. In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/ https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million. And of course people don't tend to attain substantial net worth without having an eye for ways to make money, so it's very likely that those people will abuse their position to make money as long as they think they can get away with it. I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
- LunaSea 10mo ago
  > The pay is not really enough to maintain a household and a second living space comfortably. Who's talking about a second living space? They can move like most Americans do for work when the commute is too much. > Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Then they can go work for Facebook. Who cares what they would like to have. > Would you say that this person doesn't want to serve the people enough, and shouldn't run? Yes. > Maybe you would, but the problem is that you mostly won't get people who want to serve even more. Source? > In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/ https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million. Before or after they started their career? > I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. Ordinary people don't have the expectation of needing to be payed $1M to serve their country. > That would create a lot more competition for those positions and push out some of the extremely wealthy ones. The wealthy ones just use their wealth to get ahead.

falcor84 10mo ago

Could we just not prohibit lawmakers from investing in particular stocks, but rather to only invest in the market as a whole (e.g. via ETFs) and/or in government bonds?

miohtama 10mo ago
Yes but politicians would need to agree. Why would they?
- Jensson 10mo ago
  In a decent democracy you could vote those out, sadly USA ain't that.
- ferguess_k 10mo ago
  That's why populist movements raise its head from time to time. It's the human's self-cleansing mechanism -- very damaging, and usually burn much more than necessary, but whatever.
- Aurornis 10mo ago
  More importantly, why would you want to restrict public servants only to low interest rate government bonds? That would select out most people with decent financial sense from taking the job. The point is to level the playing field, not to become so restrictive and punishing that the job only appeals to politicians who are so self-sacrificing that they don’t exist as much as people want. Stocks also aren’t the only place where politicians could leverage their positions for personal financial gain.
  - program_whiz 10mo ago
    Unintended side benefit -- those with power are incentivized to raise bond interest, creating a safe investment for others to use.
- Uehreka 10mo ago
  Because this topic makes people mad and makes politicians who oppose it look bad, which hurts electability. Not to mention it seems like non-elite politicians wouldn’t be affected, so for them this is an easy publicity boost.

Scubabear68 10mo ago

I agree that blind trusts don't fix everything, but it is a start. The situation right now isn't just corrupting, congress-critters are labeled as idiots by their own if they don't actively take advantage of "perks" like free stock tips that would be illegal in any other context. The "everyone does it" excuse is what keeps this house of cards up. And it is not partisan, both D's and R's inevitably become rich if they stay in the house for more than a couple of terms.

rgblambda 10mo ago

Wouldn't they just trade through their relatives? Or does the insider trading immunity not stretch that far?

ekianjo 10mo ago
That's also insider trading.

drob518 10mo ago

Force them to buy nothing but SPY. If you’re in Congress, you’re allowed to get the market return. Or a government bond fund, or cash. That’s it.

threethirtytwo 10mo ago

Ideally we should remove the incentive all together. Limit it so Politicians can only buy index funds that don’t target any specific industry. Fundamentally you can classify modern society into two groups: government and commercial citizenry. The incentives of these two groups are misaligned and that is essentially the origin of all corruption. The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible. The government, his goal is to be fair, to enforce and follow the rules, and to guard citizens. When you combine these two groups the incentives collide. You get government officials who are supposed to be fair but instead they are incentivized by commercial interests so they make biased laws, take bribes and do all that shit. To reduce corruption you really need to create societies made up of two different groups with two different sets of incentives. Dictators are more immune to this effect because all of their commercial incentives are pretty much completely fulfilled as they own the whole country. In a democracy the closest sort of thing I’ve seen to this is priesthood. Buddhism or becoming a monk is similar but these are not elevated leadership positions like priests. Basically when you become a government official it should be like becoming a priest. You are removing yourself from commercial society. It changes everything. Your incentives are different and it even filters out all the bad actors. Such a society can realistically exist. I think the unrealistic part is converting our current society into something like this.

radlad 10mo ago
The primary challenge I see is that at least in the US, government positions are often elected and termed, meaning there is no guarantee your cash flow from your government job will continue long-term. This is why you must continue to operate as a private citizen, with a government job. The second potential issue is one of pay - the best of society can make far more in a commercial setting than in a government setting - barring corruption, of course.
- threethirtytwo 10mo ago
  For your second potential issue, I’m saying that’s the point. Nobody becomes a priest for money. These people who become priests do so for other reasons and they largely want to exit the commercial economy. That’s the type of people government should be made of. Under this system pretty much 100 percent of politicians wouldn’t have even become a politician.

CWuestefeld 10mo ago

I'm not particularly concerned about unfair gains made possible by insider knowledge. The economy is large enough, and the set of lawmakers (not to mention leadership-level lawmakers!) small enough, that that the overall effect on anything is going to be negligible. My concern would be that the "skill" we're seeing isn't with using insider information, but with using their power to alter outcomes to make whatever investments they'd previously chosen become profitable post hoc. If they're causing our regulatory landscape to be change to pad their wallets, that's going to have a much greater effect on our overall system than just being able to make a trade a day earlier than the rest of us.

pixelatedindex 10mo ago
> I'm not particularly concerned about unfair gains made possible by insider knowledge. I am. I work at a company that trades publicly. My wife works at a firm. I can’t do anything with my stocks outside of three weeks a quarter. I can never buy options. My wife has to clear her positions with whatever department. If I have these obstacles, congress should absolutely have them — maybe more. Ideally they can trade index funds and that’s about it.
- pessimizer 10mo ago
  > If I have these obstacles, congress should absolutely have them This jealousy is a minor issue, though. There's no reason for you to believe Congresspeople should have exactly the same limitations and opportunities that you have. This is in fact a discussion that involves limiting them from doing things that you would retain the right to do. The problem is how they govern.
  - deleted 10mo ago
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  - pixelatedindex 10mo ago
    It’s not jealousy, it’s equality. If insider trading is illegal, then it should be illegal for everyone and Congress should be no exception. They have even more opportunities and insider knowledge, about many more companies than I do. It absolutely affects how they govern, they tend to be more corrupt because they don’t have to abide by the same regulations that a civilian does.

ryanmcbride 10mo ago

That's why I don't think they should be able to trade stocks at all. Why are they under less scrutiny than low rung engineering employees at one of the big 4?

toss1 10mo ago

Yes, that is one solution, but history has shown it is very hard to effectively police it, as there are a million ways to get around it. The SEC enforcement of Insider Trading laws is also simultaneously both ineffective and created high-profile wrong cases which get people with influence to further weaken it. Seems to me the best solution to all of the above is to simply require ALL trades to be open and transparent with the ultimate beneficial owner and the trade available in real-time. Pharma scientists & execs start buying/selling their stock unusually? Easy to setup trackers so we know it in the same second and can also take advantage of their knowledge that their new drug trial succeeded/failed, and it will eliminate much of the insider-trading edge. A congressperson buys/sells a bundle of shares of a company in his state? Again, we see they're likely getting/losing contracts soon, and again, much of the margin disappears. Traders would rapidly setup hedge funds and ETFs to ensure this happens in milliseconds, and much of the advantage and problems of insider trading being unfair disappear, along with a lot of enforcement cost. Obviously just a concept, what are the holes?

shadowgovt 10mo ago

Personally, I think there's a fundamental flaw in insider training law in the same category as the fundamental flaw in copyright and patents. You are trying to stop people from using knowledge for gain... In a system that is fundamentally designed to reward using knowledge for gain. Fully enforcing insider trading law requires slicing of categories and resolution of ambiguity that creates the same problems it does in the other knowledge market law: decisions that feel unfair even if the letter says they aren't, people getting away with things that feel wrong on a technicality, and the whole category Congress people fall into where it's impossible to do their job and not obtain enough market knowledge to be leverageable. I don't have enough historical knowledge to know if this was always a problem and we just weren't sensitive to it or if past generations were more modest or magnanimous and either didn't take advantage of what they knew or took advantage of it and spread the wealth around, but I think we might be trying to fundamentally solve the wrong problem. It is entirely possible that the problem is the asymmetry is the market creates themselves. There may simply be no better, more efficient solution than taxing the hell out of the rich, no matter how they got there.