5 ms·

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 governmen

by falcor84 11mo 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 11mo ago
Yes but politicians would need to agree. Why would they?
- Jensson 11mo ago
  In a decent democracy you could vote those out, sadly USA ain't that.
- ferguess_k 11mo 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 11mo 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 11mo ago
    Unintended side benefit -- those with power are incentivized to raise bond interest, creating a safe investment for others to use.
- Uehreka 11mo 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.
deleted 11mo ago
[deleted]
Aurornis 11mo ago
Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress. I think the simplest way forward would be to require immediate, not delayed, disclosure of trades. If they’re doing something, let everyone see it immediately and it specific detail. We could also implement some planned trading requirements for large purchases of individual stocks: If someone wants to trade more than $100K of something, make them announce it 7 or even 1 day in advance. They still get to buy it, but the market can front-run the investment if they believe there’s inside info at play.
- kspacewalk2 11mo ago
  Restricting them to invest in equities via index funds/ETFs, on the other hand, is not nearly as problematic.
  - Aurornis 11mo ago
    To what end? Most congressional actions that could conceivably lead to insider trading benefit aren’t directed at single companies anyway. They’re directed at sectors or policies which impact many companies, which is easily captured by ETFs. If Congress is acting on singular companies, the congress people are usually smart enough to avoid obviously trading that singular stock.
    - 5upplied_demand 11mo ago
      > They’re directed at sectors or policies which impact many companies, which is easily captured by ETFs. The abstract doesn't seem to agree. The use of "firms" and "corporate" implies individual companies. "purchase of stocks whose firms receiving more government contracts and favorable party support on bills. The corporate access channel is reflected in stock trades that predict subsequent corporate news and greater returns on donor-owned or home-state firms."
- NickC25 11mo ago
  This is what needs to happen. Banning trading outright is impossible and won't happen. Congressional staff and congresspeople (and their families + extended families) should be forced to trade via an exchange that publicly discloses immediately, and any person on public dime needs to disclose specifically WHY they made the trade or, there needs to be some sort of mechanism that forces said congressfolk to disclose their trades 48 hours prior to execution, and held for at least X amount of time. Any selling of security needs to be announced well ahead of time.
ethbr1 11mo ago
> Could we just not prohibit lawmakers from investing in particular stocks You're talking about HR 5106 [0] (aka the "Restore Trust in Congress Act"), currently being blocked by Republican House leadership, and actively facing a discharge position by the House rank and file (Republican included) to force a vote [1]. [0] https://www.congress.gov/119/bills/hr5106/BILLS-119hr5106ih.pdf https://www.congress.gov/119/bills/hr5106/BILLS-119hr5106ih.... [1] https://www.cbsnews.com/news/congress-stock-trading-ban-discharge-petition-anna-paulina-luna/ https://www.cbsnews.com/news/congress-stock-trading-ban-disc...
- deleted 11mo ago
  [deleted]
- stickfigure 11mo ago
  The de-facto leader of the Republican party is running blatant crypto scams from the White House and his supporters cheer him on. I don't know where the Overton Window is today, but it's a long way from Jimmy Carter's peanut farm.
  - CamperBob2 11mo ago
    It's a big cult, and you ain't in it.
  - iyn 11mo ago
    Imagine reading that pre 2008 (creation of bitcoin) — what kind of crypto scam could president run?!
  - ethbr1 11mo ago
    > Jimmy Carter's peanut farm Ironically, somewhere I was walking around on Sunday. Pretty place.
- trimethylpurine 11mo ago
  It's authored by a Republican congressman, and is a bipartisan flop, with only 100 total reps sponsoring. It's true that of those few who are sponsoring there are more Democrats, but overall most Democrats oppose which is also enough to block the bill, same as Republicans. Source: https://www.govtrack.us/congress/bills/119/hr5106 https://www.govtrack.us/congress/bills/119/hr5106 It also blocks stock trading entirely for congressmen, which is dramatically different from what gp was suggesting.
jerf 11mo ago
Alternatively, instead of disclosing on a huge delay, have them disclose instantly. We have the mechanisms to do this nowadays. Even "ETFs" are a big enough hole to drive a truck through in terms of performance, e.g., it's not hard to guess how an oil ETF will perform in response to certain geopolitical events. We could also apply Presidential rules to all of them. The President has to essentially forgo all ability to manage his or her wealth during the time they are in office. Such shenanigans as they play must either be to benefit someone else, or a very long term play for when they are out of office. This is still what you might call "suboptimal" but it's an improvement, even just the "longterm" part. (We should be so lucky as for our politicians to be thinking about how to goose the longterm performance of our economy rather than how to make a couple million next week no matter what it does to everyone else.)
- jonhohle 11mo ago
  Instant disclosure would allow ETFs, which is probably the best option. I think having a congressional required fund that the public could also invest in makes sense as well. I’ve been thinking about an act to intentionally enrich members of Congress for reducing the deficit (e.g. a fraction of percent of savings certified by GAO goes to district and to member’s fund with a multi year cool off period, saving based on ratcheted down watermark). The first allows constituents to reap the benefits of their member’s power, the second incentivizes members to be as financially motivated to not spend money as they are to spend money.
  - raddan 11mo ago
    > I’ve been thinking about an act to intentionally enrich members of Congress for reducing the deficit (e.g. a fraction of percent of savings certified by GAO goes to district and to member’s fund with a multi year cool off period, saving based on ratcheted down watermark). There needs to be more incentive to be wise with that money though. If a representative decides to “fall on their sword” and cut spending on local infrastructure projects, they enrich themselves while impoverishing their constituents. Other reps probably won’t jump in to save a district they don’t represent. I would worry that this would make politicians fleecing their neighbors even worse.
MangoToupe 11mo ago
I'd rather force them to completely divest and give them a decent pension (which I believe we already do).

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 11mo ago

Yes but politicians would need to agree. Why would they?

Jensson 11mo ago
In a decent democracy you could vote those out, sadly USA ain't that.
ferguess_k 11mo 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 11mo 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 11mo ago
  Unintended side benefit -- those with power are incentivized to raise bond interest, creating a safe investment for others to use.
Uehreka 11mo 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.

deleted 11mo ago

[deleted]

Aurornis 11mo ago

Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress. I think the simplest way forward would be to require immediate, not delayed, disclosure of trades. If they’re doing something, let everyone see it immediately and it specific detail. We could also implement some planned trading requirements for large purchases of individual stocks: If someone wants to trade more than $100K of something, make them announce it 7 or even 1 day in advance. They still get to buy it, but the market can front-run the investment if they believe there’s inside info at play.

kspacewalk2 11mo ago
Restricting them to invest in equities via index funds/ETFs, on the other hand, is not nearly as problematic.
- Aurornis 11mo ago
  To what end? Most congressional actions that could conceivably lead to insider trading benefit aren’t directed at single companies anyway. They’re directed at sectors or policies which impact many companies, which is easily captured by ETFs. If Congress is acting on singular companies, the congress people are usually smart enough to avoid obviously trading that singular stock.
  - 5upplied_demand 11mo ago
    > They’re directed at sectors or policies which impact many companies, which is easily captured by ETFs. The abstract doesn't seem to agree. The use of "firms" and "corporate" implies individual companies. "purchase of stocks whose firms receiving more government contracts and favorable party support on bills. The corporate access channel is reflected in stock trades that predict subsequent corporate news and greater returns on donor-owned or home-state firms."
NickC25 11mo ago
This is what needs to happen. Banning trading outright is impossible and won't happen. Congressional staff and congresspeople (and their families + extended families) should be forced to trade via an exchange that publicly discloses immediately, and any person on public dime needs to disclose specifically WHY they made the trade or, there needs to be some sort of mechanism that forces said congressfolk to disclose their trades 48 hours prior to execution, and held for at least X amount of time. Any selling of security needs to be announced well ahead of time.

ethbr1 11mo ago

> Could we just not prohibit lawmakers from investing in particular stocks You're talking about HR 5106 [0] (aka the "Restore Trust in Congress Act"), currently being blocked by Republican House leadership, and actively facing a discharge position by the House rank and file (Republican included) to force a vote [1]. [0] https://www.congress.gov/119/bills/hr5106/BILLS-119hr5106ih.pdf https://www.congress.gov/119/bills/hr5106/BILLS-119hr5106ih.... [1] https://www.cbsnews.com/news/congress-stock-trading-ban-discharge-petition-anna-paulina-luna/ https://www.cbsnews.com/news/congress-stock-trading-ban-disc...

deleted 11mo ago
[deleted]
stickfigure 11mo ago
The de-facto leader of the Republican party is running blatant crypto scams from the White House and his supporters cheer him on. I don't know where the Overton Window is today, but it's a long way from Jimmy Carter's peanut farm.
- CamperBob2 11mo ago
  It's a big cult, and you ain't in it.
- iyn 11mo ago
  Imagine reading that pre 2008 (creation of bitcoin) — what kind of crypto scam could president run?!
- ethbr1 11mo ago
  > Jimmy Carter's peanut farm Ironically, somewhere I was walking around on Sunday. Pretty place.
trimethylpurine 11mo ago
It's authored by a Republican congressman, and is a bipartisan flop, with only 100 total reps sponsoring. It's true that of those few who are sponsoring there are more Democrats, but overall most Democrats oppose which is also enough to block the bill, same as Republicans. Source: https://www.govtrack.us/congress/bills/119/hr5106 https://www.govtrack.us/congress/bills/119/hr5106 It also blocks stock trading entirely for congressmen, which is dramatically different from what gp was suggesting.

jerf 11mo ago

Alternatively, instead of disclosing on a huge delay, have them disclose instantly. We have the mechanisms to do this nowadays. Even "ETFs" are a big enough hole to drive a truck through in terms of performance, e.g., it's not hard to guess how an oil ETF will perform in response to certain geopolitical events. We could also apply Presidential rules to all of them. The President has to essentially forgo all ability to manage his or her wealth during the time they are in office. Such shenanigans as they play must either be to benefit someone else, or a very long term play for when they are out of office. This is still what you might call "suboptimal" but it's an improvement, even just the "longterm" part. (We should be so lucky as for our politicians to be thinking about how to goose the longterm performance of our economy rather than how to make a couple million next week no matter what it does to everyone else.)

jonhohle 11mo ago
Instant disclosure would allow ETFs, which is probably the best option. I think having a congressional required fund that the public could also invest in makes sense as well. I’ve been thinking about an act to intentionally enrich members of Congress for reducing the deficit (e.g. a fraction of percent of savings certified by GAO goes to district and to member’s fund with a multi year cool off period, saving based on ratcheted down watermark). The first allows constituents to reap the benefits of their member’s power, the second incentivizes members to be as financially motivated to not spend money as they are to spend money.
- raddan 11mo ago
  > I’ve been thinking about an act to intentionally enrich members of Congress for reducing the deficit (e.g. a fraction of percent of savings certified by GAO goes to district and to member’s fund with a multi year cool off period, saving based on ratcheted down watermark). There needs to be more incentive to be wise with that money though. If a representative decides to “fall on their sword” and cut spending on local infrastructure projects, they enrich themselves while impoverishing their constituents. Other reps probably won’t jump in to save a district they don’t represent. I would worry that this would make politicians fleecing their neighbors even worse.

MangoToupe 11mo ago

I'd rather force them to completely divest and give them a decent pension (which I believe we already do).