171–180 of 229 posts
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Investing in an index fund might even incentivize them to ensure the economy as a whole does well.
Incentivizing that large public companies do well, not quite the same.
Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/1…
If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in…
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Free markets do not necessarily mean that everyone has equal access to information. We've got market regulations so that less sophisticated retail investors have a chance against the more sophisticated / secretive groups with more money / knowledge / power than us. A laissez-faire market would encourage secrets as a means to protect ones own capital. To force some people to give up secrets (ie: regulations against in…
It doesn't have to be laissez-faire. Laws only have to be applied fairly. In this case, congress cannot hide their purchases for months before disclosure. They are a representative of the people or their state. The people must know immediately about their backdoor dealings. Immediate release will cause some gamification of the market. But it will also attract strong monitors on bad faith congresspeople.
Any "insider trading" law is about insider disclosure __BEFORE__ you purchase and/or sell your stock options.
The idea is: if (Insert CEO here) sells $50-million worth of stocks, we give the retail investors a chance to sell _BEFORE_ the big guy does. The CEO has to announce _far_ in advance, so that we have a chance to think "Wait, maybe this CEO is full of crap. Maybe I should sell too." (or not: maybe the CEO just wants a new party yacht. But giving people the information and opportunity to decide for themselves is what the insider trading laws are all about).
It doesn't matter if Congressmen disclose 1-day or 1-month after-the-fact. They've already benefited from the insider trade and its too late for the retail investor to benefit. Any investor who purchases after-the-fact just pumps up the stock price (making the Congressmen richer). And on the flip side: the Congressmen sells at a higher price than retailers who get "in late" to the game.
For insider trading laws to have teeth, we must push for disclosure ahead of time. But what stocks "count" as a Congressman's insider trade? Maybe any and all stocks count.
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At which point: our goal should be to push for 3-month disclosures from all Congressmen, for all publicly traded securities (stocks, commodities, etc. etc.). You see? This proposal has teeth. This has practical effect. Ex: no Congressman can ever buy, or sell, a security, without filing a disclosure at least 3 months ahead of the buy and/or sell date.
This "disclose sooner" idea does nothing. You gotta think about what you want out of a law before you start writing it.
Note: This is also a horribly "non-free" law. We force Congressmen to act by different rules than the rest of us. That's fine and good. Its an acknowledgement that they have more money, knowledge, and power than us. Its an acknowledgement that we need to level the playing field against them... even if we have to use non-free / highly selective laws that "discriminate against Congressmen".
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> "This is one of the biggest signals that the US is an oligarchy and not a democracy." The constitutional doctrine of separation of powers generally limits regulatory law enforcement by the executive against the legislative branch. This is actually a signal of constitutionally limited government-- this is a design feature.
This feels like a stretch. I really doubt anyone who designed the constitution intended to give lawmakers the ability to trade on insider information obtained through their position legally.
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I don’t think it’s “purposeful” as much as the fact that the fundamental fungibility of money makes it very hard to write legislation that covers a reasonable amount of loopholes. Or rather, while purposeful loopholes could exist, it’s very hard to prevent legislators trading stocks even if there were no deliberate loopholes.
Almost every other facet of the law rests somewhat on 'common sense' and what 'reasonable people would do' I don't see why the laws couldn't be like that, but I take your point.
Since Congresspeople are the ultimate insiders, they should be required to file the same forms, so that the American public can analyze and front-run them.
Not just Congresspeople, but anyone who works in the Government with access to secret information, especially secret financial reports.
"Many believe" is the sort of garbage phrase that "journalists" and their headline writers use nowadays. It's purely a way of laundering your personal beliefs. Who are these "many"? Just the friends of the journalist?
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This feels like a stretch. I really doubt anyone who designed the constitution intended to give lawmakers the ability to trade on insider information obtained through their position legally.
No, but they intended to limit the Presidents ability to create new regulations that could put legislators in jail.
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Incentivizing that large public companies do well, not quite the same.
Then make it a total market index fund with small, mid-size, and large companies.
Elected officials transfer all their equity assets into one or more funds before taking office and get shares in the fund.
When they leave office, they can receive the current cash value of their shares, without any capital gains tax, or can get their original contributions back, if the fund still holds them.
If the country did well, the fund did well, and so do those who were elected. Optionally, make this available to all government employees at the federal, state, and local levels, and generally to individual investors.
It's the most blatant example of insider trading. Company insiders might have inside access to a single company. Lawmakers have access to inside information that can affect the entire industry or market. It's a perfect example of how we do have class stratification in society and that rule of law and equality are laughably distant ideas in a sea of hypocrisy.
I'd be more concerned that if a law maker had a million of Tesla stock and Tesla lobbied them, it would take someone with concrete morals to not factor in their potential gains. Humans are not great at making decisions without considering their own incentives - you can trick yourself and your subconscious can sway you.
https://finance.yahoo.com/news/nancy-pelosi-buys-tesla-calls...