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.
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.
Less sure on senators.
But on the whole I agree with term limits for Congress.
The problem is getting the house full of lifers to agree to the real swamp of government (it’s Congress).
I'm only half kidding - yes, there are outliers, many of whom probably should have retired years ago (but not because they've been around too long, but because they're simply too old to do the job - Pelosi and McConnell come to mind). But, the range of term limits that are usually discussed are already within the existing range, so it doesn't change all that much.
I doubt a minority/majority leader with only 2 terms would be as good at snaking in this kind of stuff in, or snaking their way through the politics of various committees to kill off proposed legislation before it's voted upon, that takes practice to really get good at all the underhanded techniques.
How realistic is this though? Getting elected to Congress usually means having some other prior government experience, or your opponents attack you with "why would you give this person responsibility at a congressional level if they've never even worked in local politics?" Not to mention you need name recognition, a history in government that people can use to understand your values as acted, relationships in government to accomplish anything.
As I get older it seems that liberal democracy basically requires career bureaucrats to function. I'm very open to discussing other ways of organizing society, but if we're gonna do liberal democracy, seems this is the way.
I would contend there are plenty of people in lower levels who can move up or not. Was the mayor of the next town over any good and thus I want to send them onto state congress? Was a library board member two towns over good and I want them in the US house? For that matter, do they run a good honest business (there are lots of businesses) that I can check out locally and thus I want to risk them.
The real key is that term limits need to apply to everyone and so nobody will bother asking about experience as there isn't anything more on their side to fall back on.
Though in the end you are probably right - doesn't mean I like it.
> As I get older it seems that liberal democracy basically requires career bureaucrats to function.
I agree, but the people in congress should not be the career bureaucrats.
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
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.
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.
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.
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.
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.
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.
If Congress is acting on singular companies, the congress people are usually smart enough to avoid obviously trading that singular stock.
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."
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.
Running for congress is already kind of a financially silly thing to do, that ship has sailed. Let’s pull the trigger on this and just see what happens.
Evidently it's not. There's another problem that it seems to me that it's mainly wealthy elite who get in. How many working class people are there in major leadership positions?
What's wrong with that? "If you choose a life in government, you'll never be rich, but you may be powerful" seems like a perfectly acceptable situation.
We don't stop athletes who use the gym regularly from competing because all the guys using steroids also went to the gym a lot.
And you're conflating "being financially intelligent" with "being primarily motivated by profit and personal gain".
A conman is often "financially intelligent", too, but what they're inclined to do with that intelligence matters.
Restricting people only to government bond investments (the first line of my post, the point I was responding to) does not happen widely in industry.
Restricting people’s trades of a few stocks where they have insider knowledge does happen. I would be in favor of laws against congressional insider trading, too, but not laws forbidding all stock ownership or restricting them to government bonds as was proposed above. That’s just short sighted.
The flip side is it also discourages anyone primarily looking to profit off it, rather than being interested in actual governance.
There are historical examples of what happens when lawmakers mandate high amounts of money creation. It doesn’t end with the people being better off. It usually destroys the economy.
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....
[1] https://www.cbsnews.com/news/congress-stock-trading-ban-disc...
I don't know where the Overton Window is today, but it's a long way from Jimmy Carter's peanut farm.
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.)
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.
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.
It's even more damning than that I think.
>we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension.
The same person makes more after being put in a leadership position than before. That essentially removes any possibility of 'well maybe they're just more knowledgable and that's why they're in leadership.'
I would say jokes aside but the political system promotes this corruption.
That said, there should be national minimum standards for the elections.
Chain of custody is something all elections adhere to in the US, but if it's not a federal requirement, it should be.
What's really needed are hand marked paper ballots, electronically counted using open, independently audited machines with no network connectivity (obviously). "Scantron" style machines That should be a minimum requirement.
Nobody stole the election from the doddering old fool in 2020. Internet bullshit doesn't stand up in court where they do have evidence standards.
Edit: Back on topic ... individual stock trading by representatives clearly should be illegal. And apparently we need more independent watchdogs with better protections against a puppet who mindlessly goes along with the last person to manipulate them.
Ticker: NANC, its an ETF
So we're looking at 11% - 3.5% = 7.5% real return over 5 years, or roughly 1.5% per year. I'll easily recommend passing on this one.
Where do I get some of this "riskless" VOO? My broker only seems willing to sell me the regular, risky kind.
And everyone ignores the fact that her husband is a professional in the finance and venture capital world. Investing is literally his job.
Anyway, if you want to track her trades there are ETFs to do it. It’s not an exclusive investment thing. If you’re in the US you could buy them from your broker right now.
There are also countless sites that will push the Nancy Pelosi portfolio to your inbox, but they’re universally spammy and almost always pushing some other agenda too.
As a rule: If they’re focused specifically on Nancy Pelosi and not looking at top congressional trades as a whole, they’re more interested in pushing a political content than financial content.
Oh, and it’s important to know that you can’t actually track congressional portfolios in real time. The disclosures are delayed so you can only track them after the fact. If you believe they’re front-running insider info then the changes may have happened before you could possibly get the signal to buy or sell.
One smacks of hypocrisy while the other is a dirt bag behaving exactly as expected.
Given the situation (that it's unfortunately legal for them to do this) I don't blame either one for taking money left on the table. Why forgo a financial windfall, who benefits by that? The voters should back candidates who will change the law, and then we can talk about criminality and not selective hypocrisy outrage.
Bribery or anything else that affects their lawmaking decisions is significantly worse because the impact is so much larger.
But there is a third option: They are making decisions based on what will move something the most - doesn't matter what, and doesn't matter which way, and doesn't matter for how long. Then they invest in that thing a bit before the decision becomes public that moves that thing.
Don't get me wrong, I think campaign donations or even more explicit bribes are a huge problem, too, but it is already insane to me that you would ban and prosecute "ordinary insider traders" and just let lawmakers do whatever. If presidents have to give up peanut farming, then asking for congressmembers to be utterly decoupled from stock trading decisions is only fair and sensible in my view.
Lawmakers deciding what laws to argue against/for based on how much money it'll get them personally is a benign issue? It's a very hard problem to solve, when the people making the laws have to outlaw behavior that makes them rich, but it's a very worthwhile one if you manage to get it down, because then you'll again get politicians working for the people rather than against.
The boundaries between corruption, lobbyism, incompetence and nepotism can get very blurry (sometimes even actually representing your constituents interests can look this way!).
But policy makers enriching themselves by insider trading are seen as corrupt by pretty much everyone.
What is the less benign corruption seen in Washington that you feel is most pressing?
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
Yeah, sometimes people can break laws and not get caught. But that's no argument against laws. Some congressmen might be able to hide their investments, but sometimes they'd get caught and plenty of them would not take the risk.
I don't know if that's realistic or not as the electorate has already shown they don't care enough to vote their representatives out for doing it and it's unlikely that current members would restrict their earnings. I guess it's good that we know about it, at least.
George Washington was paid 4x Trump, I believe.
In the context of corruption cleanup, I think people understand that paying people well avoids corruption. Mexican cops, that sort of thing.
Yes, not popular, but important.
The problem arises from how we run elections. It's very hard to dislodge an incumbent when the small group of people voting in a primary are very biased, and then the people voting in the general election really don't want the candidate from the other party.
I suggest reading "Breaking the Two-Party Doom Loop: The Case for Multiparty Democracy in America" by Lee Drutman.
https://www.amazon.com/Breaking-Two-Party-Doom-Loop-Multipar...
Many people agree with Bay Area's idea that people making less than $105k are poor - https://news.ycombinator.com/item?id=46036803
https://www.congress.gov/crs-product/RL30064#:~:text=The%20c...
We have several high tech companies as well as a pro sports team that perpetually influence politics to the city’s detriment, and the stooges that get put on our ballot each election are simply under-equipped to combat them.
The chief of police summons a recently enrolled policeman in his office: "The accounting called, and apparently you never picked your pay cheques in the last 6 months? What's up with that?" ― "Wait, we get paid? I thought it was, you get the badge and then gun, and then you're on your own!"
The things with jokes, however, is that they probably should not become reality.
So instead they hire a city manager who basically runs everything, at a much higher salary, which meets budget rules since they could in theory fire him if they run out of money. Hence the city manager is an unelected strong executive, which is not good for democracy.
It sounds crazy but our whole muni budget is under $5 million. We have almost no infrastructure other than roads (98% of housing is on well water and septic systems, there are no street lights or sewers or the like).
A lot of municipal government in the US is like this. Very small with near-volunteers running everything.
You are right that this rules out a lot of people who can't afford to effectively volunteer for local government. I think mostly this is a good thing.
Obama signed the STOCK act into law, but of course, who watches the watchmen? The Restore Trust In Congress Act is sitting there, waiting for Mike Johnson to bring it to a vote.
Paying enough to cover the expenses of the job isn't a solution to all problems, just kind of a minimum bar if we want a normal person to be able do the job without relying on other income sources.
You need to be well connected and/or wealthy before you even start.
If your goal is to make it easier to travel to and live in DC, well, congress has the power to address housing (especially in DC) and airline costs for all Americans.
Who's going to draft those laws?
Definitely not the lawmakers who could benefit from this.
See the problem?
CA doesnt care about this -- you continue to re-elected Pelosi, she is one of the worst violators of this
By having lawmakers as peers, you’d have a natural feel for what laws have momentum, who would benefit, etc.
I’m not ruling out corruption, just that assuming malicious intent often masks underlying dynamics.
It’s not insider information to buy or short a stock knowing you’re about to do something that will impact a company.
They shouldn't be allowed to trade stocks. When you do so, corruption is inevitable. It should be an expected price of public service that you remove yourself from most other ambitions.
I'd hope that if they were required to live off of their (rapidly depreciating) savings and income, like most Americans, they might consider some of their legislative choices differently.
Countries like Singapore already figured out that if you pay public servants very well you can attract high quality people to government jobs.
If you make part of the job requirements that you sacrifice your retirement and financial well being for the good of the country you’re just targeting a type of politician you wish existed, not real people.
> I'd hope that if they were required to live off of their (rapidly depreciating) savings and income
The problem with your line of thinking is that “they” is not a fixed set of candidates. If you forced them to have “rapidly depreciating” financial states to take the job, you’d lose a lot of candidates. I know you’d like to imagine they’d be replaced by perfect utopian candidates who only have your best interests in mind, but in reality if you make people financially desperate they’re actually more likely to look for ways to commit fraud for self-benefit. Imagine the desperate lawmaker watching their family’s retirement “rapidly depreciate” who gets a visit from a lobbyist who can get their kid a sweet $200K/yr do-nothing job if they can just slip a little amendment into a law.
The populist movement to punish lawmakers is self-defeating.
So insider trading is not a thing among Singapore's ruling class?
The only acceptable leader is someone who was born so rich that he leads as a hobby.
Holding index funds seems reasonable (Total Stock Market, S&P 500)... not a huge sacrifice imo
Or is that one of those, "Of course that exists, but if you have to ask how much it costs, you can't afford it" kind of things?
If what you’re positing were true wouldn’t they have outperformed their peers before ascension as well
Right now the people entering politics are people who just want more money. They don't care about anything or anyone else. The sooner Americans realize this the better off we'll be.
But I'd definitely be okay with the property part if removing privacy isn't feasible :)
If only Congress and Americans had access to more figures and math, then we would do the right thing. This paper is going to change things. We finally did it.
It doesn't require us to change our views on areas where we don't agree. It simply requires uniting on the numerous areas where there is common ground.
I don't know about you, but I'm tired of this.
Your average Joe does this and gets ripped away from his family for 10-years. Politicians do it and it gives them job security.
The two-party system amounts to two wings on the same bird. While we're fighting about left vs. right, we're soon going to find ourselves in a new system of lords vs. peasants.
It's one thing to use insider information, it's another to be blatant and unapologetic.
[0]: https://en.wikipedia.org/wiki/2020_congressional_insider_tra...
I'd vote for that person in a heartbeat even if the rest of their platform was non-existent.
I think if you asked average USA citizens, the majority would support more restrictions, or an outright ban on trading, for the legislature. But our country isn't even pretend-run according to the will of the people at this point. The veneer of listening to the people is practically completely gone.
I remember writing to one of my reps about a decade ago, urging that she vote a particular way on an issue. The canned auto-reply that I got in response told me why she was right to take the opposite stance and didn't even pretend to value my feedback. It used to be part of the job that a politician would lie to you and say they valued your opinion, even if we all knew that was bs. It was a real mask-off moment that I didn't realize was about to become the norm throughout our country.
"After ascension, however, leaders outperform their matched peers by up to 47 percentage points per year"
They looked at the 20 congressional leaders from 1995 to 2021 that traded stocks. They found _up to_ a 47% outperformacnce per year.
It's not clear (without trudging through the data) what the average outperformance was (or if there was any).
Anyone who disagrees must be new to humanity.
mahatofu•1h ago
burkaman•1h ago
stego-tech•1h ago
It’s absolutely disgusting that this sort of Insider Trading has been allowed to continue unchecked, and a significant contributor to the normalization of American corruption and its associated regulatory capture.
andsoitis•1h ago
showerst•1h ago
Be wary of all the third party congressional stock trackers for this reason.
threatofrain•1h ago
derrida•1h ago