Not really sure if this topic has already been covered ad nauseum but I saw it brought up again recently on CNN and I started thinking about it. What do you guys think about the whole controversy surrounding Congress' ability to use insider trading info gained while acting as a mbr of the govt for personal financial gain?
When the whole topic first came up a while back my initial reaction was "Fuck, I didn't realize that it wasn't ALREADY illegal," and I pretty much have felt that it should be banned since then.
However, just today I was thinking about something the Romans used to do back before the fall of the Republic. For someone to serve in the Senate he had to have a minimum of 400,000 cisterces in personal wealth in order to be eligible. The thinking was that they wanted their leaders to be so wealthy that there wouldn't be any temptation for these presumedly virtuous men to use their political clout to influence things that would personally benefit their finances. The Roman senators didn't really get paid to be a senator, so their interest in govt was ostensibly out of some magnanimous sense of duty to the welfare of Rome and not personal gain. Instead of financial wealth, they were showered by their plebeian following with adulation and gifts and so forth that served as a sort of alternate form of payment.
Perhaps we should do the same thing here with this issue. I think it might actually be better to allow Congress the ability to act on insider information as a reward for their services. Now look, I'm not saying that this particular Congress deserves such a reward or anything. It just seems to me that if we remove this loophole for them then our Congressmen/women may be more tempted to influence legislation in a way that places their personal financial status above the country's. They can basically do so already, although at some risk as Tom Delay might say, so why give them any impetus for doing so?
Well, if that's the case then what's the point of any regulations pertaining to them and insider trading? Shit, what's the point of any sort of discourse about govt at all?
Let's be blunt. If politicians' boundaries regarding greed are without limit, then the nature of their job is such that (for very powerful/influential politicians, anyways) there is virtually no limit to the ways in which they can advance their avarice. If that is the case, why not just lay back, spread our fucking legs wide open and hope that politicians don't have a whole lot of stamina in them that day?
Think about it: what happens if a politician or some other politically-relevant figure gets caught with their hand in the proverbial cookie jar? They go to jail for a year or two at most, in minimum security of course, and they're forced to make an early career transition. They make the talk-show rounds about six months after they get out and pretty soon they have their own show or some other thing of their own going on. Look at Jack Abramoff, Ollie North, G. Grdon Liddy and of course, Bill Clinton. If the reward is worth it (and it was NOT in Clinton's case) why not take what amounts to a fairly small risk and go for the corruption, especially if there isn't any limit to their insatiability anyways?
Good point. The Senators were originally excluded from the right to invest or engage in commerce however. But this rule quickly broke down - first by loopholes and eventually completely. Know how the Republic ended BTW? One major factor and the starting point of the 100 years of civil war that ended the Republic was a kind of a Roman "New Deal" thing:
'Gaius Gracchus proposed his grain law. It delighted the people for it provided an abundance of food free of toil. The good men, by contrast, fought against it because they reckoned that the masses would be seduced from the ways of hard work and become slothful, and they saw that the treasury would be drained dry.' - Cicero
Members of Congress can use insider trading info that they gain as a result of their job as members of Congress for personal gain. They cannot pass this information on to other people so this info can be used to profit themselves only. In essence, the rules that apply to us don't apply to them, and I'm not so sure that that's a bad thing.
I thought this too. I was like "Really? They're allowed to do that?" I mean, what's the difference between regular insider trading, which IS illegal, and Congressional insider trading? Isn't it essentially the same thing? They're both acting on info that is not public knowledge.
As for the rest of your post, how do know that the insider trading didn't lead to some of their wealth? Would they have it if they hadn't had previous knowledge of financial dealings?
I think by and large most members of Congress are already wealthy when they get elected to it, certainly for Senators. But I'm sure that many of them accumulate significant wealth via profitable stock portfolios as a result of congressional insider trading info they've gained. But again, I don't think that's inherently bad. Remember, the info they get is usually oblique to some sort of other issue before the House or the Senate, like knowledge of a bill that might negatively affect the oil industry so they pull some stock out of ExxonMobil and invest it in a green tech company or something like that. This is separate from actively influencing legislation to benefit their finances, like voting on a bill strictly based on its personal financial impact.
I don't see anything wrong with it, really. That's where the Roman analogy comes in. If we expect our political leaders to be wholly devoted to politics and bettering the nation, than they should be of such position that they aren't worried about their own financial situation. This way they aren't tempted to use their power for personal acquisitions and they aren't preoccupied with ways to accomplish this. The money's in the bank and now they can get down to the business of the country since theirs is squared away. It allows them to devote their full attention to politics, which should be a good thing for the country, provided we elect good leaders.
This sounds stupid to me. Why allow them to invest at all then? What's to prevent them from passing a bill that makes them $1-5 million that's possibly harmful to their constituents instead of being against it making nothing? It's interesting that the Romans had that idea, but when has anyone ever said that's enough money? I think you could argue the more money they have the more they could make insider trading and the more tempted they'd be to make those bad decisions. You don't all of a sudden become a multimillionaire or a billionaire and stop being greedy.
If being greedy and being a multimillionaire or a billionaire came hand in hand, I'd agree. But just because one is rich doesn't mean that they are automatically greedy or that a sheer devotion to greed and the accumulation of wealth is the way they became rich.
So perhaps we as voters should do more to ensure that we find those that are rich but not driven by wealth or a desire to acquire more of it via politics when we look for political leaders.
Look, all I'm saying here is that if they're so predisposed toward greed, why even bother with any sort of regulations against them? Or why not get rid of them entirely? They're powerful enough to make it happen for themselves and they're powerful enough to get away with it for a while and the penalty isn't that harsh, especially if you've managed to squirrel away a bunch of it for when you get out of prison in a year and a half. If they're so driven by greed, why do anything at all to stop it? If they have this insatiable need for corruption or accumulation of wealth via circumspect methods, why not just provide them with an outlet for this in the form of insider trading in the hopes that this quells their appetite and it doesn't spill over into their legislative duties?
The problem is there is no way to tell this and there probably wouldn't be enough strong leaders out there who would be incorruptible to fill all the positions in the government.
Yes, but if you eliminate the ability to trade doesn't that prevent them from being tempted by money in legislation? Of course this wouldn't stop them from having someone else trade for them. I really can't think of a better system to be honest. And I think what you describe is one of the reasons every empire has failed throughout history. Corrupt leaders. Of course no one wants to deal with the corruption in government. And it's unpatriotic to criticize the government.
They don't have the ability to "trade". They can act on info but they can't pass it on outside of Congress. I'm not sure if they can within Congress. Basically, they can't go looking for it and they can't tell anyone else when it stumbles upon them, but they can act on it. I understand that corruption sinks ships but this particular law is hardly the reason behind any real or perceived problems of significance with our govt. A tiny, insignificant factor in the grand scheme of things, maybe.
"The writers of the ages since have combined to speak of Cicero with respect and admiration. They have combined, also, to speak of Catiline with abhorrence. They have agreed, also, to treat those other rebels, the Gracchi, after such a fashion that, in spite of their sedition, a sweet savor, as I have said, attaches itself to their names. For myself, I am contented to take the opinion of the world, and feel assured that I shall do no injustice in speaking of Catiline as all who have written about him hitherto have spoken of him I cannot consent to the building up of a noble patriot out of such materials as we have concerning him."