I think it's time to end that. Public officials should not be able to influence their financial portfolio. At the very least, every trade, investment, position by an elected official should be made public so that we are aware of what we're voting for: Not a representative of ourselves, but of industry and their pockets.
I really feel for you guys over in the US. These are your representatives...they sound like mafioso.
For example, when I visited Bangkok, I read in the local paper about the Minister of Telecom who also happened to be the owner of the largest telecom interest in Thailand.
In Western countries, we seem to cling to a standard that politics and business can be caissoned off. I do not know if this is better but more transparency never hurts.
It's long, but the most important line:
The reality is, critical readers should read analytic posts and the rest of Zero Hedge with the blanket assumption that the author is totally "conflicted."
Bangkok probably isn't the best example of a transparent and corruption free economy.
If a US politician's portfolio was 100% invested in international stock funds, I would like to know!
Or better yet, make them announce all trades an hour in advance!
But this particular story has left almost shaking in anger -- this is more than graft. Our government will persecute all sorts of people for inane things. Hell, Pete Rose was investigated and prosecuted because he bet against his team. And yet we have a system where the Congressman responsible for oversight of a hydra like the financial services industry can get rich betting against America? This is disgusting.
It's disgusting that anyone should be treated differently by the law because of their status.
That said, Congress-critters are in a very different position. They're writing the rules. And, they keep claiming to be "public servants", so their use of non-public information should be at least as restricted as employees.
The safest way to get more time to answer a question is to refer the questioner to counsel.
I wish they felt the same way about corruption.
I wonder if someone could write a meme for that.
I think of the market as a medium for transmitting and storing information about how much people value things. It has incredible bandwidth and storage capacity, but its latency is not always the best. Anyone proposing a replacement for a market (in anything!) needs to have respect for the incredible volume of information they're seeking to replace, but the market is not the best tool for everything.
I think this is one of those degenerate cases where the latency kills you. Specifically, the time it takes to go from "some people know this company is in trouble" to "everyone knows it" is way too long when the market is the medium of transmission. Lots of people can be ruined in the mean time.
edit 1 hr later: Now, a dilemma: do I blame the Apple fanboys or the Android fanboys for these downvotes? HN hive mind, please advise.
"The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense, just ask hedge fund manager Raj Rajaratnam who recently got 11 years in prison for doing it. But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it."
"[Senators and Representatives] shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place."
This passage has an incredibly long and complex history behind it and implicates ancient rights and privileges beyond its literal text dating back to the earliest days of Parliament that are too complex to describe in detail here, but people need to realize that it does exist, it exists for a reason, and it has implications for attempts to restrict "insider trading" by members of Congress.
Even bribery statutes can come into conflict with the Congressional privilege, and some prosecutions that probably should be brought never will be because it becomes such a close call in court.
This particular problem can and should be fixed, probably by requiring a blind trust, but people need to realize that such legislation is getting into an area that's much more complex than simply "they shouldn't personally profit from their privileged position" -- few would argue with the principle, but all should be cautious that we don't end up with laws that risk partisan prosecutions for legitimate political activity.
The idea is that if one institution or person has any two of these power it can "take over the country".
Executive and judiciary: Enforce your own court orders.
Executive and legislature: Enforce your own laws.
Legislature and judiciary: Enforce your own laws (through the courts this time).
That is why members of congress cannot be arrested. That is actually the same in most democracies.
Ultimately this does not apply here, though, as (1) congress can remove other member from congress and (2) prosecution and arrest can start as soon as the person is no longer member of congress.
I respect the need for our representatives to be able to speak their mind and vote their conscience without fear of intimidation by some tyrant in the executive or judiciary. But according to the byzantine code of law enacted by Congress and based on statements made in the 60 Minutes report, every member of congress mentioned in this article likely committed one or more felonious acts.
Who watches the watchers? The rules of the House of Representatives and Senate need to address issues such as this. Widespread corruption of this nature, extending into the leadership of the Congress brings the integrity of the United States government into question.
It's not a straightjacket, but more a statement of principle and warning shot.
Edit: By the way, see http://en.wikipedia.org/wiki/Parliamentary_privilege
Also, while they may be immune from prosecution, it should be considered an ethical violation to fail to disclose if you have a financial interest in pending legislation, and/or to be profiting in a way that would be considered illegal in another context.
My mother works as a sales assistant to a well known broker at Morgan Stanley and she isn't allowed to trade for her own account or even have an account there yet these public officials who are known to hob-knob with people who are in the know get to trade as they please using any information they stumble across?
Come on now. There should be one set of rules here but I see two: one set for me and another set for those who are supposed to represent me. Disgusting.
You can pick your lawyer and he has to do what you say. Same with your plumber.
But you have only two choices for your representative, selected by others and both will ignore you and their promises once they get in. There's something very wrong with that.
Of course, the real problem is the break down of the federal arrangement. Power is way more concentrated than the founders intended.
I'm not sure this is anything more than technically true.
It's easy to forget that the Constitution actually created a very powerful central government for its day. The Federalists, at least, envisioned the Constitution as giving Congress sweeping powers over inter-state economic activity, foreign relations, etc.
The difference between then and now is that most human activity at the time of the writing of the Constitution was strictly local. You grew your own food, died where you were born, etc.
What has happened today is not so much Congress extending its power closer to our day to day activities, but our day to day activities coming closer to the reach of Congress. Nearly every thing today involves a market transaction, often an inter-state one. If you asked one of the founders whether a purchase of a product produced with components from multiple states, in a transaction involving multiple multi-national corporations at the point of sale, was within the scope of Congressional power over commerce, the answer would likely be "well if such activity isn't within its scope, what is?" Yet that is precisely the transaction that would occur if I were to go downstairs and buy a Snickers bar from the VISA-enabled vending machine.
If you lived today on a farm, self-sufficient, perhaps trading with other self-sufficient people, like it was 1789, I don't think you'd notice much difference in Congress's power over you. You'd have to file a yearly tax return, but the Tax Code doesn't tax self-created value so you wouldn't pay much if anything in taxes. You wouldn't be paying into social security, etc. You wouldn't be using health care services, so that would all be inapplicable. The biggest burden on you would be the collection of state property taxes, just the same as it would've been in 1789.
The Constitution originally let the states directly appoint senators. That gave state governments more power than they have now.
The Constitution also originally prohibited any taxes that were not proportional, making direct taxation of citizens very difficult. But when that was thrown out, the federal government was free to grab a huge percentage of your income.
Money is power. Now the states have to kiss up to the federal government to get money.
16th amendment passed because people wanted Congress to tax rent, interest and property income the same way as their work wages were taxed.
State governments would never need money and interference from Federal Government if they were to build there own highway, maintain their own airwaves, launched their own Moon mission, agree not to prosecute minorities, have their governor not stands in way of kids attending schools, etc etc. Over period of 200 years, both technology and working of States has led to more power getting concentrated in hand of Federal government, because people wished so.
Perhaps the framers thought states would act more sensibly, but that is not what seems to have happened. This also leads to side effects like Federal government regulating what crops I can grow in my home, even if I have no intend of participating in any commerce at all.
The result was an institution in the Senate the was regressive by nearly any measure by the 1890's and 1900's.
Much better than lobbyist control.
State Legislatures make the Congress look like the Mormon Tabernacle Choir.
But, yes, they are bad. Which is why cities and counties should be free to leave for a different state or start their own.
That's actually how it works in Switzerland with their cantons.
Choice is what we need. Monopolies where the customers can't leave are very unresponsive. Government doesn't need to be as bad as it is.
The taxation bit isn't on point at all. The Constitution gave Congress broad taxing authority: "That the authority conferred upon Congress by § 8 of Article I 'to lay and collect taxes, duties, imposts and excises' is exhaustive and embraces every conceivable power of taxation has never been questioned" Bruschaber v. Union Pacific, 240 U.S. 1, 12 (1916).
The limits the Constitution imposed were in "the requirements of Art. I, § 8, cl. 1, that 'all duties, imposts and excises shall be uniform throughout the United States,' and... the limitations of Art. I, § 2, cl. 3, that 'direct taxes shall be apportioned among the several States' and of Art. I, § 9, cl. 4, that 'no capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken.'"
I.e. direct taxes must be apportioned, while excise (indirect) taxes must be uniform throughout the states.
Now, "direct" is a term of art. It does not mean that Congress can't directly tax individuals. The Framers intended for "direct taxes" to be a narrowly-defined category.
"What are direct taxes within the meaning of the Constitution? The Constitution declares that a capitation tax is a direct tax, and both in theory and practice a tax on land is deemed to be a direct tax." Hylton v. U.S., 3 US 171, 176 (1796).
"I never entertained a doubt that the principal, I will not say, the only, objects that the framers of the Constitution contemplated as falling within the rule of apportionment were a capitation tax and a tax on land." Id. at 177.
Now an 1895 case called Pollock v. Farmers' Loan & Trust Co. ruled that a tax on income from property was effectively a direct tax. It noted that a tax on the gross value of land was one of the two taxes considered direct by the Framers (the other being a capitation--head tax), and determined that a tax on income from land was basically the same thing.
What the 16th amendment did, then, was not grant Congress a broad new taxing authority had did not previously have, but nor even resolve the question of whether an income tax was a direct tax or an indirect tax, but simply removed the constraint of apportionment from the income tax, whether or not it was a direct tax.
Many people think Pollock was wrongly decided, for the simple reason that the income tax is much more like an excise tax than a property tax. The distinction between the two, as the Framers understood it was that a direct tax could not be shifted to another person, but had to be paid by the person it was legally allocated to. A head tax is the ultimate direct tax: you have to pay it, regardless of anything else.
The prototypical indirect tax is something like a sales (excise) tax, where the cost of the tax can be passed along to the buyer. The income tax is much more like an excise tax than a direct tax. It only taxes the proceeds from market transactions involving goods and labor. Income taxes are readily shifted to someone besides who it is legally incident to. Payroll taxes, for example, are apportioned by the market among employer and employee irrespective of how they are apportioned legally. Essentially, the income tax for most people functions like an excise tax on labor.
What changed between 1789 and today was not really that the 16th Amendment gave Congress carte blanche to tax the heck out of people, but rather that nearly all of the country's activity became subject to market transactions that brought it within Congress's taxing power. If you lived on a farm like in 1789, being nearly self-sufficient, like most of America at the time, the IRS could collect very little from you even today. It can't tax the value resulting from growing your own food or making your own clothes. It's only because you participate in market transactions for every little thing, from selling your labor on the open market to buying your bread on the open market, that brings so much activity within Congress's taxing power.
Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.
Article 1 Section 9 states:
No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
Do you think Wickard v. Filburn allows Congress to regulate whether you grow food for yourself?
Let's just say for the sake of argument that a typical congressman can fairly represent 20,000 people. This gives them the ability to hear the issues of those people, and a group that size can pick a representative who is close to those issues. Given congresses current size the limit of effective government is about 10,000,000 people (or perhaps just voters). To represent the United States, congress would need to have 15,000 members. As it currently stands, each member of congress represents on average 560,000 people. I'm not proposing any solutions here. I just want to illustrate what I believe to be a key issue with our democratic republic.
Scaling democracy is absolutely the issue.
It's pretty much a fundamental fact of systems that organizational overhead grows super-linearly. Why are Windows, OS X, and Linux so big? Why do Microsoft and IBM and even Google have so much bureaucracy? The US population in 1790 was 3.9 million. Today it's over 300 million. Of course government is going to be much larger than it was then!
We have representative republic, not a democracy.
I would prefer no coercion at all. Let people join a political entity if they wish and let them leave if they don't like how its going.
And these political entities can cooperate amongst themselves. Or not.
For example, the nations of Europe might choose to cooperate on border control. Some might share have a common currency. They don't have to be forced.
The merits of an initiative are enough to entice them to participate. And if a particular thing fails, they should be able to walk away from it.
Obviously, there's no guarantee government won't still screw up. But at least you're not trapped.
I can already do that.
> And these political entities can cooperate amongst themselves. Or not.
They can already do that.
I don't understand how the current system inherently prevents any of what you're suggesting. What you are describing is a problem with the people, not the system. What sort of system would account for problems with the people?
Since the first article of the United States Constitution, Section 6 Clause 1?
> [The Senators and Representatives] shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.
This makes it very tricky to try house members for any reason at all. As a result, few try as it's so hard to handle in court.
lol, "some say", just "some", really?
Even if we change disclosure laws to zero day (haha, good chance) it still doesn't fix the obvious bribing with IPOs. The fact that it isn't legally a bribe is laughable.