Incorrect title, the finding is "lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension." This is saying that people in congressional leadership positions do 47% better than other members of Congress.
>This is saying that people in congressional leadership positions do 47% better than other members of Congress.
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 think the point is that this study suggests a causal relationship (having leadership power enables one to make more money), which is stronger than just correlation (being in leadership positions correlated with making more money).
There are a lot of strong claims that the paper does not make. It never says that leaders outperform index funds. It just says very specifically that leaders outperform other members of congress. The paper also does not include any clear charts on the actual returns the congressional leaders were getting.
Maybe I'm simply too dumb to interpret this paper, but overall I find it unconvincing of anything notable or scandalous.
Essentially, what information are they privy to that public is not? What asymmetry exists (timing, un-public information)? Is there any way for the public to be nearly as informed? What are they trading on? Upcoming funding changes (more money here -> buy, less money there --> sell)? COVID impact stands out.
It isn't necessarily that they have information the public doesn't (although it could be that, they would know about policy changes before the general public does). It could also be that they use their leadership position to push forward policies that benefit stocks that they own.
If you compared Pelosi to other investors in San Francisco, you wouldn’t see much of a difference. Anyone who has gone heavy into tech in the last couple of decades has outperformed the market at considerable risk of going broke if there was a tech bust. Compare Facebook or Google to an index fund, especially before index funds decides to go heavy into FAANGs.
People who make/have more money also have more appetite for risk and also in general make more returns. Even without insider trading, being able to take a lopsided position on tech with the expectation that if it loses you still have a comfortable life, that is how the rich become richer.
That doesn't explain why persons in leadership positions outperform other members of congress. Presumably they all talk to each other and could share trading strategies. There's no reason not to unless your strategy involves inside information that might get you in trouble if spread around.
The more committees you are on, the more opportunities you have for informed medium term trading that escapes insider-dealing scrutiny. It's a fundamental problem with government and it is why politicians should be required to put their stocks in a blind trust. But it still doesn't solve the problem of blind trusts not being truly blind when you know what went into them.
Ideally we should remove the incentive all together. Limit it so Politicians can only buy index funds that don’t target any specific industry.
Fundamentally you can classify modern society into two groups: government and commercial citizenry.
The incentives of these two groups are misaligned and that is essentially the origin of all corruption.
The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible.
The government, his goal is to be fair, to enforce and follow the rules, and to guard citizens.
When you combine these two groups the incentives collide. You get government officials who are supposed to be fair but instead they are incentivized by commercial interests so they make biased laws, take bribes and do all that shit.
To reduce corruption you really need to create societies made up of two different groups with two different sets of incentives.
Dictators are more immune to this effect because all of their commercial incentives are pretty much completely fulfilled as they own the whole country.
In a democracy the closest sort of thing I’ve seen to this is priesthood. Buddhism or becoming a monk is similar but these are not elevated leadership positions like priests.
Basically when you become a government official it should be like becoming a priest. You are removing yourself from commercial society. It changes everything. Your incentives are different and it even filters out all the bad actors.
Such a society can realistically exist. I think the unrealistic part is converting our current society into something like this.
The primary challenge I see is that at least in the US, government positions are often elected and termed, meaning there is no guarantee your cash flow from your government job will continue long-term. This is why you must continue to operate as a private citizen, with a government job.
The second potential issue is one of pay - the best of society can make far more in a commercial setting than in a government setting - barring corruption, of course.
For your second potential issue, I’m saying that’s the point. Nobody becomes a priest for money.
These people who become priests do so for other reasons and they largely want to exit the commercial economy. That’s the type of people government should be made of. Under this system pretty much 100 percent of politicians wouldn’t have even become a politician.
Since we are talking about political leadership at the highest levels (not pastoral local municipalities), a good comparison with priesthood would be the Vatican. Even in priesthood, when there is concentrated power over vulnerable populations, we can find: wealth hoarding, money laundering, collaboration with organized crime, and protection of rampant sexual abuse.
The first point is true of most employment, unless you're one of the ~10% of US employees with a union contract. Your paycheck is always subject to the whims of your employer.
I don't have a great solution for the 2nd issue you pose though. Raising the pay of elected officials is often politically unpopular, but you're certainly right that one makes more in the private sector than as a junior congressperson.
Yes and no - if you lose your job at Apple, you can go down the street to Microsoft. If you lose your elected government job, you can't run again for years. Meaning, you have to switch from being a government employee back to being a commercial employee.
Here's my hot take: politicians should be paid a lot of money, and in return they should be subject to limits on how they can invest, if they can invest at all. Remove the incentives that cause corruption and attract talent. I think it's a bit naive to say that public servants need to be earning a meager salary. Underpaid people don't stay in their roles very long.
The goal should be to not produce homo economicus in the first place, not to figure out how to build a society out of them in the same way you build a trustless smart contract.
You can still play the market with index funds. For example if someone knew that Trump was about to announce new tariffs they would sell to dodge the brief market panic.
> The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible.
This conception of "citizen" is even more depressing to me than Homo Economicus. There are values aside from wealth, and not everyone is a money grubbing sociopath.
I'm not particularly concerned about unfair gains made possible by insider knowledge. The economy is large enough, and the set of lawmakers (not to mention leadership-level lawmakers!) small enough, that that the overall effect on anything is going to be negligible.
My concern would be that the "skill" we're seeing isn't with using insider information, but with using their power to alter outcomes to make whatever investments they'd previously chosen become profitable post hoc. If they're causing our regulatory landscape to be change to pad their wallets, that's going to have a much greater effect on our overall system than just being able to make a trade a day earlier than the rest of us.
> I'm not particularly concerned about unfair gains made possible by insider knowledge.
I am. I work at a company that trades publicly. My wife works at a firm. I can’t do anything with my stocks outside of three weeks a quarter. I can never buy options. My wife has to clear her positions with whatever department. If I have these obstacles, congress should absolutely have them — maybe more. Ideally they can trade index funds and that’s about it.
> If I have these obstacles, congress should absolutely have them
This jealousy is a minor issue, though. There's no reason for you to believe Congresspeople should have exactly the same limitations and opportunities that you have. This is in fact a discussion that involves limiting them from doing things that you would retain the right to do.
But we should be concerned shouldn't we? These people are exempt from laws, they and their presecessors made, for which they will happily condemn the common person and profit again when you pay for your crime.
> it is why politicians should be required to put their stocks in a blind trust
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.
I don't want people in congress as a career. Do it for at most 2 terms and get back to the real world. When that is the reality it means we cannot take away their ability to have stocks because when they return "to the real world" they will need that savings. Though while in office they should be limited to buying and selling from blind trusts and such things where they cannot know what happens except the economy in general. However if they own stock before it isn't fair to make them sell it: this is a really hard problem and there probably isn't an answer I will be happy with.
> 't want people in congress as a career. Do it for at most 2 terms and get back to the real world.
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.
> 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.
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.
> 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.
It's always funny to me how much people hand wring over politicians and then they somehow believe that putting someone who currently and actively has large personal interests and incentives to make government worse for people for their own gain is somehow a good thing
If you think politicians doing things to affect their bottom line through stocks is bad, surely you recognize how crystal clear and more direct the incentive is to do that kind of thing when your "asset" is your own business that can't be easily pivoted and depends on labor being cheap and desperate?
Nevermind that those kind of people just usually have radically different worldviews about what a government SHOULD do, and that worldview almost never allows for government preventing them from harming people for profit
There’s bad and good to term limits. It incentivizes short term thinking and goals. Supreme Court judges for example are deliberately given lifetime seats to get rid of short term incentives.
Go back to local politics? Why the only direction should be always up? At the end, who cares?
Career politicians with most power who reach the top will always be good primarily at one thing - bullshitting their way to the top in various sociopathic manners that no power structure anywhere is immune to. Those who are inside the circus for 30+ years? Expect them to be rotten to the core while wearing very polished masks, seeing and dealing with the worst and staying on top. Not a place for a nice good hearted well intending folks.
Don't expect some common good to come out of them just because it would be nice or proper thing to do, either its by mistake as a byproduct of some other effort or some pre-election campaign.
> Do it for at most 2 terms and get back to the real world.
Guaranteeing they never get good at their job, and institutional knowledge keeps decaying.
We need to stop pretending that Congress or any of these elected positions don't require skills. I think to be a Congressperson you have to go to specific trade school--let's call it Congress U--graduate with high honors, serve in some other government capacity, and your grades are public record. Only then are you qualified to even run for election.
Democracy isn't about letting any random firebrand run things. Heck, we don't even let random firebrands install electricity.
Disagree. The main motivation for serving in Congress should be just that - service to the country. Not personal power building, not a career. The actual process, writing bills, parliamentary procedure, is all managed by staff anyway. The representative or senator is mainly the face of the office and should be mostly talking with constituents and not buried in policy.
If there's one qualification test I would possibly support it would to pass a high school AP US History exam.
I am completely sympathetic to your motivations here. However, it seems like if you take that approach, where many qualifications are required before you are “eligible” to hold elected office, it’s much closer to an aristocracy than a republic or a democracy. Unelected elites who control the special university and those who set the eligibility rules in general hold and safeguard the real power, allowing trusted insiders to ascend to power and burying those with unorthodox ideas or worrying populist notions. It’s an anti-democratic idea.
It probably, on net, increases the power of elites and decreases the power of ordinary people, which increases the already extreme tilt in that direction. Like with a lot of things, it depends on the virtue of the elites in question whether this is a great idea or a catastrophic and oppressive one. As we can see, our current elites are so shameless they blatantly trade on privileged knowledge and can’t even manage to pass a budget for the country.
In general when one looks at the longest serving politicians, it seems to reek much more of extremes of corruption than skill. The insider trading this article references being but one aspect of that. It also correlates with people turning into warmongers, but that's probably just another angle to corruption since there's a rich and ridiculously unaccountable flow of money in military related stuff.
For another datum consider presidents' second term. This is often where they are supposed to be able to really act out their vision for the future since they're ostensibly out of politics after this and have at least 4 years of experience at the highest level, yet they almost invariably tend to be extremely underwhelming.
I'm not arguing there is no skill, but I am arguing that just spending a lot of time in office doesn't seem to correlate much with achieving that skill.
> Guaranteeing [that congressional lawmakers] never get good at their job
I don't know if you've been paying much attention to US politics since the year 2000 but the vast majority of them are no good at their job regardless of how long they've been there.
> We need to stop pretending that Congress or any of these elected positions don't require skills.
I don't think anyone does? But currently the only real skills you need for attaining high US office are 1) be rich and/or have enough rich people in your phone book or 2) the ability to make Donald Trump feel like a special boy.
> Democracy isn't about letting any random firebrand run things.
waves in US/UK/Argentina/Brazilian politics over the last decade
As a thought experiment, imagine a world where borders exist as they are but the whole political process inside them everywhere is to 1) choose a zone randomly 2) choose a citizen randomly 3) receive policy proposal from them 4) vote yes/no on policy using random dice 5) for resolving ambiguity on any and all policy details such as "how much" or "for how long", return to step 1.
It's uh, king for a day, with checks and balances on human cruelty via chaotic caprice. How likely is that world to be worse than ours? If so, how much worse? If not here and now, then which counterfactual geography or year would you have to transported to so that this randomized process is definitely preferable?
Think through the downstream impact of term limits... where does the power accumulated by long-term congressmen go? My guess... it flows to either/all of career bureaucrats, lobbyists, or career congressional aides. Do we really want to cede more power to groups that are not elected (bureaucrats, lobbyists) or elected-by-proxy (aides)?
I take the exact opposite view. A revolving door of congresspeople would decrease the influence of lobbying (and, for that matter, the influence of political parties in general), because once a member of congress reaches their term limit they would no longer be influenced by campaign donations.
Also, let's take a step back:
> where does the power accumulated by long-term congressmen go
We need to take a very hard look at any supposedly democratic system in which power is "accumulated" by individuals. Deeply entrenched politicians who never face term limits nor reelection resistance have no reason whatsoever to care about the will of the people.
Ding ding! I think that's the real problem. If I were king for a day, I'd end gerrymandering and replace it with non-partisan (probably algorithmic) districting. And I'd shit-can partisan primaries and introduce approval voting or instant-runoff (or something similar).
Depends on what power we cede. We should give them clear rules so they can make decisions based on their expertise. They should not be making the rules though (except as suggestions to congress - as experts this is an important part of their job)
Being a congressperson isn't something you're supposed to have to get good at. You're supposed to just be a representative of the people. The "experts" in government are the nonelected officials, advisors and agencies.
For similar reasons, all presidents are newbies. The benefits of having one with lots of experience would be vastly outweighed by the downsides...
Since they are supposed to be serving their country and not seeking personal gain, their interests should be aligned with those of the whole country. As a condition of taking office, they should surrender their entire stock portfolio to a government custodian in exchange for a federally-held broad market index fund. While in office, they are free to sell from that fund if they need the money and free to buy more of that, but no other securities. When they leave office, they are owed the present value of their index fund, and can repurchase whatever they want to. All of these could be made non-taxable events, so that if someone wants to just go back into the same positions they had, there isn’t any complication.
To me, the above seems slightly complex, but well worth undertaking in order to stop this blatant and shameless corruption.
As we’ve seen with the current president, though, it’s much more difficult when they own and control whole businesses instead of just fungible securities. To be fair to the president, there isn’t really any reasonable way to get rid of his massive conflicts of interest besides having a pre-inauguration IPO for all his companies and retaining 0 shares - and his family retaining nothing too. But that’s a bigger problem that probably cant be solved.
Stocks though, it would be easy, they just don’t want to solve it.
Good news, the average career in the House is already 8 years, so no new law needed! The Senate average is 11 years, so it's already less than 2 terms, no change needed there either!
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'd absolutely support a maximum age limit, maybe e.g. if you will reach 70 years of age in your term of office you cannot run. So a senator could be elected up to age 64. A Representative up to age 68. And I'd apply that to all elected offices. My biggest criticism of Biden vs. Trump was that they were both too old.
No, no. We want the wisdom of the older generations.
We want the stability of someone who has seen life’s ups and downs and understands there is more to life than the petty day to days of a presidency. There is a legacy beyond them and they imbue that in their policy.
Age can be a symptom of your inability to do this, but it is not the problem.
The problem is with specific mental ailments and behavior coming into the presidency. We should scrutinize those ailments heavily, and build a culture around stepping down when life inevitably gets to you too — and having it taken from you if you do not take the opportunity for mutual dignity.
The problems that afflicted Biden could happen to anyone at any age. It is a problem if any candidate experiences it.
And I do not really think age has effectively changed Trump’s view of the world.
Those with longer tenure though tend to end up in the powerful senate positions like becoming a majority/minority leader. Thus you end up with absolute fossils like Pelosi or McConnell who most recently basically snuck in banning hemp into the budget bill, which was something absolutely almost no one in the USA was calling for and incredibly unpopular.
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.
I would use straight up sortition rather than voting for congress. Propel people into the job from obscurity, by the time they've learned how to game the system it is time to leave.
The thing is that bribery is technically illegal. Of course it's completely ubiquitous, but it's generally (FFS Menendez) done in a nuanced and practiced way. Newcomers are not always going to be willing to accept bribes, and actually trying to offer them one would require much more overtness, which enters rapidly into the domain of clear criminality, to say nothing of when your bribe attempt is rejected. And these are the issues with just one guy - with hundreds of politicians regularly cycling in and out, this scale of bribery is just not realistic.
The bigger risk with sortition is that power isn't granted through a title, but through people agreeing to respect that title. If the authority of that title ends up being undermined, then it's entirely possible for power to shift from our representatives to other, probably more entrenched, groups. One could argue that on many issues this is already the case. For instance Congress ostensibly has oversight over the intelligence agencies but the power relationship there is completely reversed. For those that don't know, Congressmen don't have classified access by default. Millions of people in the US have classified clearance, but the people representing the country at the highest level - nah, why would they need such a thing?
Only if you theorize that power corruption is a step function, and that there isn't survivor bias and influence during the process of getting to the point where you can even win an election.
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.
Lord Acton has a few words about power etc. I don't think most people selected ala Cincinnatus for greatness have the ability to demure when venturing into government at high levels. Quid Pro Quo...
Yeah, but that makes them susceptible to lobby groups. They offer the politicians cushy jobs after their political career in exchange for political services. Politician probably has to be a sustainable and well-paid career somehow.
yeah this is exactly it, there's no good way to prevent congress from sharing inside information to enrich people around them in the wake of personal bans... we just need term limits to reduce the surface area
Your argument seems to be that those in public service should only survive on their salaries, because "doing it for the people" is enough of a reward that they don't need to worry about such trivialities as money.
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.
It makes more sense when the government isn't as powerful as it is today. If we didn't ask or expect our governments to do so much the politicians would have much less advantage over the average person.
If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress.
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.
Yes, like every other profession in the US seemingly, Congress is also underpaid. But letting them individually fight for getting as money as they possible can before they retire via means the typical person doesn't have access to, isn't right either. I agree they should be paid appropriately, so they also can survive on their salary, but still think they shouldn't be able to do certain things others can, because of their position.
> If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress
Congress should be paid minimum wage. They are the ones who determined that this is enough to live on so everything above that is wasteful spending of public funds. If they don't think it's enough, they can change the minimum wage to a liveable amount.
That’s the best way of ensuring that bribes (legal or not) become the primary source of income for every representative who is not independently wealthy.
You’d have a massive influx of incompetent grifters who only get themselves elected for the salary. At the end of the day public service still has to a “sacrifice” (doesn’t mean that it shouldn’t be compensated at e.g. top 5 percentile income).
Give them spending rights. You need a second home in DC? Ok, if you pass a means test we reimburse your rent and travel costs. There's no sense in giving them additional excuses for not doing their job. 174k is plenty of money to live off.
I have a hot take on this that I think could actually make some headway:
- We raise the congressional salary. Say, maybe double them across the board.
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.
> Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson.
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.
> The problem with "blind trusts" is that even blind men wink and nudge.
They should only be allowed to invest in a fund that is open to public participation. This should also be public information. You should be able to pick a congresperson and invest in the exact same funds that they do.
I honestly don't know how you put a cone of silence around congresspeople such that insider trading anywhere in their sphere of influence is impossible. My intent would be to make it difficult for the congressperson to directly benefit from passing along insider info and compensate them enough such that it isn't a practical path. Sure, they could still tell friends to buy/sell, but if the friend *does* act on that, it's sure going to raise eyebrows when they try to wire $1M worth of proceeds to the congressperson for "movie & pizza night".
And I know that the next stone to be cast is "yeah, but if they help friends/business associates beat the market, congresspeople can still benefit with board seats and jobs when they're done with congressional terms". That's totally valid, and I have no idea how to combat that.
Their salary is not nearly enough. FAANG SWEs make several times more money for something that's quite a bit less important. Their pay is pretty good, but they also have a job which requires them to stay away from home (for most of them) for long periods of time. The pay is not really enough to maintain a household and a second living space comfortably.
I get the sentiment that they shouldn't be in it for the money. But money is important even for idealists. Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Would you say that this person doesn't want to serve the people enough, and shouldn't run?
Maybe you would, but the problem is that you mostly won't get people who want to serve even more. By paying a relatively low salary, you'll end up getting:
1. Idealists with poor prospects in the job market.
2. Extreme idealists with good job prospects.
3. People who think they can leverage the position to make enough money to offset the difference in pay.
4. People rich enough not to care about piddling W-2 income.
In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million.
And of course people don't tend to attain substantial net worth without having an eye for ways to make money, so it's very likely that those people will abuse their position to make money as long as they think they can get away with it.
I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
> The pay is not really enough to maintain a household and a second living space comfortably.
Who's talking about a second living space? They can move like most Americans do for work when the commute is too much.
> Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead.
Then they can go work for Facebook. Who cares what they would like to have.
> Would you say that this person doesn't want to serve the people enough, and shouldn't run?
Yes.
> Maybe you would, but the problem is that you mostly won't get people who want to serve even more.
Source?
> In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million.
Before or after they started their career?
> I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially.
Ordinary people don't have the expectation of needing to be payed $1M to serve their country.
> That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
The wealthy ones just use their wealth to get ahead.
it's not really possible considering that most retirement accounts are stock portfolios — it also doesn't matter too much on an individual level because an individual ban just gets pushed to sharing stock tips with extended family (already happens), family bans get pushed to friends, etc...
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
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?
> 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].
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.
Blocking it outright is probably more than what I want. I think if they can only invest in things like S&P500 funds that would suffice for me. Force them to invest more broadly in a way that it cannot interfere with the market.
80 Democratic cosponsors out of 213 Democratic representatives.
The bill is sponsored by 37% of Democrats
22 Republican cosponsors out of 219 Republican representativs.
The bill is sponsored by 10% of Republicans.
I think you might be jumping to conclusions by calling it a bipartisan flop. Co-sponsorship is not the same as a vote, there may be people not on the sponsorship list who would vote for the bill.
The bill was introduced 3 months ago (43 days these last three months was a government shutdown) and not enough time has passed to determine whether the bill will be a "flop" or not.
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.)
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.
> 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.
1. Only things that approximately match the contents of TSP funds or broader
2. Have to write down a 10b5-1 for the entire duration of your election plus one year, with a double cooloff period (6mo vs 3mo), and have to extend it within 3mo of each successful election.
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.
It's not so challenging and it happens widely in industry: people are often heavily restricted in the range of trading they may conduct in cases where their business would give them insider knowledge, such as in certain parts of banks, accounting firms, credit rating agencies etc
> It's not so challenging and it happens widely in industry:
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.
You're creating a straw man (perhaps accidentally) which makes your argument seem such stronger than it is against the actual proposals.
Neither the comment you replied to, nor the proposed law, suggest the limit should be solely government bonds, which is what you're arguing against in your comment, they both say government bonds OR publicly traded diverse stock funds, for example ETFs.
Maybe you still believe that's restrictive enough to be a problem, but considering many people, even the likes of Warren Buffet, consider the best investment advice to be either "just invest in ETF/funds that track the whole market" or "just invest in a mix of ETFs/funds and also some bonds", while nobody considers "just invest in government bonds" to be good advice, your argument would be a hell if a lot weaker if actually applied to what IS being proposed rather than pretending that the proposal only allows investing in government bonds.
Well, currently we have a ton of Congresspeople who are primarily motivated by their "good financial sense" (for obvious reasons e.g. this study). So, I think we could do with a few more Congresspeople with less financial sense and more genuine motivation to improve the lives of their constituents.
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.
Ha! The supreme court (what a joke) has said that it's cool to give "gratuities" after the fact to judges or lawmakers who do what you want. It's not a bribe, it's just a gift or a tip!
> discourage anyone with financial sense from running for congress.
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.
Even the most disruptive proposals in these comments aren't banning representatives from being rich, it's just banning them from adding extreme amounts of additional wealth while in office.
It may be acceptable for them, but I'd prefer people who have financial sense in charge of the budget and people who are so power hungry as to forgo money kept as far from governance as possible
Only moreso than the counterfactual. The status quo only rewards those with financial sense who are willing to be a little corrupt, which undermines the effect. Really, we should just pay them 7 figures
> Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress.
The flip side is it also discourages anyone primarily looking to profit off it, rather than being interested in actual governance.
People think that quality governance is all about the intelligence to know the best rules to decide for the greater benefit of society. Politicians behave badly because of incentive. Good rules would require correct incentive, not merely higher quality individuals. Intelligence doesn't dissuade corruption of power, if anything it accelerates it.
Unintended side effect might be that congress would use their power to make bonds a more profitable avenue of investment, creating a very reliable, high-interest retirement vehicle for average people (rather than getting into the roulette wheel of the stock market). Imagine if USG-backed 15% treasuries were a thing?
Where do you think the money for those 15% interest payments would come from?
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.
Right now congresspeople are only paid about $200k. People who want that position are likely to be people who plan to profit off of it in other ways, at the expense of the nation. We should pay congresspeople more, as well as increasing trading and lobbying restrictions, to help attract honest, capable candidates.
Agreed. The whole idea that they are in it for the “service” is a really naive idea. If we want honest hardworking and qualified people to do the job the salaries should be in the 500k to 1.5m (senate) range. Then knock out the corruption.
According to this link [1] 200k would put someone above the 80th percentile and not far below the 95th percentile in terms of household income for the DC metro area, so I don't see how that could be considered "underpaid", especially when you consider the benefits.
> Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress.
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.
>Running for congress is already kind
of a financially silly thing to do
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?
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.
> 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."
> would be a great way to discourage anyone with financial sense from running for congress.
So it's better to encourage people without any morals?
I think we need politicians who have the financial sense to see that the government is built to serve people whether or not they're invested in the market. As it is now now we've completely failed the American people.
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.
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.
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.
That's why I don't think they should be able to trade stocks at all. Why are they under less scrutiny than low rung engineering employees at one of the big 4?
I agree that blind trusts don't fix everything, but it is a start.
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.
Yes, that is one solution, but history has shown it is very hard to effectively police it, as there are a million ways to get around it.
The SEC enforcement of Insider Trading laws is also simultaneously both ineffective and created high-profile wrong cases which get people with influence to further weaken it.
Seems to me the best solution to all of the above is to simply require ALL trades to be open and transparent with the ultimate beneficial owner and the trade available in real-time. Pharma scientists & execs start buying/selling their stock unusually? Easy to setup trackers so we know it in the same second and can also take advantage of their knowledge that their new drug trial succeeded/failed, and it will eliminate much of the insider-trading edge. A congressperson buys/sells a bundle of shares of a company in his state? Again, we see they're likely getting/losing contracts soon, and again, much of the margin disappears.
Traders would rapidly setup hedge funds and ETFs to ensure this happens in milliseconds, and much of the advantage and problems of insider trading being unfair disappear, along with a lot of enforcement cost.
Personally, I think there's a fundamental flaw in insider training law in the same category as the fundamental flaw in copyright and patents.
You are trying to stop people from using knowledge for gain... In a system that is fundamentally designed to reward using knowledge for gain. Fully enforcing insider trading law requires slicing of categories and resolution of ambiguity that creates the same problems it does in the other knowledge market law: decisions that feel unfair even if the letter says they aren't, people getting away with things that feel wrong on a technicality, and the whole category Congress people fall into where it's impossible to do their job and not obtain enough market knowledge to be leverageable.
I don't have enough historical knowledge to know if this was always a problem and we just weren't sensitive to it or if past generations were more modest or magnanimous and either didn't take advantage of what they knew or took advantage of it and spread the wealth around, but I think we might be trying to fundamentally solve the wrong problem.
It is entirely possible that the problem is the asymmetry is the market creates themselves. There may simply be no better, more efficient solution than taxing the hell out of the rich, no matter how they got there.
What's the rule on titles now? I thought HN had a strict 'no editorializing headlines' policy, but I see the article has a different headline than what was posted here
Every single one of these scoundrels will stand up at a college graduation and exhort the virtues of public service and sacrifice for country. But somehow they all manage to get rich in the midst of their own service and sacrifice.
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.
> It should be an expected price of public service that you remove yourself from most other ambitions.
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.
Or we can recruit lawmakers how we choose juries: randomly. Every two years we randomly select 435 individuals to serve in the House and 100 random people for the Senate. We pay them well, and they pass a basic literacy test. No money in politics, no parties. You have to for a coalition to govern.
One objection could be this: but what if we hire unqualified people. The counterargument: do you think are current legislators are more or less qualified than an average person?
Another objection: but what if they don’t want to do it? Counterargument: when a juror does not want to be on a case, they are almost always dismissed from it. Doesn’t mean you get to skip jury duty, just that you don’t get to do that one.
One last one: this will disrupt those people’s lives. Counter argument: what Congress is and isn’t doing right now is disrupting everyone’s lives as are lobbyists and special interest groups.
Something similar has been done in Ireland with their assemblies. And I do think that if you cannot convince 535 randomly selected average citizens that a law should be passed, that law is probably not worth passing.
Democracy is a terrible form of government. It’s just that it is about 5x better than anything else we have invented so far. Doesn’t mean we should stop looking for a better system.
As a prosecuting attorney who selects and works to convince the "average" juror 5+ times a year, this is not a good idea. You are vastly overestimating what the average level of competence is. Most people, when given unfamiliar knowledge work to do, are so hopelessly biased and ignorant that I definitely think the average congressperson is more qualified to do that kind of work. We are spoiled by selection bias when extrapolating what "average" means in the USA.
For reference, this is referred to as "sortition", and at least the Athenians felt that it was more democratic than elections. The randomization machines they used for picking winners (kleroterion) are quite ingenious.
In modern times, sortition sometimes shows up in some deliberative democracy proposals.
> We elect leaders - people with skills, knowledge, and expertise.
I admire your optimism but saying it doesn't make it so.
We elect people able to convince others they should be elected. Often that means they possess the ability to convince others they have the skills, knowledge, and expertise you describe.
If you think that's the same thing as actually having skills, knowledge, and expertise, well, I have bad news for you...
Literally laughed out loud about this. You might have missed some of the things that prominent leaders with "skill, knowledge, and expertise" have been doing:
Do our current elected leaders understand discounted cash flows or opportunity cost? I'm not seeing evidence our current process results in people skill, knowledge, and expertise, especially given the over representation of people from entertainment.
Yes. They just don’t talk about it because the voters don’t understand and feel insulted when they hear politicians talk about stuff they don’t understand.
Sounds very interesting, but one more counter-points I'd like to see counter-countered:
These random people will have to rely on experts a lot for knowledge they lack on any topic, because the world is complex. Now, these experts can be biased, bought, influenced etc. Or be accused of being in some sort of "Deep State" if you're into that.
But then again, this can already be the case, now I counter-countered myself.
That’s exactly it: we already have this in the form of the lobby industrial complex. Except it is possibly quite a bit worse because if you stay in Congress for a long time and form a trusting relationship with your lobbyists who by the way also pay to your reelection campaign or support you in other ways, over time you get to accept their expert opinion with less skepticism. If a lobbyist has to start over every 2 years, they can’t sink their teeth as hard into you. And I doubt many congresspeople are experts on most subjects on which they write laws. Some have economics degrees. Some are doctors, some are lawyers. Very few engineers, it seems.
If you wanted an alternative system: you could always have a professional group of law writers and a professional group of law opposers try to present arguments to a large assembly of law jurors. If they can’t get 2/3rds majority on a law, it doesn’t pass. This is better than something like direct democracy where everyone votes on an issue because you can’t get the voters’ attention on any one thing for more than a few minutes or a few hours at the most (except a small fraction for whom it is their life for a while). In this law jury setup you can properly brief them.
You could have some other body of professional governors who do things like emergency resolutions and maybe basic budget stuff but anything beyond that goes to the assembly for approval. You could create a new assembly as often as every 6 weeks and process a batch of laws at once so that you really rotate out the jurors before they can be influenced. And selection of law writers and law opposers can be something that is reviewed by this kind of assembly too, or just some large pool of professionals who are chosen at random for any given period of time and given the power to present before the assembly. A lot of options here for how to amortize bad behavior such that over the long haul it averages out to close to zero.
Currently, the Congressional staff is mostly recruited and retained by the congresspeople, and they become the experts in many situations. They can also be retained by the committees, in which case they are often more non-partisan. They do have some ability to influence the debate, but they usually do not frame it.
If we had national assemblies by sortition every 2 years, I would worry that the the tail (the current structure of Congressional support staff) would wag the dog. A better system would need to be designed to enable good decision-making.
Nebraska has a unicameral legislature that isn't in session year round. Pay is $12k/year (with travel per diem). This low salary leads to an older cohort of senators, either retired or wealthy enough to work part time. This low salary completely neuters the ability of younger people to enter state politics until they've amassed enough money to survive for four years.
Definitely prefer something like Total market, even 500 companies is too much of a bias towards one group. Especially with the S&P500 currently looking like an S&P10...
this feels like a no brainer solution, but just seems like a wonderful wishlist that won't happen, ive heard it a lot.
I am wondering why i don't hear anything like: if a church or group representing a church get involved with politics, through lobbying or any other type of means, their tax free status is revoked and they are treated like a normal entity.
it seems like a similar type of thing that in my eyes at least, is a no brainer, but is just as likely to be chopped down because of how our current system functions.
> Countries like Singapore already figured out that if you pay public servants very well you can attract high quality people to government jobs.
I see this argument a lot, but I think it treats people as uniform input-output machines. Singapore is successful in this regard because of much more severe and very real penalties for corruption, and because not "everyone does this". You can't bribe immoral people into behaving morally, because in the absence of morals they have no incentive not to just take your bribe and keep doing what they're doing.
A significant number of corrupt public "servants" are multi-millionaires, no amount of money will ever be enough for them.
The idea sounds tempting at first but the founders set it up so congressmen could be voted in for decades or voted out. The real issue in my view is, why are constituents not voting the scoundrels out.
maybe capital gains for politicians should be increased to like 80% and redirected entirely to public service funds lol. i'm just throwing random crap out there but haven't thought it thru at all for 2.
Or maybe if they do trade, their trades have to be on a month long delay. The transparency should take out any corruption on the duration and it will incentivize their investment on long term gains and allow the public to also participate and make their insider knowledge.
The current lag timed reporting requirement is a decent start, but fact of the matter is that it still allows Reps to take advantage of insider knowledge to profit and thereby basically be bribed in circuitous ways not really all that different than a mobster/teamster accidentally leaving behind a suitcase of cash after they dinner party the politician invited him to, just even more obfuscated and structured.
I think the solution is to pay them more, create very strict laws around insider trading, and enforce those laws vigorously.
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.
I’m also in the camp of paying government officials more. In my town, the mayor and council make about $30k each while the median income in the city is well over $100k and houses cost over $1M. That self-selects out the majority of qualified candidates who must work for a living.
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.
> That self-selects out the majority of qualified candidates who must work for a living.
Occupations like "landlord" and "car dealership owner" are wildly overrepresented in local government because they have high incomes with virtually no time commitment.
These people aren't necessarily unqualified, but their motivation for holding office isn't usually aligned with the needs of the average member of the public.
"Mayor" where I live is effectively a volunteer position. Raising the salary would require the village fully fund the position for the extent of a mayoral term which is too expensive.
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.
Here in NJ, I live in a small town of around 7,000 or so. We have a Township Committee form of government, five committee people with one nominally as Mayor (but really the same as everyone else). They get a yearly stipend of around $5,000 a year or a little less.
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.
> In my town, the mayor and council make about $30k each while the median income in the city is well over $100k and houses cost over $1M.
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.
I don't understand how paying them more will curtail this. This is a mixture of a crime of convenience and greed. It's not a Les Mis situation where they need these stock picks to survive (or even thrive). The current US Administration is full of rich people who are still not above corruption.
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.
The idea is that if their salary does not actually cover the expenses of living in and traveling to DC to do their job, you are limiting the pool of potential congressional representatives to those who are independently wealthy or who are finding other ways to make money via their position.
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.
At first I am sympathetic to this idea, but the act of running is so expensive and time consuming, it does not matter what the salary will be, the pool is already limited.
You need to be well connected and/or wealthy before you even start.
I think sortition is a great idea but you would probably need a constitutional amendment if you wanted sortition in Congress or the Senate. I think the State's have some discretion over how elections are run but I don't think its enough discretion to allow appointment by RNG. I think the strongest argument you could make is its an election where everyone is forced to vote for themselves and tie-breaks are chosen by RNG but I don't think that would be valid because I assume the courts would demand electors execute some agency.
The text of the constitution for electing congress says:
> The House of Representatives shall be composed of Members chosen every second Year by the People of the several States
and there is something similar for the Senate after the 17th amendment. I think pre-17th amendment States may have been able to use Sortion to appoint Senators but it would not have been legally enforceable. The State legislature could pre-commit to elect Senators by Sortition but then they could bail out and just decided to choose who they want when it came to the actual selection.
I am definitely not a lawyer, but "chosen... by the People of the several States" does not say the method of this choice. If the people of my state decide that the RNG decides, is that not "chosen by the People" of my state? Or if we still hold elections but one of the choices on the ballot is "RNG-chosen candidate"?
Citizens United isn’t a law, it’s a shitty Supreme Court decision. It’s on the long list of obvious problems we can’t fix without first reforming the courts (I favor increasing the justice count to match the number of circuits, and also drawing the Supreme Court justices by lot for each session from the “lower” courts—shouldn’t be any constitutional issues with that approach, so it’s just a normal law, and it ought to be easier to sell than simply expanding the court and “packing” it since it’s less-partisan)
It's an interesting idea. Is that what's happening? The article doesn't suggest it. People like Richard Burr, Chris Collins or Nancy Pelosi were certainly wealthy enough cover these expenses. It didn't stop them from seeking other ways to make money via their position. If your goal is to stop insider trading, you should focus on stopping insider trading.
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.
> as the electorate has already shown they don't care enough to vote their representatives out for doing it
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.
I agree, but the substance of the issue is that their pay has remained the same since 2009 at $174k/year (i.e. not kept up with inflation at all) so if we want to discourage corrupt behavior then giving them a proper salary is probably a good idea if we're going to restrict other methods of building wealth.
You still have to prove if raising wages will reduce corruption, and if so, prove that it is reasonably cost effective. Keep in mind, there are already independently wealthy people involved in government in the US, and they still engage in corruption: Trump & his family, Musk while at Doge, Chris Collins, etc.
After all, how much do you have to pay the world's richest man to keep things above board, I wonder?
I beg your pardon, but if that applies to Congresspeople, what about the common laborer? All I'm seeing is more pandering to those in a position of power.
Yes it would. It'd make Congress a viable career path for ambitious-but-not-yet-wealthy people. Currently, you have to already be rich to be able to make it work. Public service should be a viable path to wealth for ambitious, capable young people.
Braindead to think salary is somehow attached to morality. I would say some of the most immoral people are people with a lot of money, and there are countless examples of that.
My logic is that, if you are trying to evaluate whether you'd want to be a politician, consideration of cost/benefit is rational. If you aren't ethical, the benefit of being a politician is a lot higher (because you can get unethical sources of funds). If we want to attract more sane, talented, ethical people, we need to pay more — and prevent blatant corruption like privledged trading.
"trying to evaluate...". Normal people aren't trying to evaluate becoming a politician. It's a lifelong career for most people and you think the lunch lady or librarian who constantly gives back to their community was evaluating on "becoming" a politician? The financial incentives should be lowered. Pay them like you pay a school teacher and ban insider trading. Then you wouldn't have all these worthless nepo babies who just want a lax job and power over people in these positions.
I think a better choice would be to simply remove the ability or to profit from the job. Perhaps politicians give up all their property and become wards of the state after serving their terms, or agree to aggressive post-service surveillance and corruption enforcement.
From my perspective it would make a lot more sense to only allow index fund purchases as an elected official. If the economy does well you still do well, but there would clearly be no insider trading going on.
Or at least there would be less - you could only trade on the knowledge of full-market swings rather than per-company swings.
> From my perspective it would make a lot more sense to only allow index fund purchases as an elected official.
The new leader[1] of the Norwegian wealth fund[2] had a large stock portfolio. There was some debacle given the influential nature of the wealth fund.
He agreed to sell the stocks and buy index funds instead, until he resigned from that position.
As you say, I think that's very reasonable. They can still make money off the general stock market lkkd the rest so they're not disadvantaged, but have very limited opportunity to benefit significantly from inside deals.
Because the most capable among us are able to command high salaries regardless of whether they're 'in it for the money'. Congress needs to be competitive with industry for the best talent.
Also, giving politicians legitimate income makes them less susceptible to bribery and other forms of unethical income.
I understand this, but at the same time the concept of this to me is absolutely wild.
We see this in the UK, the exact same argument. Yet I was paid more to manage a small tech team than an MP for fewer hours. You actively disincentivise people like me from taking public positions. I'm doing tech contracting and earn more than Prime Minister.
The UK gets about a trillion dollars a year in, and spends more. The US takes in something like five trillion dollars.
An exceptionally small improvement in improving the economy pays for itself indefinitely because these countries are absolutely enormous. Our MPs are paid about 90k/year, if you could improve the tax take of the government by 0.1% by improving the economy in some way *once* you could pay them £1M/year *tax free* and you could pay that *forever* even if future people aren't as good they're just not actively detrimental. This is also for paying people who aren't actually making big decisions, just the elected representatives.
Money should not be an issue, missing a good person because of the money is utter insanity given the payback.
You've just been presented evidence that your law makers are doing something immoral, something that should be illegal, and your idea is to pay them more. Do you also advocate putting a little pot of cash at the front of every walmart so the shop lifters can just take the cash and pay for the stuff they were going to steal?
> Do you also advocate putting a little pot of cash ...
Yes, obviously I would support that /s
The idea of increasing pay for members of Congress is that we naturally discourage seeking out other forms of building wealth and/or paying bills while in office regardless of existing laws. You can also have laws that explicitly stop things like insider trading too, but obviously you can't solve for every scenario so this would be a blanket solution.
I understand that corruption can't be solved by this one action and that members can still be corrupt after a pay increase, but on the whole, I think it'd be a positive change. It's a hard problem to solve without burning everything down... which only sounds good in theory and may not result in a better system.
The logic of paying lawmakers well is that if they have enough money they won't be at tempted to do bad things to get more money. All of human history has shown that "enough money" is not a meaningful term for people attracted to such positions.
Lawmakers should be paid enough that they are not destitute, so that low income people are not excluded from participating in government, but the price of power should be that one can not become wealthy during or shortly after their stint. Tax their household 100% on all income and capital gains over the congressional salary (which should be comparable and pegged to the average DC area household income) for their term and over a reasonably small multiple of that salary for 10 years after they leave office. They can insider trade all they want, they can take a cushy job with a company that lobbied them, but all the money they would make by these efforts will go to the people. In practice I think most would not bother. Some people may choose not to go into government because they have better earning opportunities elsewhere, I consider that a feature not a bug. Some may leave office earlier than they otherwise would because they don't like the low income, again that's a good thing. Non-monetary quid pro quo is still an issue, but it's no worse than the current situation and frankly power will always come with perks.
Exempt sitting congresspeople from the change they implement and any of their past potentially ill gotten gains will be exempt from prosecution. Passing a major anti-corruption bill while legalizing your own grift? It may very well pass unanimously.
Deeply corrupt country we've created here, and it seems impossible to back out of it. How are you gonna get congress to cut their effective pay? I would bet money that there are people who go to congress _solely because_ of the advantages it will give them back in the private sector. If you even got it on a ballot or something where the general populace could vote on it, you can bet your ass that, thanks to citizens united, the pro-owning-stocks lobby would outspend the anti-corruption folks 10 to 1.
I guess the way to start is by shaming these obviously corrupt officials and practices. Much like racism, people don't mind being corrupt but they seem to mind being _called_ corrupt.
Proposal : A congressman can trade to their hearts content but must publicize their intentions to purchase or sell a stock with a minimum of at least 24 hours. This gives the public the open view of their intentions however they come to that decision, but the open market can then decide how to react to the congressman’s decision before they actually finalize a trade.
Although this sounds like a sensible idea, I think it's impossible to prevent insider trading - if you introduce a rule like this, politicians will just find a middle man or work around it in some other way - the corruption schemes getting more elaborate is the last thing you want.
This is pervasive in China; the politicians kid is the middleman. One child policy, so there's at most one kid -- makes it easy to know who to give the stock tips to.
The assumption is that the stock picks come from insider knowledge gleaned from congressional duties like sitting on committees. Another possibility is that they are a form of off-the-books campaign donation or bribe, and the knowledge comes straight from an insider who wants to influence congressional decision making.
Its almost as if private encrypted chat networks are a thing. Oh, look at that, Mets owner, Steve Cohen paid record fine for insider trading using just that.
It must be just down to the fact that they're so intelligent and tuned into the world that they know where to invest. Nothing to see here folks, move along now.
I would say jokes aside but the political system promotes this corruption.
I know you're joking, but the most interesting finding here is that they got more financially intelligent and tuned in after ascending to higher positions within congress.
Corruption and unfair election systems are one of the clearest bipartisan embarrassments. I can't understand why this gets overshadowed by wedges. Maybe the media benefits from it?
Billionaires benefit from it, they are the ones buying off our government. All the other "wedge issues" are designed to deflect attention away from our oligarchs and both parties are on the take. Look at how the DNC reacted to Mamdani for a recent example.
To be clear, because I know it will come up - not saying both parties are the same, but I am saying they are both doing the oligarch's bidding. The US government is now fully captured by billionaires and is currently being used for personal enrichment of those in power.
The election systems are managed at the state level exactly as they should be. Corruption has a much lower chance when there are barriers.
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.
You can try to win an election on something substantive, say, infrastructure repair and updates for instance. But the wedge issue fueled campaigns are gonna wipe the floor with you.
We the people have voted on this over and over. The data is irrefutable. We love our wedge issues.
Despite Congress' general dysfunction, this seems like a problem that could feasibly be solved. It would make most Congressmen of both parties look good to pass a bill that e.g. restricted sitting members to index funds/mutual funds/etc.
Great intention, but too simplistic. The lawmaker has a third party set up a trust for the benefit of his children and the trust owns a company in yet another jurisdiction that just happens to not only take a position in a certain stock, but probably provides "consulting services" for a healthy fee. And that is the simple version. By the time the lawmaker's interest is fully obfuscated, the legal structure is fully compliant with every letter of the law, just not the intention. Better to have fewer laws that are actually enforceable.
That's like saying "why bother banning insider trading? People can just obfuscate their illegal trades".
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.
Even that is open to massive bias. Who would vote to curtail the 7 tech giants when their own portfolio is basically the SP500 those companies dominate?
The SP500 is probably the most popular investment in America, perhaps aside from housing. Wouldn't hurt to have lawmaker's fortunes broadly aligned versus narrowly aligned with specific corporations.
Can I find one of these people in congressional leadership positions, who is willing to accept a sizeable campaign contribution in exchange for joining their mailing list which contains their list of stock purchases in real time?
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?
It is not illegal for them to trade on their inside information. It is illegal for you to trade on their inside information. So they can send you their stock picks list and gloat about their ROI, but if you invest on the basis of the newsletter, you go to jail.
Wilhoit was right about everything: America is in-groups who are protected by the law, but not bound by it. Alongside out-groups who are bound by the law, but not protected by it.
You and I? An out-group. And it although we make a lot of jokes about leopards ripping faces off, MAGA know they're an out-group too, it's just that as long as somebody else is getting it worse, they're fine with that.
> It is not illegal for them to trade on their inside information. It is illegal for you to trade on their inside information. So they can send you their stock picks list and gloat about their ROI, but if you invest on the basis of the newsletter, you go to jail.
All the Congress member trades are public. There are even ETFs now that track the Congress member trades. So you can just buy such an ETF and have a one-to-one replication of the Congress member portfolio.
I've seen those empathy circles, where liberals care more about people on the fringe of society, and conservatives care more about people in the middle of society (apologies, if I'm butchering the explanation.)
I'm curious, has anyone done schadenfreude circles, where they measure how much people enjoy watching someone else suffer? I mean, of course they have, that's why we have TV shows like Cops and Jerry Springer, right?
Its funny -- out of all the corruption you see from Washington this one seems the most benign. For whatever reason this one gets almost the most constant press. Maybe because its the easiest to fix but isn't.
> out of all the corruption you see from Washington this one seems the most benign
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.
Trading on inside information has that causality going on the other direction. It's them picking what stocks to buy depending on what laws are being most argued for/against. Every stock looks the same from their POV, and there's no reliable mechanism for making them prefer one law over another.
The GP is right. It's campaign contributions, career rolling doors, and direct payments that make them pick one law over another. Inside trading only let them directly steal money from the population with no strings attached.
Peoples understanding of what "corruption" is differs by a surprising amount.
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?
Insider trading is a form of theft. Every trade has a counterparty who missed out on those capital gains because they did not have their thumb on regulatory levers.
Well it’s pretty benign if they aren’t making different decisions on laws based on existing holdings. That’s just insider trading which is a tax on the shareholders.
Bribery or anything else that affects their lawmaking decisions is significantly worse because the impact is so much larger.
How can you be certain that policymakers won't make decisions that help their trading instead of their constituents? The incentive is already there, and the whole thing is legal, too.
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.
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.
Maybe a better solution is to crowdfund someone to run for federal office under the guise of purposeful naked corruption. Their whole platform will be "I'm doing this so I can get access to information before the market does, and I will immediately disclose that information to my constituents, and provide realtime trading updates".
I'd vote for that person in a heartbeat even if the rest of their platform was non-existent.
"Our baseline finding is that both congressional leaders in their pre-leadership years and their matched 'regular' members underperform the benchmark by similar magnitudes"
"Earlier studies of lawmakers’ trading by Ziobrowski et al. (2004 and 2011), found their portfolios to outperform the market. However, this conclusion is reversed in later studies. In particular, Eggers and Hainmueller (2013) and Belmont et al. (2022) document the opposite—members of Congress underperform the market during 2004-2008 and 2012-2020, respectively."
I guess the title of "Congress members suck at trading stocks, but suck less once in leadership positions" was already taken
The USA has a Constitution that allows and historically demands a massive expansion of Representation in the House, Senate and Court.
We need 6500 House, 1000 Senate Reps, 99 Justices and 1 alternating Chief, with 25 new states.
The one thing that stirs the hearts and minds of the American people is a 67 page deep dive statistical analysis of an issue.
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.
Just to be fair, they compare every congressperson who becomes a leader with a “regular” (non-leader) congressperson who entered Congress in the same year and is from the same political party. Alternative view: people who becomes leaders are just more capable and better at selecting stocks?
> 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
If what you’re positing were true wouldn’t they have outperformed their peers before ascension as well
The very first sentence of the linked article contradicts your alternative theory. These leaders performed similarly to their peers before ascending to leadership.
"This fund, which we like to refer to by its trade ticker, “[NANC/GOP],” invests in equity securities purchased or sold by [Democratic/Republican] members of Congress and their spouses
Not sure but there used to be a Nancy Pelosi tracker account on Twitter, and they would follow those trades, person made a bit of money, nowhere near what Nancy's estate has made though.
Unusual Whales keeps track of Congressional disclosures and even built ETFs around each party’s picks: https://unusualwhales.com/politics
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.
In other news, cats vote down popular House of Mice measure to bell themselves unanimously.
And before anyone mentions she whose name is nauseatingly always mentioned on this subject, here's the list of Congress members by net worth so you get the whole picture instead of just how bad the situation has become.
Because in the end, the mice keep voting the same cats back in.
the congresspeople on the house arms and means committees who approve massive defense budget spending to companies X and Y, then buy shares in X and Y before the spending approvals are public?
Look, I have my political views, but this is why the whole divide and conquer thing is 100% true. As long as we, whether left or right, allow our entire mind and emotions to be warped and subverted by those in power, we will never effect change and unite against this kind of corruption, which none of us stand for.
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.
We need to change the voting system in order to dissolve the two party system, per Duverger's law. Ranked choice voting will not work. Approval voting or STAR voting would work.
The majority of people with insider knowledge that are trading stocks will either use their knowledge to increase their gains or will tell their close friends and family.
Indeed the very foundational idea of Republican system ("no titles of nobility") makes this inevitable.
It doesn't happen on similar scale in Europe simply because our stocks are shit and can't be profited much in any case, politicians just make money on bribes and kickbacks.
Extremely weird take. I can see why this system tends towards this kind of corruption but what do titles do except make the system even more profoundly corrupt?
Because people with titles of nobility were forbidden from participating in business at the risk of losing their titles; projecting to modern era, they'd be also forbidden from owning stocks at all. They must derive their means of existence from land rents and public/military service. Pretext was that engaging in commerce or business was "dishonourable" and below their status, in practice, it was a useful tool to avoid conflict of interest.
To think of it, there's something tempting in physically separating owning class from ruling class, isn't it?
I find all this rather flaccid, frankly. While the advent of capitalism provided an avenue for non-titled people to become wealthy, a lot of titled people also took that opportunity and I would guess a lot of generational wealth today still finds its ultimate source in entitled people.
In any case, I doubt society could successfully enforce this behavior in a contemporary context.
Politicians shouldn't be allowed to own private property. Only the people that really, really want to see a better future for their country will get involved in politics. This isn't my idea by the way, it's Plato's.
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.
I'd rather politicians have no privacy as long as they are in office, i.e. all their communications, acquisitions, etc. should be hard-monitored, automatically sent to an anti-corruption office and perhaps public.
The loss would be temporary and harder to skim around, imo it's just better incentives all around.
But I'd definitely be okay with the property part if removing privacy isn't feasible :)
The problem is that they have a lot of time to report their purchases. If they were required to report before they purchased the problem would probably resolve itself.
I want to see Nancy Pelosi in jail for insider trading the same as I want to see Trump in jail for inciting insurrection. It's ridiculous that we have as many signs of insider trading as we have and yet we do nothing about it. In a proper system, there'd be an investigation and we'd have proof and we'd do something about it.
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.
I have a relative who mentioned that his investments were doing pretty well as of late. I asked him what his trick was and he sheepishly admitted that he just pinned his investments to the Nancy Pelosi Index.
They should not have this ability. They can invest all they want into ETFs but nothing specific. This is such absolute bullshit. Run for congress and leave with generational wealth. Pisses me off.
We're now at the point where the most accurate predictor of what the administration and Congress will do comes from stock trades. You want to predict a land war in Venezuela? Just watch defense contractor and energy stocks.
We should force all elected officials and senior public servants to put their assets into a blind trust for their entire term plus two years. They should be forbidden from investing directly. So should their immediate family.
But the problem is so much larger than that. The government as a whole is captured by the donor class. It's so well known that even without an explicit quid pro quo, you and your immediate family will be looked after if you play ball. Vote for tax cuts, deregulation or th einterests of some industry and after your political career, you will have a nice 6 or 7 figure job for life. So will your spouse and children.
What brought the most recent government shutdown to an end? The evidence points to politicals who were beholden to the aviation industry. The disruption to air travel was really starting to bite. Tim Kaine in particular. But it's not just one guy. Chuck Schumer whipped votes to end the shutdown and subbed out John Ossoff who would otherwise face backlack in 2026. Every single Senator who "broke ranks" is either retiring or won't face a primary until 2028 or 2030. That's not an accident and many of them are highly funded by the commericial aviation industry.
What's depressing is how little money it takes to buy our government.
The fact that Nancy Pelosi became the meme for congress members trading stocks is more political than anything. The actual top performing congressional portfolios never make as much news. Pelosi doesn’t make as many trades as other members like Marjorie Taylor Green, who gets a free pass for some reason.
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.
MTG gets a pass because she’s relatively new and mostly irrelevant. She’s also not on the side you expect to be better about avoiding shading money schemes given all of the public positioning.
One smacks of hypocrisy while the other is a dirt bag behaving exactly as expected.
Huh? Are you saying that Pelosi is a worse person because MTG is a worse person? I don't get the logic.
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.
It looks like she buys and holds, unlikely nancy. And it looks like she bought some AMD which had great returns (oh how I wish I bought it) and held it.
Nominal returns are only 11% more compared to a riskless VOO for the past 5 years. But NANC expense ratio is 0.74% per year while VOO is 0.03% per year. Every year, NANC would have to return an additional 0.7% just to break even with VOO, not accounting for the additional risk.
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.
What's the barrier? Is the fund closed to new investors, or does it require a very large initial investment and/or years of "exemplary donations" to the Democratic party?
Shout out to Nancy pelosis husband, one of the most successful investors in history. He has managed to turn 800k into anything up to 250 million dollars. I wonder what his secret is. He could be giving tips to Warren Buffet.
Incorrect title, the finding is "lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension." This is saying that people in congressional leadership positions do 47% better than other members of Congress.
>This is saying that people in congressional leadership positions do 47% better than other members of Congress.
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.'
You cherrypicked that last sentence, and reiterated what the N-1 sentence said.
I think the point is that this study suggests a causal relationship (having leadership power enables one to make more money), which is stronger than just correlation (being in leadership positions correlated with making more money).
But added "annually"! That's a lot better!
There are a lot of strong claims that the paper does not make. It never says that leaders outperform index funds. It just says very specifically that leaders outperform other members of congress. The paper also does not include any clear charts on the actual returns the congressional leaders were getting.
Maybe I'm simply too dumb to interpret this paper, but overall I find it unconvincing of anything notable or scandalous.
Essentially, what information are they privy to that public is not? What asymmetry exists (timing, un-public information)? Is there any way for the public to be nearly as informed? What are they trading on? Upcoming funding changes (more money here -> buy, less money there --> sell)? COVID impact stands out.
It isn't necessarily that they have information the public doesn't (although it could be that, they would know about policy changes before the general public does). It could also be that they use their leadership position to push forward policies that benefit stocks that they own.
If you compared Pelosi to other investors in San Francisco, you wouldn’t see much of a difference. Anyone who has gone heavy into tech in the last couple of decades has outperformed the market at considerable risk of going broke if there was a tech bust. Compare Facebook or Google to an index fund, especially before index funds decides to go heavy into FAANGs.
People who make/have more money also have more appetite for risk and also in general make more returns. Even without insider trading, being able to take a lopsided position on tech with the expectation that if it loses you still have a comfortable life, that is how the rich become richer.
That doesn't explain why persons in leadership positions outperform other members of congress. Presumably they all talk to each other and could share trading strategies. There's no reason not to unless your strategy involves inside information that might get you in trouble if spread around.
The more committees you are on, the more opportunities you have for informed medium term trading that escapes insider-dealing scrutiny. It's a fundamental problem with government and it is why politicians should be required to put their stocks in a blind trust. But it still doesn't solve the problem of blind trusts not being truly blind when you know what went into them.
Ideally we should remove the incentive all together. Limit it so Politicians can only buy index funds that don’t target any specific industry.
Fundamentally you can classify modern society into two groups: government and commercial citizenry.
The incentives of these two groups are misaligned and that is essentially the origin of all corruption.
The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible.
The government, his goal is to be fair, to enforce and follow the rules, and to guard citizens.
When you combine these two groups the incentives collide. You get government officials who are supposed to be fair but instead they are incentivized by commercial interests so they make biased laws, take bribes and do all that shit.
To reduce corruption you really need to create societies made up of two different groups with two different sets of incentives.
Dictators are more immune to this effect because all of their commercial incentives are pretty much completely fulfilled as they own the whole country.
In a democracy the closest sort of thing I’ve seen to this is priesthood. Buddhism or becoming a monk is similar but these are not elevated leadership positions like priests.
Basically when you become a government official it should be like becoming a priest. You are removing yourself from commercial society. It changes everything. Your incentives are different and it even filters out all the bad actors.
Such a society can realistically exist. I think the unrealistic part is converting our current society into something like this.
The primary challenge I see is that at least in the US, government positions are often elected and termed, meaning there is no guarantee your cash flow from your government job will continue long-term. This is why you must continue to operate as a private citizen, with a government job.
The second potential issue is one of pay - the best of society can make far more in a commercial setting than in a government setting - barring corruption, of course.
For your second potential issue, I’m saying that’s the point. Nobody becomes a priest for money.
These people who become priests do so for other reasons and they largely want to exit the commercial economy. That’s the type of people government should be made of. Under this system pretty much 100 percent of politicians wouldn’t have even become a politician.
Since we are talking about political leadership at the highest levels (not pastoral local municipalities), a good comparison with priesthood would be the Vatican. Even in priesthood, when there is concentrated power over vulnerable populations, we can find: wealth hoarding, money laundering, collaboration with organized crime, and protection of rampant sexual abuse.
The first point is true of most employment, unless you're one of the ~10% of US employees with a union contract. Your paycheck is always subject to the whims of your employer.
I don't have a great solution for the 2nd issue you pose though. Raising the pay of elected officials is often politically unpopular, but you're certainly right that one makes more in the private sector than as a junior congressperson.
Yes and no - if you lose your job at Apple, you can go down the street to Microsoft. If you lose your elected government job, you can't run again for years. Meaning, you have to switch from being a government employee back to being a commercial employee.
Here's my hot take: politicians should be paid a lot of money, and in return they should be subject to limits on how they can invest, if they can invest at all. Remove the incentives that cause corruption and attract talent. I think it's a bit naive to say that public servants need to be earning a meager salary. Underpaid people don't stay in their roles very long.
> Remove the incentives that cause corruption and attract talent.
has it been shown that a salary would actually remove the incentives for corruption? maybe for some but greed is a strong incentive.
This is a fair and rational take, but I think it's hard to drum up political appetite for increasing your own pay.
The goal should be to not produce homo economicus in the first place, not to figure out how to build a society out of them in the same way you build a trustless smart contract.
You can still play the market with index funds. For example if someone knew that Trump was about to announce new tariffs they would sell to dodge the brief market panic.
Index funds are also heavily exposed to tech these days: https://www.slickcharts.com/sp500
So they aren’t really immune to sector changes (like a bill banning AI would crash it very heavily).
> Ideally we should remove the incentive all together. Limit it so Politicians can only buy index funds that don’t target any specific industry.
I'd go one step further: upon election you have to convert all equity assets to US bonds.
> The commercial citizen, his goal is to make money, compete and to do so by bending the rules and using any means possible.
This conception of "citizen" is even more depressing to me than Homo Economicus. There are values aside from wealth, and not everyone is a money grubbing sociopath.
I'm not particularly concerned about unfair gains made possible by insider knowledge. The economy is large enough, and the set of lawmakers (not to mention leadership-level lawmakers!) small enough, that that the overall effect on anything is going to be negligible.
My concern would be that the "skill" we're seeing isn't with using insider information, but with using their power to alter outcomes to make whatever investments they'd previously chosen become profitable post hoc. If they're causing our regulatory landscape to be change to pad their wallets, that's going to have a much greater effect on our overall system than just being able to make a trade a day earlier than the rest of us.
> I'm not particularly concerned about unfair gains made possible by insider knowledge.
I am. I work at a company that trades publicly. My wife works at a firm. I can’t do anything with my stocks outside of three weeks a quarter. I can never buy options. My wife has to clear her positions with whatever department. If I have these obstacles, congress should absolutely have them — maybe more. Ideally they can trade index funds and that’s about it.
> If I have these obstacles, congress should absolutely have them
This jealousy is a minor issue, though. There's no reason for you to believe Congresspeople should have exactly the same limitations and opportunities that you have. This is in fact a discussion that involves limiting them from doing things that you would retain the right to do.
The problem is how they govern.
But we should be concerned shouldn't we? These people are exempt from laws, they and their presecessors made, for which they will happily condemn the common person and profit again when you pay for your crime.
They should be more accountable, not less.
People WILL look at for their interests. We should ask for basic disclosure of what those are and vote for people who have our interests.
> it is why politicians should be required to put their stocks in a blind trust
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.
I don't want people in congress as a career. Do it for at most 2 terms and get back to the real world. When that is the reality it means we cannot take away their ability to have stocks because when they return "to the real world" they will need that savings. Though while in office they should be limited to buying and selling from blind trusts and such things where they cannot know what happens except the economy in general. However if they own stock before it isn't fair to make them sell it: this is a really hard problem and there probably isn't an answer I will be happy with.
> 't want people in congress as a career. Do it for at most 2 terms and get back to the real world.
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.
> 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.
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.
> 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.
It's always funny to me how much people hand wring over politicians and then they somehow believe that putting someone who currently and actively has large personal interests and incentives to make government worse for people for their own gain is somehow a good thing
If you think politicians doing things to affect their bottom line through stocks is bad, surely you recognize how crystal clear and more direct the incentive is to do that kind of thing when your "asset" is your own business that can't be easily pivoted and depends on labor being cheap and desperate?
Nevermind that those kind of people just usually have radically different worldviews about what a government SHOULD do, and that worldview almost never allows for government preventing them from harming people for profit
It’s called “term limits” and it’s a good thing.
There’s bad and good to term limits. It incentivizes short term thinking and goals. Supreme Court judges for example are deliberately given lifetime seats to get rid of short term incentives.
Go back to local politics? Why the only direction should be always up? At the end, who cares?
Career politicians with most power who reach the top will always be good primarily at one thing - bullshitting their way to the top in various sociopathic manners that no power structure anywhere is immune to. Those who are inside the circus for 30+ years? Expect them to be rotten to the core while wearing very polished masks, seeing and dealing with the worst and staying on top. Not a place for a nice good hearted well intending folks.
Don't expect some common good to come out of them just because it would be nice or proper thing to do, either its by mistake as a byproduct of some other effort or some pre-election campaign.
> Do it for at most 2 terms and get back to the real world.
Guaranteeing they never get good at their job, and institutional knowledge keeps decaying.
We need to stop pretending that Congress or any of these elected positions don't require skills. I think to be a Congressperson you have to go to specific trade school--let's call it Congress U--graduate with high honors, serve in some other government capacity, and your grades are public record. Only then are you qualified to even run for election.
Democracy isn't about letting any random firebrand run things. Heck, we don't even let random firebrands install electricity.
Disagree. The main motivation for serving in Congress should be just that - service to the country. Not personal power building, not a career. The actual process, writing bills, parliamentary procedure, is all managed by staff anyway. The representative or senator is mainly the face of the office and should be mostly talking with constituents and not buried in policy.
If there's one qualification test I would possibly support it would to pass a high school AP US History exam.
That's the main motivation to serving in the army, but that still requires training and exams.
I am completely sympathetic to your motivations here. However, it seems like if you take that approach, where many qualifications are required before you are “eligible” to hold elected office, it’s much closer to an aristocracy than a republic or a democracy. Unelected elites who control the special university and those who set the eligibility rules in general hold and safeguard the real power, allowing trusted insiders to ascend to power and burying those with unorthodox ideas or worrying populist notions. It’s an anti-democratic idea.
It probably, on net, increases the power of elites and decreases the power of ordinary people, which increases the already extreme tilt in that direction. Like with a lot of things, it depends on the virtue of the elites in question whether this is a great idea or a catastrophic and oppressive one. As we can see, our current elites are so shameless they blatantly trade on privileged knowledge and can’t even manage to pass a budget for the country.
In general when one looks at the longest serving politicians, it seems to reek much more of extremes of corruption than skill. The insider trading this article references being but one aspect of that. It also correlates with people turning into warmongers, but that's probably just another angle to corruption since there's a rich and ridiculously unaccountable flow of money in military related stuff.
For another datum consider presidents' second term. This is often where they are supposed to be able to really act out their vision for the future since they're ostensibly out of politics after this and have at least 4 years of experience at the highest level, yet they almost invariably tend to be extremely underwhelming.
I'm not arguing there is no skill, but I am arguing that just spending a lot of time in office doesn't seem to correlate much with achieving that skill.
> Guaranteeing [that congressional lawmakers] never get good at their job
I don't know if you've been paying much attention to US politics since the year 2000 but the vast majority of them are no good at their job regardless of how long they've been there.
> We need to stop pretending that Congress or any of these elected positions don't require skills.
I don't think anyone does? But currently the only real skills you need for attaining high US office are 1) be rich and/or have enough rich people in your phone book or 2) the ability to make Donald Trump feel like a special boy.
> Democracy isn't about letting any random firebrand run things.
waves in US/UK/Argentina/Brazilian politics over the last decade
As a thought experiment, imagine a world where borders exist as they are but the whole political process inside them everywhere is to 1) choose a zone randomly 2) choose a citizen randomly 3) receive policy proposal from them 4) vote yes/no on policy using random dice 5) for resolving ambiguity on any and all policy details such as "how much" or "for how long", return to step 1.
It's uh, king for a day, with checks and balances on human cruelty via chaotic caprice. How likely is that world to be worse than ours? If so, how much worse? If not here and now, then which counterfactual geography or year would you have to transported to so that this randomized process is definitely preferable?
Think through the downstream impact of term limits... where does the power accumulated by long-term congressmen go? My guess... it flows to either/all of career bureaucrats, lobbyists, or career congressional aides. Do we really want to cede more power to groups that are not elected (bureaucrats, lobbyists) or elected-by-proxy (aides)?
I take the exact opposite view. A revolving door of congresspeople would decrease the influence of lobbying (and, for that matter, the influence of political parties in general), because once a member of congress reaches their term limit they would no longer be influenced by campaign donations.
Also, let's take a step back:
> where does the power accumulated by long-term congressmen go
We need to take a very hard look at any supposedly democratic system in which power is "accumulated" by individuals. Deeply entrenched politicians who never face term limits nor reelection resistance have no reason whatsoever to care about the will of the people.
nor reelection resistance
Ding ding! I think that's the real problem. If I were king for a day, I'd end gerrymandering and replace it with non-partisan (probably algorithmic) districting. And I'd shit-can partisan primaries and introduce approval voting or instant-runoff (or something similar).
Depends on what power we cede. We should give them clear rules so they can make decisions based on their expertise. They should not be making the rules though (except as suggestions to congress - as experts this is an important part of their job)
Doesn't that imply that everyone in Congress will be amateur at best at being congressman?
Like most founding fathers were at the time?
Being a congressperson isn't something you're supposed to have to get good at. You're supposed to just be a representative of the people. The "experts" in government are the nonelected officials, advisors and agencies.
For similar reasons, all presidents are newbies. The benefits of having one with lots of experience would be vastly outweighed by the downsides...
Since they are supposed to be serving their country and not seeking personal gain, their interests should be aligned with those of the whole country. As a condition of taking office, they should surrender their entire stock portfolio to a government custodian in exchange for a federally-held broad market index fund. While in office, they are free to sell from that fund if they need the money and free to buy more of that, but no other securities. When they leave office, they are owed the present value of their index fund, and can repurchase whatever they want to. All of these could be made non-taxable events, so that if someone wants to just go back into the same positions they had, there isn’t any complication.
To me, the above seems slightly complex, but well worth undertaking in order to stop this blatant and shameless corruption.
As we’ve seen with the current president, though, it’s much more difficult when they own and control whole businesses instead of just fungible securities. To be fair to the president, there isn’t really any reasonable way to get rid of his massive conflicts of interest besides having a pre-inauguration IPO for all his companies and retaining 0 shares - and his family retaining nothing too. But that’s a bigger problem that probably cant be solved.
Stocks though, it would be easy, they just don’t want to solve it.
For reps, I’m okay with four terms for a total of eight years.
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).
Good news, the average career in the House is already 8 years, so no new law needed! The Senate average is 11 years, so it's already less than 2 terms, no change needed there either!
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.
> they're simply too old to do the job
I'd absolutely support a maximum age limit, maybe e.g. if you will reach 70 years of age in your term of office you cannot run. So a senator could be elected up to age 64. A Representative up to age 68. And I'd apply that to all elected offices. My biggest criticism of Biden vs. Trump was that they were both too old.
No, no. We want the wisdom of the older generations.
We want the stability of someone who has seen life’s ups and downs and understands there is more to life than the petty day to days of a presidency. There is a legacy beyond them and they imbue that in their policy.
Age can be a symptom of your inability to do this, but it is not the problem.
The problem is with specific mental ailments and behavior coming into the presidency. We should scrutinize those ailments heavily, and build a culture around stepping down when life inevitably gets to you too — and having it taken from you if you do not take the opportunity for mutual dignity.
The problems that afflicted Biden could happen to anyone at any age. It is a problem if any candidate experiences it.
And I do not really think age has effectively changed Trump’s view of the world.
Those with longer tenure though tend to end up in the powerful senate positions like becoming a majority/minority leader. Thus you end up with absolute fossils like Pelosi or McConnell who most recently basically snuck in banning hemp into the budget bill, which was something absolutely almost no one in the USA was calling for and incredibly unpopular.
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.
I would use straight up sortition rather than voting for congress. Propel people into the job from obscurity, by the time they've learned how to game the system it is time to leave.
Don't we get the same problem? You win the lottery, now you're a senator, and by the way, I have nice brown bag for you.
The thing is that bribery is technically illegal. Of course it's completely ubiquitous, but it's generally (FFS Menendez) done in a nuanced and practiced way. Newcomers are not always going to be willing to accept bribes, and actually trying to offer them one would require much more overtness, which enters rapidly into the domain of clear criminality, to say nothing of when your bribe attempt is rejected. And these are the issues with just one guy - with hundreds of politicians regularly cycling in and out, this scale of bribery is just not realistic.
The bigger risk with sortition is that power isn't granted through a title, but through people agreeing to respect that title. If the authority of that title ends up being undermined, then it's entirely possible for power to shift from our representatives to other, probably more entrenched, groups. One could argue that on many issues this is already the case. For instance Congress ostensibly has oversight over the intelligence agencies but the power relationship there is completely reversed. For those that don't know, Congressmen don't have classified access by default. Millions of people in the US have classified clearance, but the people representing the country at the highest level - nah, why would they need such a thing?
Only if you theorize that power corruption is a step function, and that there isn't survivor bias and influence during the process of getting to the point where you can even win an election.
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.
Lord Acton has a few words about power etc. I don't think most people selected ala Cincinnatus for greatness have the ability to demure when venturing into government at high levels. Quid Pro Quo...
That's a good point actually.
Yeah, but that makes them susceptible to lobby groups. They offer the politicians cushy jobs after their political career in exchange for political services. Politician probably has to be a sustainable and well-paid career somehow.
yeah this is exactly it, there's no good way to prevent congress from sharing inside information to enrich people around them in the wake of personal bans... we just need term limits to reduce the surface area
> I don't want people in congress as a career. Do it for at most 2 terms and get back to the real world.
This means you want them to do a job for four years when it takes them two or three to learn how to do it.
Your argument seems to be that those in public service should only survive on their salaries, because "doing it for the people" is enough of a reward that they don't need to worry about such trivialities as money.
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.
> There's no good reason to stop anyone from owning stocks. It's part of any sensible person's retirement strategy.
Congrescritters already have a retirement strategy provided to them for free courtesy of the American people: a pension.
On top of that, many of them never retire, they just hold power and keep collecting paychecks until the day they die.
It makes more sense when the government isn't as powerful as it is today. If we didn't ask or expect our governments to do so much the politicians would have much less advantage over the average person.
If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress.
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.
Yes, like every other profession in the US seemingly, Congress is also underpaid. But letting them individually fight for getting as money as they possible can before they retire via means the typical person doesn't have access to, isn't right either. I agree they should be paid appropriately, so they also can survive on their salary, but still think they shouldn't be able to do certain things others can, because of their position.
Agreed. I'd prefer they were required to use a blind trust. Or, possibly immediate reporting on trades.
> If we don't pay them well (and we arguably already fail to do that[1]), then it becomes really hard for anybody but the independently wealthy to be in Congress
Congress should be paid minimum wage. They are the ones who determined that this is enough to live on so everything above that is wasteful spending of public funds. If they don't think it's enough, they can change the minimum wage to a liveable amount.
That’s the best way of ensuring that bribes (legal or not) become the primary source of income for every representative who is not independently wealthy.
I would bump it to $10M/year. In terms of importance, this is still vastly underpaying these jobs.
That should take the edge off any money seeking schemes. It's hard to bribe the wealthy!
For 435 congress people and 100 senators, that adds up to $5.35B, which is about 6 hours of federal spending.
You’d have a massive influx of incompetent grifters who only get themselves elected for the salary. At the end of the day public service still has to a “sacrifice” (doesn’t mean that it shouldn’t be compensated at e.g. top 5 percentile income).
Give them spending rights. You need a second home in DC? Ok, if you pass a means test we reimburse your rent and travel costs. There's no sense in giving them additional excuses for not doing their job. 174k is plenty of money to live off.
I have a hot take on this that I think could actually make some headway: - We raise the congressional salary. Say, maybe double them across the board.
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.
> Or, you can remove yourself from the investment/ownership vehicle during the term you serve as a congressperson.
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.
> The problem with "blind trusts" is that even blind men wink and nudge.
They should only be allowed to invest in a fund that is open to public participation. This should also be public information. You should be able to pick a congresperson and invest in the exact same funds that they do.
Which can be solved with insider trading enforcement of political figures and their associates. This SEC already does this to 'normal' people.
I honestly don't know how you put a cone of silence around congresspeople such that insider trading anywhere in their sphere of influence is impossible. My intent would be to make it difficult for the congressperson to directly benefit from passing along insider info and compensate them enough such that it isn't a practical path. Sure, they could still tell friends to buy/sell, but if the friend *does* act on that, it's sure going to raise eyebrows when they try to wire $1M worth of proceeds to the congressperson for "movie & pizza night".
And I know that the next stone to be cast is "yeah, but if they help friends/business associates beat the market, congresspeople can still benefit with board seats and jobs when they're done with congressional terms". That's totally valid, and I have no idea how to combat that.
Their salary is not nearly enough. FAANG SWEs make several times more money for something that's quite a bit less important. Their pay is pretty good, but they also have a job which requires them to stay away from home (for most of them) for long periods of time. The pay is not really enough to maintain a household and a second living space comfortably.
I get the sentiment that they shouldn't be in it for the money. But money is important even for idealists. Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead. Would you say that this person doesn't want to serve the people enough, and shouldn't run?
Maybe you would, but the problem is that you mostly won't get people who want to serve even more. By paying a relatively low salary, you'll end up getting:
1. Idealists with poor prospects in the job market.
2. Extreme idealists with good job prospects.
3. People who think they can leverage the position to make enough money to offset the difference in pay.
4. People rich enough not to care about piddling W-2 income.
In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million.
And of course people don't tend to attain substantial net worth without having an eye for ways to make money, so it's very likely that those people will abuse their position to make money as long as they think they can get away with it.
I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially. That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
> The pay is not really enough to maintain a household and a second living space comfortably.
Who's talking about a second living space? They can move like most Americans do for work when the commute is too much.
> Let's say someone wants to serve the people, but not enough to take a $174,000/year salary with a lot of travel and needing to pay for lodging in a remote city, when they could be making $500,000/year at Facebook instead.
Then they can go work for Facebook. Who cares what they would like to have.
> Would you say that this person doesn't want to serve the people enough, and shouldn't run?
Yes.
> Maybe you would, but the problem is that you mostly won't get people who want to serve even more.
Source?
> In practice, categories 3 and 4 will win. According to https://www.quiverquant.com/congress-live-net-worth/, 107 members, or 20%, of Congress has a net worth of over $10 million. That net worth is in the top 2% of their age group. 16 members, or 3%, have a net worth of over $100 million.
Before or after they started their career?
> I'd rather see a substantially increased salary, something like $1 million/year, so that ordinary people with decent skills can see serving in Congress as something they don't have to sacrifice for, financially.
Ordinary people don't have the expectation of needing to be payed $1M to serve their country.
> That would create a lot more competition for those positions and push out some of the extremely wealthy ones.
The wealthy ones just use their wealth to get ahead.
it's not really possible considering that most retirement accounts are stock portfolios — it also doesn't matter too much on an individual level because an individual ban just gets pushed to sharing stock tips with extended family (already happens), family bans get pushed to friends, etc...
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
Agree -- strict term limits would be a gamechanger in a lot of ways.
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?
> 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....
[1] https://www.cbsnews.com/news/congress-stock-trading-ban-disc...
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.
> Jimmy Carter's peanut farm
Ironically, somewhere I was walking around on Sunday. Pretty place.
Imagine reading that pre 2008 (creation of bitcoin) — what kind of crypto scam could president run?!
It's a big cult, and you ain't in it.
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
It also blocks stock trading entirely for congressmen, which is dramatically different from what gp was suggesting.
Blocking it outright is probably more than what I want. I think if they can only invest in things like S&P500 funds that would suffice for me. Force them to invest more broadly in a way that it cannot interfere with the market.
80 Democratic cosponsors out of 213 Democratic representatives.
The bill is sponsored by 37% of Democrats
22 Republican cosponsors out of 219 Republican representativs.
The bill is sponsored by 10% of Republicans.
I think you might be jumping to conclusions by calling it a bipartisan flop. Co-sponsorship is not the same as a vote, there may be people not on the sponsorship list who would vote for the bill.
The bill was introduced 3 months ago (43 days these last three months was a government shutdown) and not enough time has passed to determine whether the bill will be a "flop" or not.
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.)
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.
> 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.
I would say instead of just blanket "ETF":
1. Only things that approximately match the contents of TSP funds or broader
2. Have to write down a 10b5-1 for the entire duration of your election plus one year, with a double cooloff period (6mo vs 3mo), and have to extend it within 3mo of each successful election.
Or have them disclose before they buy?
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.
It's not so challenging and it happens widely in industry: people are often heavily restricted in the range of trading they may conduct in cases where their business would give them insider knowledge, such as in certain parts of banks, accounting firms, credit rating agencies etc
> It's not so challenging and it happens widely in industry:
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.
You're creating a straw man (perhaps accidentally) which makes your argument seem such stronger than it is against the actual proposals.
Neither the comment you replied to, nor the proposed law, suggest the limit should be solely government bonds, which is what you're arguing against in your comment, they both say government bonds OR publicly traded diverse stock funds, for example ETFs.
Maybe you still believe that's restrictive enough to be a problem, but considering many people, even the likes of Warren Buffet, consider the best investment advice to be either "just invest in ETF/funds that track the whole market" or "just invest in a mix of ETFs/funds and also some bonds", while nobody considers "just invest in government bonds" to be good advice, your argument would be a hell if a lot weaker if actually applied to what IS being proposed rather than pretending that the proposal only allows investing in government bonds.
Well, currently we have a ton of Congresspeople who are primarily motivated by their "good financial sense" (for obvious reasons e.g. this study). So, I think we could do with a few more Congresspeople with less financial sense and more genuine motivation to improve the lives of their constituents.
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.
They should also, like judges, be recusing themselves from decisions and deliberations known to directly favor or hinder those personal holdings.
Ha! The supreme court (what a joke) has said that it's cool to give "gratuities" after the fact to judges or lawmakers who do what you want. It's not a bribe, it's just a gift or a tip!
Yes, well, it’s obvious the current Supreme Court is ethically and politically compromised.
> discourage anyone with financial sense from running for congress.
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.
Even the most disruptive proposals in these comments aren't banning representatives from being rich, it's just banning them from adding extreme amounts of additional wealth while in office.
It may be acceptable for them, but I'd prefer people who have financial sense in charge of the budget and people who are so power hungry as to forgo money kept as far from governance as possible
So you're saying we currently have a Congress with financial sense?
Only moreso than the counterfactual. The status quo only rewards those with financial sense who are willing to be a little corrupt, which undermines the effect. Really, we should just pay them 7 figures
People who want to enrich themselves rarely care about others. It's the opposite of people you want running a government.
You shouldn't be punished for being financially intelligent. You are conflating corruption with financial competence.
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.
> You shouldn't be punished for being financially intelligent. You are conflating corruption with financial competence.
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.
You aren't being punished, nobody is forcing you to run for Congress.
> Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress.
The flip side is it also discourages anyone primarily looking to profit off it, rather than being interested in actual governance.
People think that quality governance is all about the intelligence to know the best rules to decide for the greater benefit of society. Politicians behave badly because of incentive. Good rules would require correct incentive, not merely higher quality individuals. Intelligence doesn't dissuade corruption of power, if anything it accelerates it.
Unintended side effect might be that congress would use their power to make bonds a more profitable avenue of investment, creating a very reliable, high-interest retirement vehicle for average people (rather than getting into the roulette wheel of the stock market). Imagine if USG-backed 15% treasuries were a thing?
Where do you think the money for those 15% interest payments would come from?
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.
Right now congresspeople are only paid about $200k. People who want that position are likely to be people who plan to profit off of it in other ways, at the expense of the nation. We should pay congresspeople more, as well as increasing trading and lobbying restrictions, to help attract honest, capable candidates.
Agreed. The whole idea that they are in it for the “service” is a really naive idea. If we want honest hardworking and qualified people to do the job the salaries should be in the 500k to 1.5m (senate) range. Then knock out the corruption.
According to this link [1] 200k would put someone above the 80th percentile and not far below the 95th percentile in terms of household income for the DC metro area, so I don't see how that could be considered "underpaid", especially when you consider the benefits.
[1] https://statisticalatlas.com/metro-area/District-of-Columbia...
If someone is paid 500k-1.5M, do they suddenly lose interest in further enriching themselves? I don't understand this argument.
> Restricting public servants to only government bond investments would be a great way to discourage anyone with financial sense from running for congress.
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.
We've been doing it. There has been a severe degradation in quality.
Congressmen's salaries need to increase by 10x.
>Running for congress is already kind of a financially silly thing to do
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?
> Evidently it’s not.
Cards on the table: I just don’t think people operate with single incentives like that, and even if they did, it’s a cost I’d pay easily.
Not just individual disclosure, as families and friends share information. It's a sticky web.
ETFs and mutual funds wouldn’t suffer from this?
Restricting them to invest in equities via index funds/ETFs, on the other hand, is not nearly as problematic.
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.
> 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."
> would be a great way to discourage anyone with financial sense from running for congress.
So it's better to encourage people without any morals?
I think we need politicians who have the financial sense to see that the government is built to serve people whether or not they're invested in the market. As it is now now we've completely failed the American people.
Yes but politicians would need to agree. Why would they?
In a decent democracy you could vote those out, sadly USA ain't that.
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.
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.
Unintended side benefit -- those with power are incentivized to raise bond interest, creating a safe investment for others to use.
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.
I'd rather force them to completely divest and give them a decent pension (which I believe we already do).
That's why I don't think they should be able to trade stocks at all. Why are they under less scrutiny than low rung engineering employees at one of the big 4?
Force them to buy nothing but SPY. If you’re in Congress, you’re allowed to get the market return. Or a government bond fund, or cash. That’s it.
I agree that blind trusts don't fix everything, but it is a start.
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.
Yes, that is one solution, but history has shown it is very hard to effectively police it, as there are a million ways to get around it.
The SEC enforcement of Insider Trading laws is also simultaneously both ineffective and created high-profile wrong cases which get people with influence to further weaken it.
Seems to me the best solution to all of the above is to simply require ALL trades to be open and transparent with the ultimate beneficial owner and the trade available in real-time. Pharma scientists & execs start buying/selling their stock unusually? Easy to setup trackers so we know it in the same second and can also take advantage of their knowledge that their new drug trial succeeded/failed, and it will eliminate much of the insider-trading edge. A congressperson buys/sells a bundle of shares of a company in his state? Again, we see they're likely getting/losing contracts soon, and again, much of the margin disappears.
Traders would rapidly setup hedge funds and ETFs to ensure this happens in milliseconds, and much of the advantage and problems of insider trading being unfair disappear, along with a lot of enforcement cost.
Obviously just a concept, what are the holes?
Wouldn't they just trade through their relatives? Or does the insider trading immunity not stretch that far?
That's also insider trading.
Personally, I think there's a fundamental flaw in insider training law in the same category as the fundamental flaw in copyright and patents.
You are trying to stop people from using knowledge for gain... In a system that is fundamentally designed to reward using knowledge for gain. Fully enforcing insider trading law requires slicing of categories and resolution of ambiguity that creates the same problems it does in the other knowledge market law: decisions that feel unfair even if the letter says they aren't, people getting away with things that feel wrong on a technicality, and the whole category Congress people fall into where it's impossible to do their job and not obtain enough market knowledge to be leverageable.
I don't have enough historical knowledge to know if this was always a problem and we just weren't sensitive to it or if past generations were more modest or magnanimous and either didn't take advantage of what they knew or took advantage of it and spread the wealth around, but I think we might be trying to fundamentally solve the wrong problem.
It is entirely possible that the problem is the asymmetry is the market creates themselves. There may simply be no better, more efficient solution than taxing the hell out of the rich, no matter how they got there.
This would be the largest insider trading scandal in that case. Sharing company information that is then traded on would fit this bill I think.
> the largest insider trading scandal
Based on the dollar amounts, no. What makes it noteworthy is it’s a massive corruption scandal.
Absolutely. I like the diplomatic way the authors put this, whilst making it blatant what the implications are.
So, you want a title that is 5 lines long? It’s a fair criticism, but maybe it’s just too difficult to summarize in a title.
Something like "Congressional leadership 47% better at picking stocks than rank-and-file"
What's the rule on titles now? I thought HN had a strict 'no editorializing headlines' policy, but I see the article has a different headline than what was posted here
Every single one of these scoundrels will stand up at a college graduation and exhort the virtues of public service and sacrifice for country. But somehow they all manage to get rich in the midst of their own service and sacrifice.
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.
> It should be an expected price of public service that you remove yourself from most other ambitions.
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.
Or we can recruit lawmakers how we choose juries: randomly. Every two years we randomly select 435 individuals to serve in the House and 100 random people for the Senate. We pay them well, and they pass a basic literacy test. No money in politics, no parties. You have to for a coalition to govern.
One objection could be this: but what if we hire unqualified people. The counterargument: do you think are current legislators are more or less qualified than an average person?
Another objection: but what if they don’t want to do it? Counterargument: when a juror does not want to be on a case, they are almost always dismissed from it. Doesn’t mean you get to skip jury duty, just that you don’t get to do that one.
One last one: this will disrupt those people’s lives. Counter argument: what Congress is and isn’t doing right now is disrupting everyone’s lives as are lobbyists and special interest groups.
Something similar has been done in Ireland with their assemblies. And I do think that if you cannot convince 535 randomly selected average citizens that a law should be passed, that law is probably not worth passing.
Democracy is a terrible form of government. It’s just that it is about 5x better than anything else we have invented so far. Doesn’t mean we should stop looking for a better system.
As a prosecuting attorney who selects and works to convince the "average" juror 5+ times a year, this is not a good idea. You are vastly overestimating what the average level of competence is. Most people, when given unfamiliar knowledge work to do, are so hopelessly biased and ignorant that I definitely think the average congressperson is more qualified to do that kind of work. We are spoiled by selection bias when extrapolating what "average" means in the USA.
For reference, this is referred to as "sortition", and at least the Athenians felt that it was more democratic than elections. The randomization machines they used for picking winners (kleroterion) are quite ingenious.
In modern times, sortition sometimes shows up in some deliberative democracy proposals.
Athens is a tiny community. And within that the citizens are the aristocrats who know each other by name. Ordinary residents are merchants or slaves.
We elect leaders - people with skills, knowledge, and expertise.
Does the average citizen even understand discounted cash flows or opportunity cost? And not to mention legal concepts I’m ignorant of.
I don’t see why lowering the quality of candidates by 10x would improve things.
> We elect leaders - people with skills, knowledge, and expertise.
I admire your optimism but saying it doesn't make it so.
We elect people able to convince others they should be elected. Often that means they possess the ability to convince others they have the skills, knowledge, and expertise you describe.
If you think that's the same thing as actually having skills, knowledge, and expertise, well, I have bad news for you...
Literally laughed out loud about this. You might have missed some of the things that prominent leaders with "skill, knowledge, and expertise" have been doing:
https://www.kennedy.senate.gov/public/2025/9/kennedy-calls-f...
https://edition.cnn.com/2015/02/26/politics/james-inhofe-sno...
Or an even older one: https://rollcall.com/2018/02/16/flashback-friday-a-series-of...
We are definitely not sending our brightest.
Do our current elected leaders understand discounted cash flows or opportunity cost? I'm not seeing evidence our current process results in people skill, knowledge, and expertise, especially given the over representation of people from entertainment.
Yes. across parties senators typically have prestigious law degrees and piles of accomplishments.
I’m not saying that makes them great. But if you want to see the pool of average citizens walk into a Walmart or DMV outside the Bay Area.
Yes. They just don’t talk about it because the voters don’t understand and feel insulted when they hear politicians talk about stuff they don’t understand.
Sounds very interesting, but one more counter-points I'd like to see counter-countered:
These random people will have to rely on experts a lot for knowledge they lack on any topic, because the world is complex. Now, these experts can be biased, bought, influenced etc. Or be accused of being in some sort of "Deep State" if you're into that.
But then again, this can already be the case, now I counter-countered myself.
That’s exactly it: we already have this in the form of the lobby industrial complex. Except it is possibly quite a bit worse because if you stay in Congress for a long time and form a trusting relationship with your lobbyists who by the way also pay to your reelection campaign or support you in other ways, over time you get to accept their expert opinion with less skepticism. If a lobbyist has to start over every 2 years, they can’t sink their teeth as hard into you. And I doubt many congresspeople are experts on most subjects on which they write laws. Some have economics degrees. Some are doctors, some are lawyers. Very few engineers, it seems.
If you wanted an alternative system: you could always have a professional group of law writers and a professional group of law opposers try to present arguments to a large assembly of law jurors. If they can’t get 2/3rds majority on a law, it doesn’t pass. This is better than something like direct democracy where everyone votes on an issue because you can’t get the voters’ attention on any one thing for more than a few minutes or a few hours at the most (except a small fraction for whom it is their life for a while). In this law jury setup you can properly brief them.
You could have some other body of professional governors who do things like emergency resolutions and maybe basic budget stuff but anything beyond that goes to the assembly for approval. You could create a new assembly as often as every 6 weeks and process a batch of laws at once so that you really rotate out the jurors before they can be influenced. And selection of law writers and law opposers can be something that is reviewed by this kind of assembly too, or just some large pool of professionals who are chosen at random for any given period of time and given the power to present before the assembly. A lot of options here for how to amortize bad behavior such that over the long haul it averages out to close to zero.
Currently, the Congressional staff is mostly recruited and retained by the congresspeople, and they become the experts in many situations. They can also be retained by the committees, in which case they are often more non-partisan. They do have some ability to influence the debate, but they usually do not frame it.
If we had national assemblies by sortition every 2 years, I would worry that the the tail (the current structure of Congressional support staff) would wag the dog. A better system would need to be designed to enable good decision-making.
sortition is just democracy but with a weird probabilistic form of voting
As opposed to the determinism we have now?
Nebraska has a unicameral legislature that isn't in session year round. Pay is $12k/year (with travel per diem). This low salary leads to an older cohort of senators, either retired or wealthy enough to work part time. This low salary completely neuters the ability of younger people to enter state politics until they've amassed enough money to survive for four years.
> requirements that you sacrifice your retirement and financial well being
Holding index funds seems reasonable (Total Stock Market, S&P 500)... not a huge sacrifice imo
Definitely prefer something like Total market, even 500 companies is too much of a bias towards one group. Especially with the S&P500 currently looking like an S&P10...
this feels like a no brainer solution, but just seems like a wonderful wishlist that won't happen, ive heard it a lot.
I am wondering why i don't hear anything like: if a church or group representing a church get involved with politics, through lobbying or any other type of means, their tax free status is revoked and they are treated like a normal entity.
it seems like a similar type of thing that in my eyes at least, is a no brainer, but is just as likely to be chopped down because of how our current system functions.
Hong Kong already showed that paying public servants well doesn’t stop corruption.
> Countries like Singapore already figured out that if you pay public servants very well you can attract high quality people to government jobs.
I see this argument a lot, but I think it treats people as uniform input-output machines. Singapore is successful in this regard because of much more severe and very real penalties for corruption, and because not "everyone does this". You can't bribe immoral people into behaving morally, because in the absence of morals they have no incentive not to just take your bribe and keep doing what they're doing.
A significant number of corrupt public "servants" are multi-millionaires, no amount of money will ever be enough for them.
Compare the observation that in superhero comics, wealthy villains can be self-made, while wealthy heroes invariably get that way through inheritance.
The only acceptable leader is someone who was born so rich that he leads as a hobby.
That strategy is pretty hit or miss though. Sure we've got Kennedy or FDR, but we've also got Bush and Trump.
I'm not saying that's a useful thing to believe. I'm saying that's what people do believe.
> Countries like Singapore already figured out that if you pay public servants very well
So insider trading is not a thing among Singapore's ruling class?
The idea sounds tempting at first but the founders set it up so congressmen could be voted in for decades or voted out. The real issue in my view is, why are constituents not voting the scoundrels out.
> They shouldn't be allowed to trade stocks.
I'd be okay letting them invest in S&P500 and that's about it.
This is called the PELOSI Act:
https://www.hawley.senate.gov/hawley-advances-pelosi-act-to-...
maybe capital gains for politicians should be increased to like 80% and redirected entirely to public service funds lol. i'm just throwing random crap out there but haven't thought it thru at all for 2.
Yes, I’m sure they’ll vote for that.
Then we shouldnt vote for them...
Or maybe if they do trade, their trades have to be on a month long delay. The transparency should take out any corruption on the duration and it will incentivize their investment on long term gains and allow the public to also participate and make their insider knowledge.
The current lag timed reporting requirement is a decent start, but fact of the matter is that it still allows Reps to take advantage of insider knowledge to profit and thereby basically be bribed in circuitous ways not really all that different than a mobster/teamster accidentally leaving behind a suitcase of cash after they dinner party the politician invited him to, just even more obfuscated and structured.
I think the solution is to pay them more, create very strict laws around insider trading, and enforce those laws vigorously.
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.
I’m also in the camp of paying government officials more. In my town, the mayor and council make about $30k each while the median income in the city is well over $100k and houses cost over $1M. That self-selects out the majority of qualified candidates who must work for a living.
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.
> That self-selects out the majority of qualified candidates who must work for a living.
Occupations like "landlord" and "car dealership owner" are wildly overrepresented in local government because they have high incomes with virtually no time commitment.
These people aren't necessarily unqualified, but their motivation for holding office isn't usually aligned with the needs of the average member of the public.
"Mayor" where I live is effectively a volunteer position. Raising the salary would require the village fully fund the position for the extent of a mayoral term which is too expensive.
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.
Here in NJ, I live in a small town of around 7,000 or so. We have a Township Committee form of government, five committee people with one nominally as Mayor (but really the same as everyone else). They get a yearly stipend of around $5,000 a year or a little less.
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.
125k people, $9,000 for the city council position in my area.
> In my town, the mayor and council make about $30k each while the median income in the city is well over $100k and houses cost over $1M.
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.
I don't understand how paying them more will curtail this. This is a mixture of a crime of convenience and greed. It's not a Les Mis situation where they need these stock picks to survive (or even thrive). The current US Administration is full of rich people who are still not above corruption.
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.
The idea is that if their salary does not actually cover the expenses of living in and traveling to DC to do their job, you are limiting the pool of potential congressional representatives to those who are independently wealthy or who are finding other ways to make money via their position.
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.
At first I am sympathetic to this idea, but the act of running is so expensive and time consuming, it does not matter what the salary will be, the pool is already limited.
You need to be well connected and/or wealthy before you even start.
That's true, and I think Bernie's idea of having publicly funded elections is great because of that issue.
I would like to mention that this is not just "Bernie's idea". It's how elections are run in a lot of countries, including mine (Spain).
Or don’t have elections and pick legislators randomly like we pick juries.
I think sortition is a great idea but you would probably need a constitutional amendment if you wanted sortition in Congress or the Senate. I think the State's have some discretion over how elections are run but I don't think its enough discretion to allow appointment by RNG. I think the strongest argument you could make is its an election where everyone is forced to vote for themselves and tie-breaks are chosen by RNG but I don't think that would be valid because I assume the courts would demand electors execute some agency.
The text of the constitution for electing congress says:
> The House of Representatives shall be composed of Members chosen every second Year by the People of the several States
and there is something similar for the Senate after the 17th amendment. I think pre-17th amendment States may have been able to use Sortion to appoint Senators but it would not have been legally enforceable. The State legislature could pre-commit to elect Senators by Sortition but then they could bail out and just decided to choose who they want when it came to the actual selection.
I am definitely not a lawyer, but "chosen... by the People of the several States" does not say the method of this choice. If the people of my state decide that the RNG decides, is that not "chosen by the People" of my state? Or if we still hold elections but one of the choices on the ballot is "RNG-chosen candidate"?
Publicly funded elections & doing things like repealing citizens united would address the expense. It is very time consuming though.
Citizens United isn’t a law, it’s a shitty Supreme Court decision. It’s on the long list of obvious problems we can’t fix without first reforming the courts (I favor increasing the justice count to match the number of circuits, and also drawing the Supreme Court justices by lot for each session from the “lower” courts—shouldn’t be any constitutional issues with that approach, so it’s just a normal law, and it ought to be easier to sell than simply expanding the court and “packing” it since it’s less-partisan)
I don't know how you repeal citizens united. That decision basically fucked the US over for a very long time. I'll probably be dead before it's fixed.
It's an interesting idea. Is that what's happening? The article doesn't suggest it. People like Richard Burr, Chris Collins or Nancy Pelosi were certainly wealthy enough cover these expenses. It didn't stop them from seeking other ways to make money via their position. If your goal is to stop insider trading, you should focus on stopping insider trading.
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.
The comment above specifically also said to create and enforce laws against insider trading, in addition to the pay increase.
> as the electorate has already shown they don't care enough to vote their representatives out for doing it
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...
Somehow I don’t think paying them more is going to be a very popular idea among the citizenry.
I agree, but the substance of the issue is that their pay has remained the same since 2009 at $174k/year (i.e. not kept up with inflation at all) so if we want to discourage corrupt behavior then giving them a proper salary is probably a good idea if we're going to restrict other methods of building wealth.
You still have to prove if raising wages will reduce corruption, and if so, prove that it is reasonably cost effective. Keep in mind, there are already independently wealthy people involved in government in the US, and they still engage in corruption: Trump & his family, Musk while at Doge, Chris Collins, etc.
After all, how much do you have to pay the world's richest man to keep things above board, I wonder?
I beg your pardon, but if that applies to Congresspeople, what about the common laborer? All I'm seeing is more pandering to those in a position of power.
Less concentrated wealth means less discretionary funds for bribery. :)
The common laborer doesn't control the thing that has a monopoly on violence (the government)
They should benchmark to early USA and Singapore and corporations.
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.
It also wouldn't help anything.
Yes it would. It'd make Congress a viable career path for ambitious-but-not-yet-wealthy people. Currently, you have to already be rich to be able to make it work. Public service should be a viable path to wealth for ambitious, capable young people.
Not unless you combine it with outlawing trading for them.
How much do they get paid currently?
Many people agree with Bay Area's idea that people making less than $105k are poor - https://news.ycombinator.com/item?id=46036803
$174k to $223k + allowances up to $2 million
https://www.congress.gov/crs-product/RL30064#:~:text=The%20c...
Not enough to attracted talented, sane people with strong ethical values
Braindead to think salary is somehow attached to morality. I would say some of the most immoral people are people with a lot of money, and there are countless examples of that.
My logic is that, if you are trying to evaluate whether you'd want to be a politician, consideration of cost/benefit is rational. If you aren't ethical, the benefit of being a politician is a lot higher (because you can get unethical sources of funds). If we want to attract more sane, talented, ethical people, we need to pay more — and prevent blatant corruption like privledged trading.
"trying to evaluate...". Normal people aren't trying to evaluate becoming a politician. It's a lifelong career for most people and you think the lunch lady or librarian who constantly gives back to their community was evaluating on "becoming" a politician? The financial incentives should be lowered. Pay them like you pay a school teacher and ban insider trading. Then you wouldn't have all these worthless nepo babies who just want a lax job and power over people in these positions.
I think a better choice would be to simply remove the ability or to profit from the job. Perhaps politicians give up all their property and become wards of the state after serving their terms, or agree to aggressive post-service surveillance and corruption enforcement.
Good way to make sure that the most capable people absolutely never go into politics.
From my perspective it would make a lot more sense to only allow index fund purchases as an elected official. If the economy does well you still do well, but there would clearly be no insider trading going on.
Or at least there would be less - you could only trade on the knowledge of full-market swings rather than per-company swings.
> From my perspective it would make a lot more sense to only allow index fund purchases as an elected official.
The new leader[1] of the Norwegian wealth fund[2] had a large stock portfolio. There was some debacle given the influential nature of the wealth fund.
He agreed to sell the stocks and buy index funds instead, until he resigned from that position.
As you say, I think that's very reasonable. They can still make money off the general stock market lkkd the rest so they're not disadvantaged, but have very limited opportunity to benefit significantly from inside deals.
[1]: https://en.wikipedia.org/wiki/Nicolai_Tangen
[2]: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
Why would we pay them more? The people who are in Congress for the money are the exact type of people I don't want in Congress.
Because the most capable among us are able to command high salaries regardless of whether they're 'in it for the money'. Congress needs to be competitive with industry for the best talent.
Also, giving politicians legitimate income makes them less susceptible to bribery and other forms of unethical income.
I understand this, but at the same time the concept of this to me is absolutely wild.
We see this in the UK, the exact same argument. Yet I was paid more to manage a small tech team than an MP for fewer hours. You actively disincentivise people like me from taking public positions. I'm doing tech contracting and earn more than Prime Minister.
The UK gets about a trillion dollars a year in, and spends more. The US takes in something like five trillion dollars.
An exceptionally small improvement in improving the economy pays for itself indefinitely because these countries are absolutely enormous. Our MPs are paid about 90k/year, if you could improve the tax take of the government by 0.1% by improving the economy in some way *once* you could pay them £1M/year *tax free* and you could pay that *forever* even if future people aren't as good they're just not actively detrimental. This is also for paying people who aren't actually making big decisions, just the elected representatives.
Money should not be an issue, missing a good person because of the money is utter insanity given the payback.
You've just been presented evidence that your law makers are doing something immoral, something that should be illegal, and your idea is to pay them more. Do you also advocate putting a little pot of cash at the front of every walmart so the shop lifters can just take the cash and pay for the stuff they were going to steal?
> Do you also advocate putting a little pot of cash ...
Yes, obviously I would support that /s
The idea of increasing pay for members of Congress is that we naturally discourage seeking out other forms of building wealth and/or paying bills while in office regardless of existing laws. You can also have laws that explicitly stop things like insider trading too, but obviously you can't solve for every scenario so this would be a blanket solution.
I understand that corruption can't be solved by this one action and that members can still be corrupt after a pay increase, but on the whole, I think it'd be a positive change. It's a hard problem to solve without burning everything down... which only sounds good in theory and may not result in a better system.
"create very strict laws"
Who's going to draft those laws?
Definitely not the lawmakers who could benefit from this.
See the problem?
The logic of paying lawmakers well is that if they have enough money they won't be at tempted to do bad things to get more money. All of human history has shown that "enough money" is not a meaningful term for people attracted to such positions.
Lawmakers should be paid enough that they are not destitute, so that low income people are not excluded from participating in government, but the price of power should be that one can not become wealthy during or shortly after their stint. Tax their household 100% on all income and capital gains over the congressional salary (which should be comparable and pegged to the average DC area household income) for their term and over a reasonably small multiple of that salary for 10 years after they leave office. They can insider trade all they want, they can take a cushy job with a company that lobbied them, but all the money they would make by these efforts will go to the people. In practice I think most would not bother. Some people may choose not to go into government because they have better earning opportunities elsewhere, I consider that a feature not a bug. Some may leave office earlier than they otherwise would because they don't like the low income, again that's a good thing. Non-monetary quid pro quo is still an issue, but it's no worse than the current situation and frankly power will always come with perks.
Exempt sitting congresspeople from the change they implement and any of their past potentially ill gotten gains will be exempt from prosecution. Passing a major anti-corruption bill while legalizing your own grift? It may very well pass unanimously.
the solution is dont let them pick individual stocks, only indexes. they also should have to publish all trades publicly the day the trade takes place
CA doesnt care about this -- you continue to re-elected Pelosi, she is one of the worst violators of this
Deeply corrupt country we've created here, and it seems impossible to back out of it. How are you gonna get congress to cut their effective pay? I would bet money that there are people who go to congress _solely because_ of the advantages it will give them back in the private sector. If you even got it on a ballot or something where the general populace could vote on it, you can bet your ass that, thanks to citizens united, the pro-owning-stocks lobby would outspend the anti-corruption folks 10 to 1.
I guess the way to start is by shaming these obviously corrupt officials and practices. Much like racism, people don't mind being corrupt but they seem to mind being _called_ corrupt.
Proposal : A congressman can trade to their hearts content but must publicize their intentions to purchase or sell a stock with a minimum of at least 24 hours. This gives the public the open view of their intentions however they come to that decision, but the open market can then decide how to react to the congressman’s decision before they actually finalize a trade.
[delayed]
Although this sounds like a sensible idea, I think it's impossible to prevent insider trading - if you introduce a rule like this, politicians will just find a middle man or work around it in some other way - the corruption schemes getting more elaborate is the last thing you want.
The goal isn't to make it impossible to do insider trading, it's to set some controls and have consequences when they aren't followed.
The middle man scheme you mention would be illegal under OP's idea. So prosecute everyone involved. The more people involved, the harder to hide it.
Your argument is basically "it doesn't make sense to have murder be illegal because the law won't prevent the bullet from flying."
Yeah, unfortunately.
This is pervasive in China; the politicians kid is the middleman. One child policy, so there's at most one kid -- makes it easy to know who to give the stock tips to.
In September, there was a bipartisan bill in the House to ban individual stock trading. Members of Congress must divest before being sworn in under this proposal: https://www.npr.org/2025/09/03/nx-s1-5485340/congress-stock-...
I think that one died in committee.
There’s another from a Republican member from Florida that the Speaker has blocked. They’re currently attempting a discharge petition: https://www.congress.gov/bill/119th-congress/house-resolutio...
Over the summer, Josh Hawley of all people introduced a similar bill in the Senate.
The assumption is that the stock picks come from insider knowledge gleaned from congressional duties like sitting on committees. Another possibility is that they are a form of off-the-books campaign donation or bribe, and the knowledge comes straight from an insider who wants to influence congressional decision making.
This makes far more sense. "No, no, it isn't a bribe. It's a sure thing!"
Its almost as if private encrypted chat networks are a thing. Oh, look at that, Mets owner, Steve Cohen paid record fine for insider trading using just that.
It must be just down to the fact that they're so intelligent and tuned into the world that they know where to invest. Nothing to see here folks, move along now.
I would say jokes aside but the political system promotes this corruption.
I know you're joking, but the most interesting finding here is that they got more financially intelligent and tuned in after ascending to higher positions within congress.
Corruption and unfair election systems are one of the clearest bipartisan embarrassments. I can't understand why this gets overshadowed by wedges. Maybe the media benefits from it?
Billionaires benefit from it, they are the ones buying off our government. All the other "wedge issues" are designed to deflect attention away from our oligarchs and both parties are on the take. Look at how the DNC reacted to Mamdani for a recent example.
To be clear, because I know it will come up - not saying both parties are the same, but I am saying they are both doing the oligarch's bidding. The US government is now fully captured by billionaires and is currently being used for personal enrichment of those in power.
The election systems are managed at the state level exactly as they should be. Corruption has a much lower chance when there are barriers.
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.
>Maybe the media benefits from it?
Nah.
We just love our dog whistles.
Abortion!!
Immigrants!!
The billionaires are stealing from you!!
Libtards!!
Right wing shooters!!
Oh yeah, almost forgot..
Something, something blacks!!!
That's how you win elections these days.
You can try to win an election on something substantive, say, infrastructure repair and updates for instance. But the wedge issue fueled campaigns are gonna wipe the floor with you.
We the people have voted on this over and over. The data is irrefutable. We love our wedge issues.
I'd be more interested in how corrupt a system in this context is.
I'm not sure what to make of this study, and their wording is careful:
"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).
Despite Congress' general dysfunction, this seems like a problem that could feasibly be solved. It would make most Congressmen of both parties look good to pass a bill that e.g. restricted sitting members to index funds/mutual funds/etc.
Great intention, but too simplistic. The lawmaker has a third party set up a trust for the benefit of his children and the trust owns a company in yet another jurisdiction that just happens to not only take a position in a certain stock, but probably provides "consulting services" for a healthy fee. And that is the simple version. By the time the lawmaker's interest is fully obfuscated, the legal structure is fully compliant with every letter of the law, just not the intention. Better to have fewer laws that are actually enforceable.
That's like saying "why bother banning insider trading? People can just obfuscate their illegal trades".
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.
A new "boutique" mutual/ETF would spin up overnight which included just the assets already being insider traded.
Even that is open to massive bias. Who would vote to curtail the 7 tech giants when their own portfolio is basically the SP500 those companies dominate?
The SP500 is probably the most popular investment in America, perhaps aside from housing. Wouldn't hurt to have lawmaker's fortunes broadly aligned versus narrowly aligned with specific corporations.
That can go very poorly like in 1929, 1965, 2000, etc. and it is going to go poorly again and show everyone why it is a bad idea.
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
Just make their trades public in real time. Their alpha will evaporate
We have seen the opposite in crypto recently. Celebrity buys something and then people followed drives up the price like crazy
Can I find one of these people in congressional leadership positions, who is willing to accept a sizeable campaign contribution in exchange for joining their mailing list which contains their list of stock purchases in real time?
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?
It is not illegal for them to trade on their inside information. It is illegal for you to trade on their inside information. So they can send you their stock picks list and gloat about their ROI, but if you invest on the basis of the newsletter, you go to jail.
Wilhoit was right about everything: America is in-groups who are protected by the law, but not bound by it. Alongside out-groups who are bound by the law, but not protected by it.
You and I? An out-group. And it although we make a lot of jokes about leopards ripping faces off, MAGA know they're an out-group too, it's just that as long as somebody else is getting it worse, they're fine with that.
You're wrong on both counts
It is illegal for Congress to trade on insider information (it just isn't well enforced)
It is NOT illegal to trade based on a list of stocks they bought after the fact. That's not insider information.
> It is not illegal for them to trade on their inside information. It is illegal for you to trade on their inside information. So they can send you their stock picks list and gloat about their ROI, but if you invest on the basis of the newsletter, you go to jail.
All the Congress member trades are public. There are even ETFs now that track the Congress member trades. So you can just buy such an ETF and have a one-to-one replication of the Congress member portfolio.
Yes, but delayed by 30 days or more.
I've seen those empathy circles, where liberals care more about people on the fringe of society, and conservatives care more about people in the middle of society (apologies, if I'm butchering the explanation.)
I'm curious, has anyone done schadenfreude circles, where they measure how much people enjoy watching someone else suffer? I mean, of course they have, that's why we have TV shows like Cops and Jerry Springer, right?
Its funny -- out of all the corruption you see from Washington this one seems the most benign. For whatever reason this one gets almost the most constant press. Maybe because its the easiest to fix but isn't.
> out of all the corruption you see from Washington this one seems the most benign
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.
Trading on inside information has that causality going on the other direction. It's them picking what stocks to buy depending on what laws are being most argued for/against. Every stock looks the same from their POV, and there's no reliable mechanism for making them prefer one law over another.
The GP is right. It's campaign contributions, career rolling doors, and direct payments that make them pick one law over another. Inside trading only let them directly steal money from the population with no strings attached.
Peoples understanding of what "corruption" is differs by a surprising amount.
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?
Insider trading is a form of theft. Every trade has a counterparty who missed out on those capital gains because they did not have their thumb on regulatory levers.
This is so far from benign.
Well it’s pretty benign if they aren’t making different decisions on laws based on existing holdings. That’s just insider trading which is a tax on the shareholders.
Bribery or anything else that affects their lawmaking decisions is significantly worse because the impact is so much larger.
How can you be certain that policymakers won't make decisions that help their trading instead of their constituents? The incentive is already there, and the whole thing is legal, too.
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.
if they are actively avoiding making decisions based on how it would directly impact them? o,O
If.
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.
Mind bending to be downvoted over this. Do people really think these people are better or smarter?
Maybe a better solution is to crowdfund someone to run for federal office under the guise of purposeful naked corruption. Their whole platform will be "I'm doing this so I can get access to information before the market does, and I will immediately disclose that information to my constituents, and provide realtime trading updates".
I'd vote for that person in a heartbeat even if the rest of their platform was non-existent.
The discussion here seems to assume that insider trading is the only corrupting influence on politicians.
But there are many other interests that heavily influence politicians.
For example, in many districts you can not get elected without the endorsement of certain unions.
"Our baseline finding is that both congressional leaders in their pre-leadership years and their matched 'regular' members underperform the benchmark by similar magnitudes"
"Earlier studies of lawmakers’ trading by Ziobrowski et al. (2004 and 2011), found their portfolios to outperform the market. However, this conclusion is reversed in later studies. In particular, Eggers and Hainmueller (2013) and Belmont et al. (2022) document the opposite—members of Congress underperform the market during 2004-2008 and 2012-2020, respectively."
I guess the title of "Congress members suck at trading stocks, but suck less once in leadership positions" was already taken
Is this the high-frequency trading for humans?
The USA has a Constitution that allows and historically demands a massive expansion of Representation in the House, Senate and Court. We need 6500 House, 1000 Senate Reps, 99 Justices and 1 alternating Chief, with 25 new states.
The one thing that stirs the hearts and minds of the American people is a 67 page deep dive statistical analysis of an issue.
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.
Just to be fair, they compare every congressperson who becomes a leader with a “regular” (non-leader) congressperson who entered Congress in the same year and is from the same political party. Alternative view: people who becomes leaders are just more capable and better at selecting stocks?
> 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
If what you’re positing were true wouldn’t they have outperformed their peers before ascension as well
The very first sentence of the linked article contradicts your alternative theory. These leaders performed similarly to their peers before ascending to leadership.
They have found legal ways to do anything that's considered illegal. "They" is literally anyone who's rich and powerful.
Light is a good disinfectant.
I think you can see the actual numbers on capitol trades. https://www.capitoltrades.com/politicians
Many people mention unusualwhales.com to follow lawmakers's holdings.
Do you get insights early enough or is it too late to turn a profit? Anyone knows how they get the data?
They have 30 days to disclose trades. Even with that massive limitation, the NANC fund that tracks pelosi does well- https://www.nasdaq.com/market-activity/etf/nanc/advanced-cha...
Neither of them tracks leaders. They just say:
"This fund, which we like to refer to by its trade ticker, “[NANC/GOP],” invests in equity securities purchased or sold by [Democratic/Republican] members of Congress and their spouses
https://subversiveetfs.com/nanc/ https://subversiveetfs.com/gop/
So far my YTD is right in their range. But if leaders have a 47% edge, then I'm interested.
Not sure but there used to be a Nancy Pelosi tracker account on Twitter, and they would follow those trades, person made a bit of money, nowhere near what Nancy's estate has made though.
Between this and the comical definitely not corruption lobbying system it’s pretty hard to take any of it seriously
How does one find out what stocks each Rep owns?
See https://www.investopedia.com/how-to-find-lawmaker-investment... for the official disclosure portals, as well as some unofficial trackers.
They have to fill out a disclosure form, but it's on a 30 day delay, often more because they file late.
Be wary of all the third party congressional stock trackers for this reason.
https://unusualwhales.com/portfolios/pro-congress-etf
Unusual Whales keeps track of Congressional disclosures and even built ETFs around each party’s picks: https://unusualwhales.com/politics
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.
By the time you factor in the information you're too late.
Ask one of them to lunch, slip them an envelope.
How is this not the top story on US news networks?
So... where is the index that tracks their investments, so that we can also profit off their wisdom and foresight?
Isn't there a fund indexed to their portfolios?
Unrelated: Nancy Pelosi made $130M in stock profits during Congress career — a return of 16,930%
https://nypost.com/2025/11/08/us-news/nancy-pelosi-made-130-...
so where's the Top Congresspeople Index Fund then
In other news, cats vote down popular House of Mice measure to bell themselves unanimously.
And before anyone mentions she whose name is nauseatingly always mentioned on this subject, here's the list of Congress members by net worth so you get the whole picture instead of just how bad the situation has become.
Because in the end, the mice keep voting the same cats back in.
https://www.quiverquant.com/congress-live-net-worth/
Who's more of an insider than the person who writes the rules of business?
the congresspeople on the house arms and means committees who approve massive defense budget spending to companies X and Y, then buy shares in X and Y before the spending approvals are public?
(another post pointed out you can track all this at https://quiverquant.com)
Anyone seen similar research at least the same depth for other countries?
If a normal person did this, the SEC would almost certainly call it insider trading.
It's been five years since key lawmakers deftly navigated the market implications of covid-19 after being briefed in a closed-door session [0].
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...
Look, I have my political views, but this is why the whole divide and conquer thing is 100% true. As long as we, whether left or right, allow our entire mind and emotions to be warped and subverted by those in power, we will never effect change and unite against this kind of corruption, which none of us stand for.
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.
We need to change the voting system in order to dissolve the two party system, per Duverger's law. Ranked choice voting will not work. Approval voting or STAR voting would work.
https://www.equal.vote/
So make all congressional stock traded public information in realtime?
Unpopular opinion, but couldn’t this be explained by something as innocent as seeing what changes are likely to be coming?
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.
“Seeing what changes are coming” is insider information.
Exactly. The corruption is systemic and structural, rather than individuals' moral failings. (Though of course there's plenty of the latter, too.)
That’s not insider information following the legal definition in the US. That’s why people want to make special laws to prevent this.
It’s not insider information to buy or short a stock knowing you’re about to do something that will impact a company.
How is insider trading only 47% better. Knowing what they know... I'd do way better than that.
lol. Sure they are. Totally massive skills.
The majority of people with insider knowledge that are trading stocks will either use their knowledge to increase their gains or will tell their close friends and family.
Anyone who disagrees must be new to humanity.
Indeed the very foundational idea of Republican system ("no titles of nobility") makes this inevitable. It doesn't happen on similar scale in Europe simply because our stocks are shit and can't be profited much in any case, politicians just make money on bribes and kickbacks.
Extremely weird take. I can see why this system tends towards this kind of corruption but what do titles do except make the system even more profoundly corrupt?
Because people with titles of nobility were forbidden from participating in business at the risk of losing their titles; projecting to modern era, they'd be also forbidden from owning stocks at all. They must derive their means of existence from land rents and public/military service. Pretext was that engaging in commerce or business was "dishonourable" and below their status, in practice, it was a useful tool to avoid conflict of interest.
To think of it, there's something tempting in physically separating owning class from ruling class, isn't it?
I find all this rather flaccid, frankly. While the advent of capitalism provided an avenue for non-titled people to become wealthy, a lot of titled people also took that opportunity and I would guess a lot of generational wealth today still finds its ultimate source in entitled people.
In any case, I doubt society could successfully enforce this behavior in a contemporary context.
Politicians shouldn't be allowed to own private property. Only the people that really, really want to see a better future for their country will get involved in politics. This isn't my idea by the way, it's Plato's.
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.
I'd rather politicians have no privacy as long as they are in office, i.e. all their communications, acquisitions, etc. should be hard-monitored, automatically sent to an anti-corruption office and perhaps public. The loss would be temporary and harder to skim around, imo it's just better incentives all around.
But I'd definitely be okay with the property part if removing privacy isn't feasible :)
Great, so I can copycat their portfolio and do 47 pts better.
The problem is that they have a lot of time to report their purchases. If they were required to report before they purchased the problem would probably resolve itself.
Geniuses.
Obligatory Unusual Whales mention... https://unusualwhales.com/politics/profile/Nancy%20Pelosi
Is there like a TL;DR of what I should do to also get 47% better? Happy to copy someone's profile
hey and if we all do it we could all get 47% more!
I want to see Nancy Pelosi in jail for insider trading the same as I want to see Trump in jail for inciting insurrection. It's ridiculous that we have as many signs of insider trading as we have and yet we do nothing about it. In a proper system, there'd be an investigation and we'd have proof and we'd do something about it.
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.
I have a relative who mentioned that his investments were doing pretty well as of late. I asked him what his trick was and he sheepishly admitted that he just pinned his investments to the Nancy Pelosi Index.
Whatever she's investing in, he chases the money.
Ah yes that must be perfectly legal and a sign of a healthy democracy.
My personal opinion is that Nancy Pelosi is an anomaly in the dataset. Her husband is a VC/stock trader.
They should not have this ability. They can invest all they want into ETFs but nothing specific. This is such absolute bullshit. Run for congress and leave with generational wealth. Pisses me off.
/ pelositracker
Imagine my shocked Pikachu face.
We're now at the point where the most accurate predictor of what the administration and Congress will do comes from stock trades. You want to predict a land war in Venezuela? Just watch defense contractor and energy stocks.
We should force all elected officials and senior public servants to put their assets into a blind trust for their entire term plus two years. They should be forbidden from investing directly. So should their immediate family.
But the problem is so much larger than that. The government as a whole is captured by the donor class. It's so well known that even without an explicit quid pro quo, you and your immediate family will be looked after if you play ball. Vote for tax cuts, deregulation or th einterests of some industry and after your political career, you will have a nice 6 or 7 figure job for life. So will your spouse and children.
What brought the most recent government shutdown to an end? The evidence points to politicals who were beholden to the aviation industry. The disruption to air travel was really starting to bite. Tim Kaine in particular. But it's not just one guy. Chuck Schumer whipped votes to end the shutdown and subbed out John Ossoff who would otherwise face backlack in 2026. Every single Senator who "broke ranks" is either retiring or won't face a primary until 2028 or 2030. That's not an accident and many of them are highly funded by the commericial aviation industry.
What's depressing is how little money it takes to buy our government.
My boss has invested in a fund that tracks Nancy Pelosi's stock trades for years, and he's made quite a profit. I wish I could do that.
The fact that Nancy Pelosi became the meme for congress members trading stocks is more political than anything. The actual top performing congressional portfolios never make as much news. Pelosi doesn’t make as many trades as other members like Marjorie Taylor Green, who gets a free pass for some reason.
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.
MTG is part of the side that has won the social media influence game (via bots/russians/etc.), so of course, she doesn't get as targeted.
MTG gets a pass because she’s relatively new and mostly irrelevant. She’s also not on the side you expect to be better about avoiding shading money schemes given all of the public positioning.
One smacks of hypocrisy while the other is a dirt bag behaving exactly as expected.
Huh? Are you saying that Pelosi is a worse person because MTG is a worse person? I don't get the logic.
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.
MTG does better than Nancy?
https://www.quiverquant.com/congresstrading/politician/Marjo...
https://www.quiverquant.com/congresstrading/politician/Nancy...
Sure doesn't look like it.
It looks like she buys and holds, unlikely nancy. And it looks like she bought some AMD which had great returns (oh how I wish I bought it) and held it.
Looks like a false claim to me.
you can do that, if you are in the US?
Ticker: NANC, its an ETF
yep also curious about this!
NANC
Nominal returns are only 11% more compared to a riskless VOO for the past 5 years. But NANC expense ratio is 0.74% per year while VOO is 0.03% per year. Every year, NANC would have to return an additional 0.7% just to break even with VOO, not accounting for the additional risk.
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.
https://portfolioslab.com/tools/stock-comparison/NANC/VOO
> compared to a riskless VOO
Where do I get some of this "riskless" VOO? My broker only seems willing to sell me the regular, risky kind.
I would bet Congress passing legislation to backstop VOO (like they have time and time again) is much likelier than legislation to backstop NANC.
What's the barrier? Is the fund closed to new investors, or does it require a very large initial investment and/or years of "exemplary donations" to the Democratic party?
NANC
Nothing. Its performance is kinda meh.
Shout out to Nancy pelosis husband, one of the most successful investors in history. He has managed to turn 800k into anything up to 250 million dollars. I wonder what his secret is. He could be giving tips to Warren Buffet.
Right, no insider trading going on here at all /s