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Comment by ryandrake | Hacker News Reader

> Politicians live on fixed budgets, any private wealth is put in index funds

I like where you are going with all this, but I'll nitpick here that while tying politicians' wealth to the overall stock market in general reduces their incentive to legislate in favor of particular companies, it does provide them incentive to legislate in favor of corporate America in general. We don't need laws that help stock market participants. ~50% of Americans don't hold stock in any form, even through mutual funds or retirement accounts.

I don't know what the solution is. As long as rule making can disproportionately affect the rule maker's own personal wealth and wellbeing, you have a conflict of interest.

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> We don't need laws that help stock market participants. ~50% of Americans don't hold stock in any form

But everybody benefits from the wealth of society, which somewhat includes the value of the businesses within the economy.

Care needs to be taken not to kill the golden goose.

The problem I see with the US is the two party political system. I live in New Zealand and while MMP has serious problems, it was a great improvement over FPP.

Note I personally believe in equitable sharing of wealth ("The Scandinavian model"). But as a founder I also believe in the power of the incentives of personal gain from enterprise, which needs to be approximately 10:1 to break even given the risk (see VC).

> 50% of Americans don't hold stock in any form

Maybe we should address that problem -- it's one of the best long term ways for anyone to build wealth. Why aren't we educating people about this in school?

It's not really a matter of education, I'm in the bottom 50% and after rent and bills I'm left with very little. It's a highly competitive system, with winners and losers.

Wouldn’t something like requiring their employers to pay into a pension fund that is invested in a safe mix of stocks and other assets allow more of the population to share in corporate profits? (Ignoring social security for the moment, but assuming the policy was implemented as a similar sort of thing; but perhaps not as a deduction from the nominal wage).

Of that 50%, many have negative wealth due to eg credit card debt, many have zero wealth because they're poor, and many have all of their wealth tied up in houses or cars. It's probably not ignorance so much as lack of savings to invest.

You could buy a cheaper car, or a cheaper house, or cheaper clothes, and put the difference into an IRA.

Yes some people must spend all their income on food and shelter. And government assistance stupidly penalizes people who try to save. But many people, even lower income people, could save a little. I think they have never been shown what the power of compounding can do over time. It is not intuitive, because the gains in early years are small.

I don't think that's a good assumption. What you know is that, at the moment, some kinds of owning stock are effective at building wealth FOR NOW.

It could have inherent failure modes you're not taking into account. For instance, if systemic crashes are built into the model, and 'anyone' as a class is substantially more likely to risk such crashes and lose everything, that changes the calculation.

Good point. I'd be happy with any sort of blind trust where it's reasonably correlated with overall economic health.

>correlated with overall economic health.

How is this measured?

That's the rub, of course. I suspect there's a whole array of valid measures sufficient to blunt incentives. We don't need something perfect, just enough so legislators don't gain so much that their pecuniary motivations override their duty to public service (and their fear of getting caught). Right now they can profit massively from legislation by betting on individual companies. If they're instead looking at a blind trust that contains a mix of index funds, bond funds, etc, then they still are aligned with the wealthy, which is certainly bad, but any gains they can drive for themselves become much smaller.

I'd like to see a system where, while in office, a representative's income is hard capped at the median income (or some multiplier of median) of the people they represent. This could apply to the president, too.

One could argue that such a policy actually just ends up incentivizing politicians to accept bribes. Then again, it isn't like the current salary of a congressman seems to be preventing that anyway.

Exactly. They should be able to live comfortably, so that they don't have to take bribes to survive. But wealth inequality in the US is so large that we can't pay them enough so they won't feel like they have to keep up with the joneses. If we made the salary, say, $10m/year we'd get the problem of totally unqualified loons pursuing the job and doing anything to keep it just because they wanted the money. So I think N times the median where N is between 1 and 10 is about the best we can do.

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