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Comment by lisper | Hacker News Reader

I can think of at least three plausible counter-arguments:

1. That's overly restrictive. Why not let them own individual stocks in, say, a blind trust?

2. It's a free country. It's up to the voters to decide if they want to elect someone who profits from their position. What is needed is a law requiring public disclosure, not prohibition.

3. If you force people to divest their portfolios before taking public office you will reduce the pool of people willing to serve.

This is not to say that I disagree with the policy position, only that it's not the slam-dunk you seem to think it is.

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2. Think of it like term limits. We don't let people sit in office forever just because it's a free country. No, these are constraints implemented democratically by voters to protect against bad outcomes that aren't well addressed by future direct voting.

3. You would reduce the pool of people who have corrupt intent. Owning individual stocks isn't more profitable than owning ETFs.

Owning individual stocks (even temporarily or unvested) is a substantial fraction of compensation of many people that I want to be able to participate in local politics.

Owning individual stocks is the same expected value than owning ETFs for almost all retail investors who are non-corrupt. Studies have looked at this and shown that regular investors in single stocks consistently underperform. So there's no real financial reason (in expectation terms) to do so unless they have corrupt intent. Of course someone that just got rich off NIO or GME probably differs but that doesn't speak to expected value which is all that matters for decision making.

Many FAANG(-N) employees receive more in compensation in the form of shares of an individual company than they do in cash. I don’t want to force them to quit their job (or cut their comp by more than 50%) if they want to contribute in local politics.

If this were broadly adopted, companies would be forced to switch to all-cash offers, to create long-term incentive plans that don’t use something the legislation defines as shares, or just be content to exclude politically active people from being employees. Some might be happy with that last outcome.

The original phrasing wasn't "contribute in local politics" but "take public office". Presumably if you take public office you give up your FAANG employment. I don't think anyone is saying you can't vote or petition government for the redress of grievances if you own individual stocks.

Unless it’s been edited in the meantime*, the text above is “precludes any publicly elected official or appointee at any level from directly owning individual stocks”.

Many publicly elected or appointed roles are part-time (school board/committee, city council, etc.) Even MA state legislators make only $70.5K/yr and MA is one of the highest-paying states for that job. Many of them maintain another full-time job.

https://ballotpedia.org/Comparison_of_state_legislative_sala...

* https://news.ycombinator.com/item?id=28966192 (edit window is 2 hours)

Yeah, you make a good point. I'd be pretty happy if they just implemented it for full time office holders only (senate, congress, judges) which aren't going to be having jobs on the side that pay equity.

I own my own company. That is a very specific stock and you are saying I can't own my business and run for office? Stocks aren't just for trading on the nyse.

1. There is no way for a fairly normal person working a fairly normal job (probably service industry) to verify any of the blind trust stuff and past politicians have helped make a mockery of the whole thing. To be fair, though, there are other ways. You can reform things so that there are minimum holding times for stocks alongside rules that make selling stocks take more time. If you need to hold onto the stocks for 6 weeks after you say you want to sell, you are going to have a harder time selling. You can also restrict times officials can sell.

2. Again, how is a normal person - say, a retail employee - ever going to find out about this? Even with public disclosure, all folks need to do to hide their doings is to make the language in the disclosure full of technical jargon instead of everyday language.

3. That's a bonus, not a feature. Maybe it'll encourage normal folks to take office more often - but of course, we'd have to do other changes to make that happen.

>If you force people to divest their portfolios before taking public office you will reduce the pool of people willing to serve.

Dissuading the wealthy from seeking office sounds like a feature, not a bug to me.

> Dissuading the wealthy from seeking office sounds like a feature, not a bug to me.

Around 55% of Americans own stock.

"The wealthiest 10% of Americans own a record 89% of all U.S. stocks" — CNBC

https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-...

If you aren't one of that "wealthiest 10%" it would not be difficult to divest your stock holdings in exchange for an index fund.

I would presume that almost everyone qualified to be a federal judge to be among the wealthiest 10% - the median lawyer income is approximately 90-th percentile, and I would presume that the seniority and skills needed for such a position would disqualify most of the less experienced and/or weaker lawyers.

Income is not the same as wealth. They are correlated, but you're blurring lines. The wealthiest individuals accrue a negligible amount of their wealth from income. And the power law relationship between wealth and stock ownership doesn't end when you cross the 90th percentile either.

That includes things like index funds. The vast majority of people do not own individual equities.

A lot of high-powered jobs come with strong restrictions and controls around stock ownership/trading. Does not seem to dissuade people from pursuing careers in banking or strategy consulting, for example.

They are not blanket total bans in most cases, but single name stuff is often very restricted, broad market less so. Also does come with transparency requirements.

Well...

1. Too bad. There are plenty of other good investments out there.

2. Too bad. The removal of incentives to do slimy things like the ones that are subject of this article is the greater good here.

3. Too bad. Maybe those people who choose to serve will be those who aren't in it to fleece the system of every dollar they can.

I'm not sure you'd find my "counterarguments" any more persuasive than I find yours. I'm more interested in what the systemic consequences of such a policy would be, and, it seems to me that they tip in a direction that removes incentives to be corrupt, which sounds pretty darn good to me. I care a lot less about the effects on people who are currently in the position to exploit the system.

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