Congress Needs to Stop Day Trading, Says Sen. Mark Warner
bigtechnology.substack.com
bigtechnology.substack.com
It will be an unpopular opinion, but I believe that we should pay better (and demand better) for a job with that much responsibility. Otherwise, a congressperson will be forever tempted to align their incentives with service to causes other than their electorate.
I'm fairly certain we should be paying our elected officials at least as much as our football coaches.
[1] https://www.senate.gov/artandhistory/history/common/briefing...
You can't get anywhere near a top-notch CEO for their salaries, why would you expect to get a top-notch Congressman?
https://www.investopedia.com/articles/wealth-management/0404...
https://en.wikipedia.org/wiki/Congressional_Apportionment_Am...
Many of us here are in software development and make more than $174K a year. That's great. However, even if we were paid $225K, but found an easy way to make $3 million a year, many of us would be tempted to go for the millions.
(It isn't in my country. You can be a pilot, an actor or an engineer and still be a legislator)
https://en.wikipedia.org/wiki/Texas_Legislature
So at least in Texas it does not have to be a full time job.
Or we didn't hear about them, or the candidate was chosen via networking rather than advertising. There are a million reasons that this is not a perfect market.
My experience in fintech has taught me that people working for more money are not necessarily any better at their jobs, in fact a lot of them are worse, they just happen to know the right people.
Ah, but that wasn't the claim - the claim was that people who get the $200k jobs are not good enough to get the $1m jobs. My counter-claim is that the people who are actually in the higher paying jobs are not always better.
You may be able to attract better people by offering more, but that's not necessarily relevant to the hiring processes that result in the people who have those $1m jobs getting to where they are. I've seen flat-out useless sycophants holding on to high paid roles because of basically office politics and industry connections.
EDIT: Correction--engineers, didn't actually see managers do it.
"...This is what Steve Jobs did about the fact of how he tricked his best friend into working all night long for several days and then cheating him out of his paycheck. This proved to be only the first offense in a long litany of his penchant for pettiness and pointless cruelty.
The friend that I am talking about is Steve Wozniak, him and Jobs were working at Atari, one of the first video game consoles which revolutionized the video game market. The owner of Atari at the time was its actual founder by the name of Nolan Bushnell.
The first game that came out was “Pong,” a classic which many people remember. Due to its high success, Bushnell thought of making a sequel that would be only a single-player and call it “Breakout” in 1975.
...For this project, Bushnell was thinking of tasking Steve Jobs to be in charge and take care of the project. Jobs was considered (at the time) a low-level Atari technician with huge potential. As this game was expected to be much better than its predecessor, Jobs recruited Steve Wozniak, who was known on the market as the better engineer. ..
Jobs and Wozniak had been friends for quite some time at that point. They both were working towards the Apple 1 which would follow to become the most iconic computer around the world for four long years so they got to spend a lot of time together.
The way that Atari worked was by offering a monetary bonus for every chip fewer than fifty that was used when building a game. Wozniak was ecstatic when Jobs asked him to help with this big project.
This is when Jobs started to lie to Wozniak in order to use him for his expertise. He told Wozniak that the deadline was four days and that he had to use as few chips as possible. The truth is that Jobs was given a whole month for this project, not four days.
Jobs never told Wozniak about the bonus for using fewer chips and the four-day deadline was self-imposed by Jobs, as he needed to get back to his commune farm to help bring in the apple harvest. It is imperative to mention (for those who are not aware) that Steve Jobs came from a very poor background.
Wozniak was working for Hewlett-Packard at the time as well, so he had to balance his main job as well as this project. So he would end up going to his job in the day time and spending most of the night working on “Breakout”. The only thing that Steve did was implementing the required chips, making sure that there were less than fifty chips. Their herculean efforts succeeded, as they finished the game in four days and only using forty-five chips.
When payday came, Steve Jobs only gave Wozniak half the pay, he kept the rest of his pay as well as the bonus for himself. Wozniak only found out about this ten years later..."
https://historyofyesterday.com/steve-jobss-dark-past-55a9804...
Or! Pay our football coaches significantly less/tax them more and redistribute that wealth towards a safety net for all Americans.
But sure, give members of congress a cool million while the poor go hungry.
To be clear, I agree with the sentiment. Elected officials should probably get a bit more money. But, I think you vastly underestimate the greed of the ultra-wealthy in the US. Ultimately government jobs need to be motivated by a desire to change the system for the better. If you just give them all millions of dollars you're inducting them into the class of the wealthy on day one.
It makes sense to pay them a high enough wage so (lack of) money doesn't become a worry in their life, but incentives get borked beyond that.
What worries me more is the fact that they are guaranteed that same wage for the rest of their life after serving in Congress.
Looks like one must serve at least 5 yr to get them (so House members aren't automatically in, but Senators are).
Integrity is not connected to how well someone is paid. Reckless behavior for minor motives that makes people risk careers of years, family responsibilities, seems the norm for some individuals.
I collect these cases, as they fascinate me on what they say about human nature.
I am still trying to find out if these individuals end up on those roles because of that unhinged behavior, or getting into these roles is what intoxicates their moral judgement, despite many years of successfully running professional careers.
In other words, your strategy will not work.
I suspect it helps more than it hurts since it seems to be a successful policy in Singapore. I’m skeptical decreasing the salaries would help because competent people would work elsewhere.
I agree with the OP, where in nuance, paying policy maker more would more or less reduce corruption. It doesn't guarantee that it'll work but at least worth the try, cost wise.
Just like in sports gambling, one of the most efficient way to tilt the favor to your bet is pay the arbiter.
The cheaters are going to cheat anyways. The politicians who are inclined to do the right thing: let’s make it easier for them.
Make any form of corruption by congress automatic death penalty and congress would clean itself up pretty quick because the type of scum who go into politics to make money would look for easier targets where their life isn't at risk
Of course the problem with this is who enforces the law and how do you stop them from being corrupt themselves. The obvious answer to the root problem is to have the smallest government possible to limit centralization of power and ability for mass corruption
I have a better idea.
1)Fix salary at 2x poverty wage.
2) make house members 1:50,000 representation to their county (yes that means the house would explode to 8000 elected officials)
3) tax any earnings above their pre-office historical income avg, at say 98%. No ones lives off the taxpayer and no ones lives off favors given.
If they want to serve. They serve. The country would be far better off if congress shut down because they have DAY jobs to perform to keep their families fed.
If they cant make ends meet with their basic salary, they dont know sacrifice. If they dont know sacrifice shouldn't be running for office.
Stop paying for busy bodies and start electing hardworking, everyday americans
You can appreciate that jurt selection mostly works becayse the vast majoritt of events for which you are selecting is truly unimportant and thus with no value.
When you are making a selection that in fact provides well paid jobs, arent you making the selection process a highly sought target for criminals and thieves seeking power?
This is how you get bad candidates.
> If they dont know sacrifice shouldn't be running for office.
The poster might like AOC then. But something tells me they're not a supporter.
> Stop paying for busy bodies and start electing hardworking, everyday americans
TBH not sure i trust the "everyday american" to make really big complex decisions for a job. People who are familiar with such decision making process make a lot more and may not be "hardworking, everyday americans" to this poster.
As per the known representative systems, there are countless ways to end up with bad candidates. I don't find this simplistic answer compelling. Notably, Plato (ie The Republic) suggested a relatively pious existence, to combat corruption.
Are politicians hired to debug code?
To send rockets to the moon?
To discover innovative ways to create profit?
No. Politicians only have 1 job. Protect the minority from the mob. To ensure neutral refereeing between consensual adults. Thats it. Its not rocket science.
In fact i venture that the avg rocket scientist would do a far worse job than your avg joe.
Avg joe understands the limits of his intellect and has a healthy respect for the wisdom of crowds.
The avg scientist has gone thru life being told how great they are, and now they think they know better than you and me.
Kissinger, McNamara, Wolfowitz, Fauci et al believe their hubris to be true and have caused major damage with their decisions.
> Politicians only have 1 job. Protect the minority from the mob.
> has a healthy respect for the wisdom of crowds.
But is a politicians job to listen to the wisdom of the crowds?
> The avg scientist has gone thru life being told how great they are, and now they think they know better than you and me.
I sure trust a scientist more on their area of expertise more than I trust my own knowledge. I think people who rise to the top of their field generally believe their own hubris, not just scientists. Doctors think they can do anything, because becoming a doctor is so hard and well rewarded, engineers think they can solve anything because an engineers job is to solve (a specific subdomain of) things.
Whenever an engineer tells me an issue is simple and they have the answer, if it's not their field, then they don't. This doubly applies to comments on HN, which have already solved economics, politics, and healthcare, just to name a few.
My father spent some time in Bolivia some decades ago, and people in government were paid practically nothing. So there were a lot of bribes expected. And government officials got a fantastic exchange rate on Bolivios -> USD, which after you go through the cycle a few times, ended up with the government transferring the rate subsidy to the official.
China also doesn't pay its government officials much, and similarly, there is lots of corruption, which Xi Jinping spent several years cracking down on.
At the very least, it will be independently wealthy people (aka "elites") running the country, which brings its own set of problems.
Politicians take money not to enrich their lifestyle, but to spend on getting elected/re-elected
Who are these people you are referring to as talented?
Do you mean talent to lie cheat and steal to the top? Kind of like a CEO?
We dont want talented people. Those belong in private industry where the metric for benefit of society is measured in hard currency.
We need people NOT talented in government so that the government does what its supposed to, and nothing else
I disagree with rest, but something along these lines does seem like a good solution.
What you are stating is the same I advocate. (Done with govt, ok cap hits you now)
This works well because elected oficials have reporting requirments which means any high income during office is subject to optics and actual regulatory disclosure.
Plus, I'm taking for granted that term limits would be put in place first.
We need to get rid of the speech circuit retirement.
The problem is that there isn't a free market which any politician's salary can be determined by. Someone can't decide they don't like the salary in the US Senate and apply to the Canadian Parliament instead.
Plus, these salaries aren't that much out of line compared to other Federal government employees. The benefits are what really keeps them in the job.
This whole salary debate is pointless when there is a "cost of staying in power"
Let's make it fairer and attractive.
We can start with $1m.
Edit: And I'll still day trade, what are you gonna do to stop me?
I even think president should be paid like 40m a year.
Stopping day trading is an orthogonal goal. I never see these two coupled together.
The schoolhouse rock look at me I’m a bill thing isn’t even wrong anymore. There’s not a single “legislator” who actually writes legislation anymore. They literally just broker their signatures (those brokers are called lobbyists) to the parties that actually write the laws. It’s a painful bandaid to rip off, but that’s how the system actually operates.
As you seem to be a beltway insider with connections, and not just making up bullshit to sound cool, which bars specifically would you suggest?
None of these millionaire douchebags are relatable at this point.
In my view there should just be a law that says congresspeople can't have their net worth increase by more than their after tax salary period. Then, when we find one of them doing corrupt things we should send them to prison.
All those people that pretend to understand that interest rates affect discounted future values seem to forget that this is also creating short term thinking where destroying something (potentially long lived) to get money today is profitable and encouraged.
In every country I’ve lived in, politicians are not there for the formal salary/responsibilities. Those are tangential.
Political roles attract people who want power and control. The networking of favours is expected and emphasised - with money being the underlying foundation for it all.
This is all quite obvious social science, and I’d be curious to hear others thoughts.
I accept there's probably some variance here, but even if they're in the top 10% of Americans, is that not sufficient? What percentage do you think they should be in?
They are in a position to influence stocks, and hence must be barred from owning them, other than in a blind trust.
It's the same moral principle as "Judges must recuse themselves from cases in which they have a financial interest."
We want them to vote on regulating Big Tech based on their understanding of the issues and their constituents' desires, not on their holdings of Big Tech stocks. Yes, I know that's naïve and there are campaign contributions to think of, but that's a separate topic of law.
Discussing whether they get "enough" to live on also misses the fact that they're not doing it for living expenses -- they're doing it to get rich.
Initially the titles talked about banning "insider trading", despite them not legally being insiders (which is a very specific legal term which refers to company employees/agents which specific non-public corporate information).
The the titles talk about banning "day-trading", which is trading in-out of stocks multiple times per day. They are almost certainly NOT doing that.
...now you're saying they cannot even have any stock ownership - which would imply they cannot have a 401k or 529 for their kids (because those invest in funds) - or even a vanilla money-market savings account at any bank.
Taking this logic further, they shouldn't be allowed to own any financial assets - bonds, real estate, etc...
These arguments have lost touch with reality.
However, "insider" is often construed broadly as "possessing material, non-public information." For example, if you work at Google and you realize the next earnings are bad and you call your brother-in-law, who sells short, he can be prosecuted for violating insider trading laws. I think. Not just you.
Now as to "you're saying they cannot even have any stock ownership" -- I didn't say that, I said "blind trust." This is a legal vehicle that's been used for public officials for generations. It means they can't influence it and they don't know how it's doing.
Just being an employee does not make you an "insider". I regularly traded in the company I worked for. I did not have access to any financial information, so it was all based on my hunches of how sales were doing.
There's nothing illegal about that.
Moreover, you are not in violation of insider trading laws just for knowing insider information. You have to have received it from someone you knew was violating their insider status, or compensated them for such. For example, if you overhear someone in a bar talking about their sales numbers, and you trade on that - you are not guilty of insider trading.
However, many (most?) companies nowadays impose blanket trading restrictions for the month before earnings reports. I know Google does, and probably the other FAANGs as well.
In my example, the brother-in-law would get caught and questioned, since the SEC actively watches for trades just before major moves in a stock. He could expect to be asked "why did you short Google?" I would not want to be in his shoes. And the employee could also expect to get asked why he called the BIL. Would the SEC go that far? They certainly could; whether they always do or not, it's "do you feel lucky?"
Do you think we can't dig up examples where this has happened?
In any case, the "blind trust" is the answer to conflicts of interest. Public officials have the ability to affect the fortunes of any private company by the performance of their duties, and that's why they're quite often required to use one.
"Some of the most egregious stock trading in Congress occurred when several Senators dumped large volumes of stock in Winter 2020, right after Congress was briefed on the magnitude of the Covid threat. Sen. Kelly Loeffler sold millions in stock. Her fellow Georgia Sen. David Purdue made a windfall by dumping and buying back stock. Sen. Richard Burr offloaded more than $1.6 million in stock ahead of the market crash (and then made a suspicious call to his brother-in-law, who promptly called a broker)."
They should be held accountable like most people that have a conflict of interest. I work for a publicly traded company, and even though I don't have anything to do with the financial side of things, I'm forbidden from trading for most of the year to avoid any potential conflict of interest.
I am not proposing the same “months and months ahead” rules for politicians, because for private executives that restriction applies only to the equity of their own companies (while for congress it would be for all companies). But what about a day ahead? I think that’s reasonable to make government officials to declare their trade a day ahead. After all, unless it is some specifically-timed trade based on insider info, why would it matter? It is just a single day.
But i would also be ok with “declared a day ahead to SEC, with the trade info being automatically released to the public the second it happens” (basically, same as real-time, but with an extra safeguard). Mostly proposing this one, because I am concerned that knowing their trades ahead of time publicly might introduce unwanted side effects.
Unwanted side effects like them not buying small volatile stocks that are perfect for insider trading, and instead buying large index funds that are difficult to manipulate?
Frankly, anyone who's buying small named stocks that the market can move is either 1) a gambling addict, 2) a professional daytrader, 3) an idiot, 4) breaking the law, or 5) all of the above.
I would personally prefer that we do not hire day-traders to represent us in government (or if we do, that they stop daytrading for the duration), so I'm fine if this just has the side-effect of no congress-people daytrading.
Basically, I am sensing there might be unwanted side effects from this, but I am not sure. I don’t think it makes sense to worry about much, given that a “report a day ahead” system would be good enough and wouldn’t have as much potential for unwanted side-effects.
Keep in mind, it wont only be the retail traders looking at the live feed of Pelosi’s trades, it will be all big institutional investors as well.
What I meant was that if a congressperson says "I will buy $100 worth of $SMALLCO in two weeks", that would artificially increase the price of that stock, and the congressperson would get less money / traders would profit slightly by selling shares they got cheaply.
This effect is what I thought you were concerned about. Such an effect can only happen if these known trades are a significant fraction of the market cap, or the activity, on that stock.
The reason I'm talking about small cap stocks is that those are the only ones I think such side-effects would occur on, and such manipulation wouldn't really be feasible for things like large index funds or AAPL or such.
Hopefully it makes sense what I'm trying to say now? It would indeed have severe negative side effects for a subset of possible trades, but I don't think those trades are reasonable ones to make.
While Apple might be an outlier example, I think that a congress person heavily investing into even significant cap tickers (like Palantir or Ford or Pfizer or etc.) could move the market and turn into a self-fulfilling prophecy.
I am not worried about the investment dollar amount itself being the catalyst (because you are correct, senators don't have the raw amount of money needed to move the tickers by its own virtue), but everything else influenced by it. If everyone saw that some senator is extremely bullish on something like Ford, institutional investors will likely jump onto it as well (and large institutional investors definitely can affect the market with such moves, as they quite often do).
Not even mentioning retail, but I agree that it isn't that important and can be disregarded for the purpose of this conversation. You are right that the retail dollar amounts aren't really high enough to move the ticker on their own for non-small-cap tickers (but it can make the pump from large institutional investors more significant).
Just like banning trading, this will be circumvented by family/business proxies doing the trades. Including potential family proxies, in the public accounting, would probably be the most effective move to motivate ethical behavior. At least put some risk in the form of the relationship to the business partners, given the vast amounts of money flowing.
Require any congress-person who wishes to trade a stock to write a plan saying "I will buy/sell roughly this many dollars worth of these shares on this date", and require the plan to be published a week before the trade is executed.
We already require CEOs and company officers at large companies to do similar plans (though they do not have to publish them publicly ahead of time), and requiring our government officials to act as sorta officers of the entire economy seems kinda fair. They have material information on many different things.
Making them decide on trades weeks or months in advance seems like it should prevent day trading, while still letting them invest in reasonable portfolios if they want.
Make a trade request, gets published publicly, a legal body reviews and allows or denies.
Who will be the members of the legal body?
Then Senator Jackass dumps stock on Monday to crash it and picks it back up for a song on Tuesday.
Because this hasn't fixed the issue, and most don't seem to have any shame, these recent laws (originally coming from Ds but Rs have their own version) prevent them from trading individual stocks while in office.
https://www.washingtonpost.com/politics/2021/08/11/rand-paul...
RP is a particularly grotesque piece of work (not only in this regard), but he's far from alone. Staffers are subject to the same rules, and at least 182 of them have done the same thing.
https://www.businessinsider.com/congress-staff-violated-stoc...
If a congress person is caught doing anything else besides their job, they should be fired immediately for cause. We need to put the public service back in public service.
Is it right to work another job for profit at your employer or while your employer is expecting you to be doing work on behalf of them? According to my moral compass, that’s a no. I would be pretty upset if I found one of my employees trading stocks while they were supposed to be working. Especially if my approval of them was low, which is the current situation with many government officials right now. If there was agreement on both sides before taking a job, that would be different but I find that hard to believe before taking a job someone would admit to that, and that’s a sign they know it’s wrong.
They have a lot of nerve thinking this is acceptable behavior when the country is in the middle of a crisis and has a lot of problems to solve.
Most markets are not 0-sum, and taking a "long" position (congresswomen buying low, and selling high) won't cause anyone harm unless they took a short position on the asset - which hopefully most people's regular investments don't do.
off topic, but I know congressmen know the only way is legislation
I take it you don't trade/follow financial markets?
There may be politically powerful voices which speak out on issues such as these, but only briefly. Tomorrow will be a new crisis, or celebrity death, or something which takes attention away. And because the politicians voicing support for change are in the minority, and support for their efforts non-existent, then there is no momentum to push it forward beyond the crisis of the week.
This has been true for as long as I can remember. I have never seen evidence, current or historical, that gives evidence otherwise. Instead, voters are blamed, blamed for a system they have little to no power to affect in any significant way.
I cannot think of anything the lower classes can offer that would be of any substance -- only things they can take away by force to impel the other to meet "eye to eye."
This is the content I'm here for. Well done LOL
According to the now-Cancelled Twitter account (would that have happened if she was a Republican?) dedicated to her financial shenanigans, her portfolio has outperformed Bitcoin. Something is deeply, deeply wrong here.
Decent article:
https://www.jacobinmag.com/2021/12/house-speaker-paul-stocks...
Interesting (though they have 30 days to report their activities):
That aside, such information is a form of currency, and done right...untraceable. A term or two in office, is temporary. The involvement in this currency is forever.