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The mainstream press1 has finally acknowledged that members of congress from both parties have been using their position to glean information2 from congressional committee testimony unavailable to the public at large and have used this privileged information to play the stock market to their financial benefit. Other (non-congressional) citizens who have made use of such insider information have been prosecuted. Congress has specifically exempted themselves and their staff members from these laws.3 If a subpoenaed witness in these committee meetings used such information in the stock market, he would be prosecuted while a congressman or staff member who used the same information in the same time frame for the same purpose would not be so prosecuted.

Given that some supporters of laissez faire capitalism do not think that insider trading is a violation of anyone's rights and thus should not be considered a criminal act should Objectivists embrace Rick Perry's suggestion as enforcing equality under the law or should they reject it as another instance of expanding government power?

1I'm not including any links to news stories as they would likely be transient.

2This is distinct from the problem of government actors creating new law to enhance their financial positions. Historically this has been documented to have occurred, apologists for Congress argue that it no longer does. I think that they are being disingenuous.

3A subsidiary question. Does the argument from the Separation of Powers argument hold water? This was articulated by Norman Ornstein, scholar at American Enterprise Institute, to The Christian Post as follows;

“The reason for the exemption is presumably separation of powers, not wanting executive agencies that Congress oversees to have leverage over members of Congress – along with the idea that members have the check of balance of elections, have to disclose their holdings, and can recuse themselves.”

asked Nov 26 '11 at 13:53

c_andrew's gravatar image

c_andrew ♦
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edited Nov 26 '11 at 13:56

Why should a congressional committee have subpoena power in the first place? Get rid of the subpoenas, and you can get rid of the confidentiality. Get rid of the confidentiality and it's not insider information.

Anyway, the simple solution to the problem of insider trading, which requires no specific laws, is to simply put the assurances about it in the sales contract for the security. One need not have a law specifically against insider trading to recognize that selling something while lying about it on the sales contract, is criminal fraud.

(Nov 27 '11 at 08:51) anthony anthony's gravatar image

Also I take issue with your reference to "the problem of government actors creating new law to enhance their financial positions".

Of course "government actors" are going to create new laws to enhance their financial positions. Proper laws often enhance the financial positions of everyone.

I find it worrying that you would suggest that there's something wrong with a member of Congress who owns stock in a credit card company, voting against a law which would restrict the rights of the owners, directors, and employees of credit card companies.

(Nov 27 '11 at 08:58) anthony anthony's gravatar image

"Punish everyone equally!" is not equality under the law. Equality under the law is the full protection of each individual's rights under the law, and the absolute ban on special privileges and immunities granted to some which would permit them to violate others' rights (i.e. injure others) without fear of justice.

(Nov 27 '11 at 09:52) Justice Justice's gravatar image

Justice, I deliberately phrased the question in the form of a false dichotomy to illustrate the point that many political "fixes" proposed by candidates today offer only false alternatives. Your comment exposes that. Would you care to make a full fledged answer on the basis of your comment?

(Nov 27 '11 at 12:13) c_andrew ♦ c_andrew's gravatar image

Anthony, Are you arguing that, in this case, Pelosi did the right thing in blocking the reform bill as it would have made the situation more unjust than it already is?

Would you be against a new law that enhances a congressman's financial position or that of his supporters at the expense of the rights and property of the citizenry at large? In such case, would such an enhancement - particularly in the form of an indirect payoff - be an ethical breach or a legal one? If a legal breach, should the congressman be punished for his illegal action or left immune to prosecution as is now the case?

(Nov 27 '11 at 12:26) c_andrew ♦ c_andrew's gravatar image

"Are you arguing that, in this case, Pelosi did the right thing in blocking the reform bill as it would have made the situation more unjust than it already is?"

Well, first of all, I'd like to point out that I haven't read the text of the law, only the summary in the link you pointed to. But that summary says the law "would have amended antitrust laws to require credit card companies to enter negotiations with merchants over interchange fees".

Blocking such a law is a good thing. Refusing to block such a law because the law's passage would cause you to lose money, would be horrendous.

(Nov 27 '11 at 21:29) anthony anthony's gravatar image

"Would you be against a new law that enhances a congressman's financial position or that of his supporters at the expense of the rights and property of the citizenry at large?"

I am opposed to any law that violates any of the rights of anyone.

"In such case, would such an enhancement - particularly in the form of an indirect payoff - be an ethical breach or a legal one?"

I don't know. I'm not a lawyer.

(Nov 27 '11 at 21:33) anthony anthony's gravatar image

"If a legal breach, should the congressman be punished for his illegal action or left immune to prosecution as is now the case?"

I'm not sure the details of the question. What exactly is the alleged illegal action?

I don't think you can or should prosecute a member of Congress for the way s/he votes. It's just not feasible, even if desirable. The threat of such prosecutions would be abused for political purposes.

The proper way, short of revolution, to deal with a member of Congress who engages in crony capitalism, is by impeachment or non-reelection. And I'm not recommending revolution.

(Nov 27 '11 at 21:49) anthony anthony's gravatar image

If the corrupt politicians are a small minority, they will be impeached. If they are the majority, as they are today, then we're screwed no matter what.

By all means, throw them all out. Though, even that isn't going to work unless and until we have an electorate which understands the proper role of government.

You can't protect yourself from the tyranny of the majority by passing laws. Certainly not standard run of the mill criminal laws, anyway. Something like the bill of rights can offer some protection for some period of time, though as we see even that has its limits (thanks Roosevelt).

(Nov 27 '11 at 22:00) anthony anthony's gravatar image
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In a free economy, all information is private in varying degrees. The idea of a distinction between private and public information is largely a government created fiction. And in a free economy, there are no government restrictions on what one may do in response to information that one possesses, other than to refrain from fraud, unilateral breach of contract, theft, or other forms of direct or indirect physical force. There may still be contractual restrictions on the recipient and/or provider of information, particularly if the parties are concerned about conflicts of interest.

Legislators certainly weaken their own case against trading on private information when they engage in it themselves. Rather than pursue criminal sanctions against them, however, a far better approach would be to do away with "insider trading" laws entirely, and to put an end to the power of Congress to extort information from its victims by subpoena in the first place.

I also see little merit in the claim that Congress has to be exempt from laws against trading on private information to preserve separation of powers. There are already campaign financing laws, which ought to be repealed, to which legislators are subject, and the Congress is also already empowered to police itself through its own overseeing subcommittees if the Congress so chooses. The larger point is the need to reduce rather than expand the powers of our government. Candidates who call for expansion are missing point, as are office holders who practice different principles than they preach.

answered Nov 29 '11 at 01:38

Ideas%20for%20Life's gravatar image

Ideas for Life ♦
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Asked: Nov 26 '11 at 13:53

Seen: 690 times

Last updated: Nov 29 '11 at 01:38