"In my opinion, our goal should be to reduce conflicts of interest as much as possible among members of Congress but not to prohibit members from participating in our capitalist system entirely."
Anyone who owns common stock is participating in our capitalist system. That's true even if he/she holds shares in an index fund -- the participation is passive, in that case.
Should we allow congresspeople to actively run businesses, while they serve? I don't know what the law is, but I know that the opportunity for self-serving bias is immense. Disclose everything -- if Henry Ford votes "Yea!" on a highway-improvement bill, who's to say if he's doing it for his company, or for the good of the country ?
I like the idea of forcing congresspeople to { liquidate OR put into a blind trust OR convert to shares of broad-based index funds } their wealth, while they're in office. Make that conversion tax-free (as it is, now, for those forced to do it) for fairness.
The answer to:
. . . "But I don't want to give up control of my money, or my company!" is:
. . . "Then you don't care enough, about the country, to govern it."
. Charles (I'm not a socialist, but sometimes I might sound like one<g>)
PS -- Sal's Dad might have a good idea -- if there's "inside information", let everyone have it!
There is certainly precedent for having executive branch appointees swap out of concentrated holdings into treasuries or approved mutual funds on a tax deferred basis. I discussed this in an article regarding Gary Cohn when he joined the Trump administration in 2017 (in the section "But there's one more thing ...." https://rationalwalk.com/golden-exit-packages-for-government-service/
But I think we need to keep in mind that allowing this type of tax-deferred conversion from a concentrated holding into a diversified fund is a very valuable benefit not available to ordinary citizens. For example, consider the benefits that would accrue to a CEO of a hot tech unicorn that goes public. If the CEO has $500 million of capital gains in the company's stock and then gets elected to Congress, he could convert this holding into a broad based index fund and defer taxes on the conversion. That's a very valuable benefit!
There really are no perfect solutions but I think we should at least try to go from a 45 day delayed disclosure model to something much more real-time where both the portfolio and all trades are totally transparent. If we still have major problems, we could always tighten the restrictions even further.
"But I think we need to keep in mind that allowing this type of tax-deferred conversion from a concentrated holding into a diversified fund is a very valuable benefit not available to ordinary citizens."
Yes -- but he'd be giving up control of the company! Worst case, you'd have a Congress composed of very rich men (maybe rich enough to fund their own campaigns?), but with no special financial interests.
"More disclosure" is an incremental change, much more likely to actually happen.
There's really no technical reason to not have immediate disclosure. Some of these delayed disclosure rules seem like relics from the pre-computer era. It should all be realtime.
Even better than real-time disclosure: Require advance notice of intent to trade. Say, trading in specified accounts is locked - unless the public has been informed between thirty and seven days in advance. This would give interested parties time to investigate, and perhaps to trade ahead of the official, thus eliminating any advantage from inside information.
"In my opinion, our goal should be to reduce conflicts of interest as much as possible among members of Congress but not to prohibit members from participating in our capitalist system entirely."
Anyone who owns common stock is participating in our capitalist system. That's true even if he/she holds shares in an index fund -- the participation is passive, in that case.
Should we allow congresspeople to actively run businesses, while they serve? I don't know what the law is, but I know that the opportunity for self-serving bias is immense. Disclose everything -- if Henry Ford votes "Yea!" on a highway-improvement bill, who's to say if he's doing it for his company, or for the good of the country ?
I like the idea of forcing congresspeople to { liquidate OR put into a blind trust OR convert to shares of broad-based index funds } their wealth, while they're in office. Make that conversion tax-free (as it is, now, for those forced to do it) for fairness.
The answer to:
. . . "But I don't want to give up control of my money, or my company!" is:
. . . "Then you don't care enough, about the country, to govern it."
. Charles (I'm not a socialist, but sometimes I might sound like one<g>)
PS -- Sal's Dad might have a good idea -- if there's "inside information", let everyone have it!
There is certainly precedent for having executive branch appointees swap out of concentrated holdings into treasuries or approved mutual funds on a tax deferred basis. I discussed this in an article regarding Gary Cohn when he joined the Trump administration in 2017 (in the section "But there's one more thing ...." https://rationalwalk.com/golden-exit-packages-for-government-service/
But I think we need to keep in mind that allowing this type of tax-deferred conversion from a concentrated holding into a diversified fund is a very valuable benefit not available to ordinary citizens. For example, consider the benefits that would accrue to a CEO of a hot tech unicorn that goes public. If the CEO has $500 million of capital gains in the company's stock and then gets elected to Congress, he could convert this holding into a broad based index fund and defer taxes on the conversion. That's a very valuable benefit!
There really are no perfect solutions but I think we should at least try to go from a 45 day delayed disclosure model to something much more real-time where both the portfolio and all trades are totally transparent. If we still have major problems, we could always tighten the restrictions even further.
"But I think we need to keep in mind that allowing this type of tax-deferred conversion from a concentrated holding into a diversified fund is a very valuable benefit not available to ordinary citizens."
Yes -- but he'd be giving up control of the company! Worst case, you'd have a Congress composed of very rich men (maybe rich enough to fund their own campaigns?), but with no special financial interests.
"More disclosure" is an incremental change, much more likely to actually happen.
There's really no technical reason to not have immediate disclosure. Some of these delayed disclosure rules seem like relics from the pre-computer era. It should all be realtime.
Even better than real-time disclosure: Require advance notice of intent to trade. Say, trading in specified accounts is locked - unless the public has been informed between thirty and seven days in advance. This would give interested parties time to investigate, and perhaps to trade ahead of the official, thus eliminating any advantage from inside information.