If you enjoyed watching the Atlas Network’s Tom Palmer contrast cronyism and free-market capitalism during a presentation this week to the John Locke Foundation’s Shaftesbury Society, you might appreciate The Atlantic’s efforts to document whether members of Congress are reaping unwarranted financial benefits from their public service.
No member of Congress has ever been investigated for insider trading. Four times since 2006, Congresswoman Louise Slaughter (D–New York) has sponsored the STOCK Act, which would explicitly make congressional insider trading illegal, and require members of Congress to disclose significant trades within 90 days. It’s never even come to a vote.
If we can’t require members of Congress to report their transactions in real time, the way corporate insiders have to—and we can’t—then maybe they should have to put their holdings in a blind trust, as executive-branch officials like the Treasury secretary often must. Or at least in index funds that mirror the broad market, so that their fortunes rise and fall along with the contents of our 401(k)s. This requirement would curb the related temptation to use legislation to help companies they’re invested in, which must at least occasionally plague even the most honorable legislators.
Otherwise, given the weakness of the oversight, Americans will continue to suspect the worst. One reason that the findings of Ziobrowski et al. may not have triggered much response is that everyone already believed their legislators were crooks—morally, if not legally. And that’s corrosive. In the end, the problem with congressional insider trading isn’t that it undermines confidence in the market—Congress frequently does that openly. The problem with congressional insider trading is that it erodes confidence in our political institutions. We can’t really afford to deplete that pitiful stock much further.
