"Suppose you were an idiot and suppose you were a member of Congress. But I repeat myself"
~ Mark Twain
Imagine for a moment that you belong to an elected body for the most powerful nation in the world. Imagine you had the lowest public approval rating of all time and you wanted to seem more trustworthy, more honorable. You want to show that you are truly "of the people, for the people, by the people". You're wondering what can possibly help...so you call your PR firm and say, "Hey, our brand sucks, what can we do?"
Your PR guy says "I've got an idea! There is a stink brewing about this expose that aired recently by 60 Minutes. It said that you guys are involved in insider trading; making millions based on information you've gleaned in the legislative process. It would be GREAT PR to pass a law banning Congressional Insider Trading! How noble and brave you will seem, to pass a law to prohibit profit from insider information. Your constituents will see you as self-policing, and they will think you're a mensch! This is genius!"
On February 2, 2012, The Senate did just that, with a near unanimous vote of 97-3. The bill is being passed to the House of Representatives as we speak, and I'm sure it will pass again with no struggle. Betcha no piece of peace-time legislation has ever been passed faster.
Now, you're probably thinking "Wait a minute, isn't insider trading already illegal?" Well, yes it is, for everyone in America...except Congress. It's a "diplomatic immunity" of sorts. Not only have they been able to profit from information attained during legislative sessions, but if they were to sway policy in a certain way that makes them even more money...oh, well. After all why would The Law apply to the lawmakers?
Wikipedia describes Insider Trading as "the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-public information about the company."
Isn't that why Martha Stewart went to prison? (Technically, she went to jail for lying about it, but it
was the basis for the trial).
So, let's put it into common terms. If your Uncle Joe told you that his employer was just awarded a 10 billion dollar contract to make widgets for the Department of Defense and you bought their stock before a public announcement the following Tuesday, you'd be breaking the law and could go to jail and make a whole new group of friends, much like Martha.
However, if you were a Congressman on the committee that awarded the contract to Uncle Joe's factory, you could buy as much of the stock as you wanted and make a bundle without ever having to report that trade to the SEC.....
So, legal? Yep. Ethical? Nah. But since when has a Moral Code ever interfered with human nature when politicians and mass profits are put in the same room? It's the American way, right?
We aren't talking an extra thousand bucks here or there. We are talking millions. Billions collectively....They were DOUBLING the return that Wall Street Insiders were bringing in. They were surpassing You and Me by 1000%!! And it was legal...
If you think it's really not that bad, check out Stephen Bainbridge's article on the "Stop Trading on Congressional Knowledge Act".
So what's worse? That members of Congress (whose combined assets are in the billions) were making money with the legislation they themselves create? Or that they are now banning this activity in an attempt to increase the likability of the least popular Legislature in the history of the United States? Do we trust that there aren't loopholes built into the Bill that will still allow this to happen? Is this just as much of a hollow gesture as Kim Kardashian promising she won't ever have a fake for-profit wedding again?
The bigger psychological question here (this is a psychology blog after all) is why do ''We the People" put up with it? There can only be two reasons:
1) We think these are the best of the best that we can elect to the legislature, and they are the least of the many evils that were up for election. Or,
2) We know deep inside that given the same money, power, and celebrity that we would do the same thing.
This is where most of us think "Wait! We elected them in good faith! We should hold them to a higher standard than this!" Well, our complacency has left us with kids minding the candy store.
Thomas Jefferson is credited with saying "The government you elect is the government you deserve."
H.L. Mencken said the same thing, but better: "People deserve the government they get, and they deserve to get it good and hard."
So while you sit in your armchair and bemoan the state of the American political debacle, you'd do well to remember this: Until we hold our elected offcials accountable, nothing will change.