It’s extremely common for US politicians to trade on legislative decisions and I feel like this is a better explanation for corruption than political donations are. Which is important because it’s a stupid and so maybe fragile reason for corruption. The natural tendency of market manipulation is in a sense not to protect incumbents, but to threaten them, because you can make way way more money off of volatility than you can on stasis.
So in theory, there should exist some moderate and agreeable policy intervention that could flip the equilibrium.
On one side, it’s definitely harmful to the markets. Distorts the prices and scams other investors out of their money by essentially cheating. This is a lesser point but worth considering.
On the other, it’s possibly harmful to their legislation too. If it’s a case of “I would do this anyway for unrelated reasons, may as well make a few bucks off it”, then no. But is that how it works? If you were in the habit of doing that, wouldn’t “which of these possible legislative decisions is going to make me more money” be a factor in your choices?
Also, as kind of an aside, but it’s very much illegal. And while this is far from the only illegal thing that legislators engage in, the people who make the rules that can put you in jail doing things that should put them in jail blatantly and without consequence is something that deeply undermines the confidence in the entire concept of the rule of law, which is kind of an important cornerstone of civilisation.
It seems distasteful to be sure. A moral failure. But how bad is it really?
I’m completely over finding stuff like that aesthetically repellent after hearing Flashbots talking about MEV (miner-extractable value (ethereum hosts taking bribes to favour some transactions over others)) (a project to open source information about MEV techniques to enable honest hosts to compete), being overwhelmed by the ugliness of it, then realising like.. preventing people from profiting from information asymmetries is obviously unsolvable in general. The best we can do is reduce the amount of energy that gets wasted on it, and the kind of reflexive regulations people would try to introduce here would be counterproductive, the interventions that work tend to look more like acceptance and openness.
And I think trying to solve it on the morality/social ostracism layer is an example of a counterproductive approach, because that just leads to people continuing to do it but invisibly and incompetently. And I suspect that if it were visible and openly discussed as a normal thing it wouldn’t even manifest in a way that’s harmful. That’s going to be difficult for many to imagine because we’re a long way from having healthy openness about investing today. But at its adulthood I can imagine a culture where politicians are tempered by their experiences in investing into adopting the realist’s should, where their takes about where america should go are forced into alignment with their beliefs about where it can go, which are now being exposed in their investing decisions.
It’s extremely common for US politicians to trade on legislative decisions and I feel like this is a better explanation for corruption than political donations are. Which is important because it’s a stupid and so maybe fragile reason for corruption. The natural tendency of market manipulation is in a sense not to protect incumbents, but to threaten them, because you can make way way more money off of volatility than you can on stasis.
So in theory, there should exist some moderate and agreeable policy intervention that could flip the equilibrium.
I wonder what the evidence is that politicians trading on legislative decisions is very harmful.
It seems distasteful to be sure. A moral failure. But how bad is it really?
I’d say there are two sides to that question.
On one side, it’s definitely harmful to the markets. Distorts the prices and scams other investors out of their money by essentially cheating. This is a lesser point but worth considering.
On the other, it’s possibly harmful to their legislation too. If it’s a case of “I would do this anyway for unrelated reasons, may as well make a few bucks off it”, then no. But is that how it works? If you were in the habit of doing that, wouldn’t “which of these possible legislative decisions is going to make me more money” be a factor in your choices?
Also, as kind of an aside, but it’s very much illegal. And while this is far from the only illegal thing that legislators engage in, the people who make the rules that can put you in jail doing things that should put them in jail blatantly and without consequence is something that deeply undermines the confidence in the entire concept of the rule of law, which is kind of an important cornerstone of civilisation.
I’m completely over finding stuff like that aesthetically repellent after hearing Flashbots talking about MEV (miner-extractable value (ethereum hosts taking bribes to favour some transactions over others)) (a project to open source information about MEV techniques to enable honest hosts to compete), being overwhelmed by the ugliness of it, then realising like.. preventing people from profiting from information asymmetries is obviously unsolvable in general. The best we can do is reduce the amount of energy that gets wasted on it, and the kind of reflexive regulations people would try to introduce here would be counterproductive, the interventions that work tend to look more like acceptance and openness.
And I think trying to solve it on the morality/social ostracism layer is an example of a counterproductive approach, because that just leads to people continuing to do it but invisibly and incompetently. And I suspect that if it were visible and openly discussed as a normal thing it wouldn’t even manifest in a way that’s harmful. That’s going to be difficult for many to imagine because we’re a long way from having healthy openness about investing today. But at its adulthood I can imagine a culture where politicians are tempered by their experiences in investing into adopting the realist’s should, where their takes about where america should go are forced into alignment with their beliefs about where it can go, which are now being exposed in their investing decisions.