Taking STOCK

Amidst the pervasive and widely debated political issues in our culture— healthcare, entitlement programs, immigration, unemployment—there exists at all times what can be termed a political undercurrent, a more varied pattern of sentiments, more impetuous and prone to outrage over what the public perceives to be injustices, and yet more quickly and easily satiated by a firm promise by the proper authorities that the problem will be handled by some token legislation that the public presumes, without scrutiny, to have fully addressed the issue. Such was the case in the first two months of the year with the subject of Congressional insider trading—a cause not particularly provoked by some recent development or more injurious perpetration, but rather by a rash of editorials and debate made contagious by social media that perforated into the mainstream news banter of national cable outlets. The resultant legislation being signed into law today, the STOCK Act, has become yet another vehicle for lawmakers to make petty political barbs at one another before agreeing on a final product seasoned with irrelevant laws and regulations expected to slip by unnoticed, but the primary point worth taking from the whole ordeal has continued to be the fundamental unwillingness or inability of legislators to view deregulation of the economy as the proper course toward a better system of governance.

I will refrain in this writing from engaging in a discussion of the morality of insider trading in general, contented to say merely that it is a subject more complex and more deserving of careful analysis than public discourse has ever afforded it. Rather, I think it appropriate to view the subject of insider trading by members of Congress as meriting separate treatment than the same act performed by members of the general public. The cause for this distinction is inherent to the nature of their position—as lawmakers, these individuals wield the distinguishing feature of government: a monopoly on the use of force. This monopoly is proper for government to retain and perform in a retaliatory fashion—it is the very essence of law and order. However, it is important to recognize that regulation is not retaliatory. By its very nature, it is pre-emptive, preventative law that treats some elements of our culture—namely businessmen—as requiring of close monitoring and subjection to “rules” without the government enduring the burden of ever having to prove a history of wrongdoing. By their commitment to incorporate and exercise their freedom of trade on a wider scale than they could achieve individually, these men are made subject to a higher measure of suspicion than the remainder of society.

The conflict of interest soon becomes clear. Though the primary focus of public outrage has stemmed from the (very real) possibility of legislators acquiring valuable information through the course of their duties and using that information to improve their private investment strategies, if this were the only concern it should be noted that Senators and Congressmen are subject to the same longstanding insider trading laws as the rest of the population, that they are further subject to over 20 existing federal statutes aimed at punishing public corruption, and that any additional law meant to condemn these very same acts as crimes would be redundant and a waste of Congress’ time. This is not to say that there do not exist problems and contradictions in the relationship between Congress and markets as they stand today. The real conflict of interest (which has gone relatively unmentioned) is that which results from representatives’ power to regulate by force of law the very markets in which they and the general public can legally invest. The fact that the public is more offended by the idea that a Senator may turn a quick dollar on some under-the-table stock tip than that he might use his powers to award government contracts to favored parties, exercise regulatory discretion in committee or on the Senate floor to afford special privileges to companies in which he is invested, or strategically disadvantage that company’s competitor is demonstrable evidence of how passively this nation has come to accept injustice, so long as it is perpetrated under the heading of government control and economic interventionism. It seems that so long as injustices are committed in the full light of an oversight committee rather than behind closed doors, the public feels that at least they haven’t been duped or outsmarted and they are willing to offer up the rights of the businessman as a settlement.

Presented with the described dilemma, the ingrained political mentality of this nation is, at its root, so avowedly comfortable with the idea of regulation that the solution they seek is either to endorse such entirely superfluous laws as the STOCK Act would impose or—as some have proposed—to legally ban lawmakers from participation in the stock market altogether (a measure supported by a shocking 72% of participants in a recent Rasmussen poll). Bans, prohibitions, and restrictions appear a panacea to the atavistic nuisance of public outrage. What must be recognized, however, is that just as businessmen have a right to trade freely and without onerous regulation, so members of Congress do not renounce the freedom of exchange or any other of their individual rights when they are sworn into their offices. To deny their right to use and dispose of their own property and income as they see fit is an intellectually inadequate and morally objectionable answer to the actions of some within their ranks which might violate the rights of private citizens. What is needed is an entirely separate solution that, though politically difficult to promote, is the only true solution to the fundamental conflict that exists in the interactions of government and business.

The solution is a withdrawal from the culture of regulation that has come to be perceived by many as the chief moral pursuit of our elected officials. Where government has no ability to selectively coerce the activities of industries and markets, the people have nothing to fear from their representatives’ acquisition of information, nor could that acquisition have any more effect than it would in the hands of the average citizen. Government regulation of industry is already both morally reproachable and in violation of the principle of individual rights, as by its very existence it presumes guilt of a man or group of men based solely on the criterion that they have undertaken productive activity. Add to this the economic inefficiencies and social burdens that it causes in almost every area of our daily lives (drugs, food, trade, communications, energy, etc.) and one can see the dual threat that regulation imposes on the progress, development, and well-being of this country and its citizens. This publication has always remained devoted to an analysis of the countless ways in which government involvement in the economy perpetrates injustices and violations of individual rights against each of its citizens. Let us take this opportunity to remember that in the defense of our own individual rights against the onslaught of violations passed down by government officials, we must not allow ourselves to seek comfort in the violation of their rights or by demanding that as a consequence of service they submit to enjoying any less of the freedoms which we ask them to respect and uphold.

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