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Big shock: Politicians are corrupt. So what do we do about it?

Clearly not satisfied with their sky high approval ratings, members of Congress seem to be doing everything they can to convince that final 12% of Americans who support them to reconsider. Last week, Peter Schweizer revealed in his new book that a lot of them have been using their offices to engage in insider trading. For example, while most American citizens were debating the merits of Obamacare, John Kerry was busy making sure it benefitted his stock portfolio:

[A]t least $200,000 of stock in medical device manufacturer ResMed was purchased in the $20 to $25 per share range. After Obamacare passed, ResMed jumped to $34, an increase of as much as 71%. “ResMed was a winner in the health care reform legislation—as Reuters declared—thanks in part to John Kerry’s efforts,” says Schweizer. The reason: earlier versions of the Obamacare bill would have slapped companies like ResMed with an “industry fee” tax. Kerry opposed the higher taxes on medical device companies and helped delay the taxes until 2013.

The sickest part is that John Kerry’s behavior here isn’t the exception in Congress – it’s the rule. But as disgusting as that is, there are two important lessons that can be learned from this situation: 1) members of Congress currently have way too much power, and 2) all of our laws must apply to all Americans in the exact same way.

1.) Members of Congress currently have way too much power.

“The Experience of every Age convinces us, that we must not judge Men by what they ought to do, but what they will do; and all History affords us but few Instances of Men trusted with great Power without abusing it, when with security they could”

John Trenchard, Cato’s letters #60

Right now, Congress has an unimaginable amount of power to impact industries throughout the economy both positively and negatively. But beyond that, individual congressmen who land positions on powerful committees can have an incredible influence on each bill – almost single-handedly. Giving politicians that kind of power is exactly what leads to corruption like the current insider-trading scandal.

Getting this Congressional power back under control may seem like a Herculean task, but the solution is really simple. It doesn’t even require some massive government “reform” bill. All Congress would have to do is… abide by the Constitution we already wrote and ratified in this country. How’s that for a radical idea?

When our Constitution was written, the federal government was mainly intended to handle national defense, foreign diplomacy, and ensuring the free flow of trade between the states. This is a point that James Madison made clear:

“The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects as war, peace, negotiation, and foreign commerce [...]“

Federalist #45

Very clear:

“The powers of the general government relate to external objects, and are but few. But the powers in the states relate to those great objects which immediately concern the prosperity of the people.”

Remarks at the Virginia Ratification Convention

Notice how straightforward Madison is – the federal government is designed to focus primarily on “war, peace, negotiation, and foreign commerce.” Domestic issues were supposed to be handled almost entirely by state and local governments – which are much more effective in those areas.

But for some reason, today’s Congress wastes the vast majority of its time messing around with domestic legislation that it has no real authority to pass. If members of Congress could manage to limit themselves to exercising the powers that were actually granted to them in the Constitution, they wouldn’t have had the inside information they used to make these immoral trades in the first place. Problem solved.

Isn’t it amazing what can happen when the Constitution is read and applied?

Of course, there will be those who say, “The government will still be responsible for funding the military. So Congress will still have insider information about all of those massive defense contracts.”

That’s true, defense spending will still be an area of concern. But if Congress were to actually limit itself to Constitutionally mandated actions, federal spending would be a fraction of what it is today. In that case, it would be much easier for citizen groups to follow and analyze which members of Congress are benefitting inappropriately from insider information.

That wouldn’t completely solve the problem though. That’s where Lesson 2 comes in.

2.) All of our laws must apply to all Americans in exactly the same way.

“The Experience of all Ages may convince us, that Men, when they are above Fear, grow for the most part above Honesty and Shame.”

John Trenchard, Cato’s letters #61

Part of the reason insider-trading became such a common practice is Congress exempted itself from laws that made it illegal. So at some point, the politicians in Washington must have actually gotten together and said, “Wow, this insider-trading is really dishonest. No one should be allowed to make a fortune off of unknowing investors like that… you know, except us.”

When members of Congress are able to act as if they are a privileged class, it’s no wonder why so much of the legislation they pass is complete garbage. They know that they don’t have to live under the laws that they enact, so they are free to make a joke of our legislative process without feeling the effects.

The law that was just passed made the market tank? Don’t worry about Congress, they had insider information so they sold their stocks ahead of time. Obamacare is a disaster? No problem, they made sure they can keep their federal health plan instead. Unemployment is really high? Not to worry, they’ve got lucrative Congressional pensions.

The answer to all of this is to require all laws to apply to every American the same way – including public officials – similar to what Friedrich von Hayek suggests in The Road to Serfdom. No more exemptions. No more loopholes. No more waivers. If it’s wrong for private investors to engage in insider trading (and it is), then it’s wrong for members of Congress to engage in insider trading.

This requirement would also have another benefit besides simply eliminating Congress’ ability to write itself “Get out of jail free” cards. Much of the problem with Congressional insider trading stems from lobbyists and crony capitalists who are trying to “encourage” politicians to give them special tax breaks or legal advantages over their competition (see: Nancy Pelosi and the Visa IPO).

But when laws have to be applied generally, it makes it much more difficult for members of Congress to give those special interests what they want. If Congress isn’t able to give out valuable special favors, there’s no reason for crony capitalists to give politicians access to insider information and exclusive IPOs.

Whenever members of government are abusing their offices, lessons need to be learned from those situations and changes need to be made. In this case, Congressmen are using power not authorized by the Constitution and are exempting themselves from legal consequences to gain an unfair advantage in the stock market.

That cannot be tolerated. If our public officials are allowed to act as if they are above the law it will destroy this country. Members of Congress who are engaging in insider trading need to be held accountable and soon. Otherwise, no “Get out of jail free card” in the world will be able to clean up the mess they’re making.

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  1. patriot says:

    I think it is time to clean out ALL the corrupted Congress men/women and vote in new people who will actually uphold our Constitution and our Federal Laws! Congress has way too much control and corruption is running rampant. They are more interested in lining their pockets instead of working for the common good of We The People!

    I have written to my senators and reps from Capital Hill to the State Capital to no avail. They tell me what they are working on and thank me for my input and that is about all. All or most of Capital Hill knows that obama is not a US citizen because when he came here he started out as a ‘non-US citizen using his step-father’s last name. I think it disrespectful to the USA for Congress to allow obama to stay in the WH when they know he isn’t a US citizen and being born in Kenya makes him unqualified for the office! Instead, Congress sticks their heads in the sand even though they know of all the impeachment petitions that We The People have signed. This is greed and desire to have a ‘One World Government’ with communism as the law of the world instead of any country allowed to be a democracy or republic. Greed and corruption have over-stepped and walked on our Constitution, Declaration of Independence and Bill of Rights!!

    The Muslim impact on our country is another obama agenda. He has allowed CA schools to implement Islam in schools, teach the kids how to be good little muslim’s, requires them to dress like muslims and learn all the Kuran in class! Too bad the atheists aren’t up in arms on this like they always are on the Bible and Christian religion! Muhammed who wrote the Quran was just a ‘man’ like the rest of humankind, not a god as his followers try to paint him. His religion requires killing all the infidels who won’t convert to the Islam faith! obama went to one of the worst muslim schools in Indonesia for the indoctrination to Islam because both his father and step-father are muslims!

    As for insider trading in Congress: they all think they are above the law! They make laws for the public to follow and exempt themselves from the same laws that are required to be upheld by the rest of us. All the congress men/women should be held accountable for their crimes, arrested and sentenced according to their involvement in the crime the same as the common people! These people just think they are so much better because we elected them to their office. They will lie, cheat, bribe, whatever is necessary to cover up their misdeeds and get very angry at the public when they are found out! Too bad! What is good for We The People is also good for our president and all of congress – no exemptions allowed!

  2. WillofLa says:

    I have emailed and emailed my Congressman, Senator, and Congressmen and Senator’s that what they need to do is to start arresting every single one of these Communists who are getting inside information about changes in our lawmaking processes so that the country can turn Communist. And that insider trader deals also are against the law, but the trick see, is not to arrest them under a writ as a Congresswoman, but as a person with a name and a address, and cell phone number, you know, a person. If the local Washington police department walk down the aisle in Congress and go up to Nancy Pelosi and arrest her for committing a crime, and then hand her over to the California police and have her locked up in jail in San Francisco then they might be able to get away with it. But if the other Congressmen approach her with a couple of U.S. Marshall’s, she could stand on her law that protects her and the rest of the criminals. These people need to be taught a lesson that they are still just ordinary citizen’s and nothing any more special than that.

    That’s like the cops. They walk around like they are indestructible and can get away with anything they want. Well, guess what, they can’t. Do you know why? Because every cop in this country are members of a “civilian police force”….CIVILIAN’S, NOT MILITARY OR PARAMILITARY. They’re not the FBI, or CIA or anything like that which aren’t civilian police officer’s. COP’S ARE. They don’t have any more rights than you do, nor can they take your rights away from you if they stop you for something. They are authorized by the cities to enforce the laws that are applicable to that city, state in certain situations, and Federal law in certain situations. Other than that they are citizen’s like you and me, and I don’t care what they told them in police academy, they’re wrong. All this crap about speaking nicely to a law enforcement officer is crap. Sure the cities pass laws that may claim to give the cop special protection from some person who might be mad about something, but that is crap to.

    Just like the government, these blowhards give themselves special protections so that they will feel special when they aren’t special. Like the cities giving special protection to the cops so that no one will complain to them about how little protection they actually give the people of their representative city, and how much less they are actually worth, they can’t because all the cop has to do is tell the person they are speaking to them “disrespectfully”. What bull crap!!

    I told these Congressmen to get some guts and start having these people arrested and put some of them in jail and they’ll start scattering like a bunch of rats, the rats they are!!