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OpEdNews Op Eds    H3'ed 10/23/19

Making government and politics work for all

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Message Tim Duff

In 1789, Alexander Hamilton, the first U.S. secretary of the Treasury, planned to pay off both the Federal Revolutionary War debt and the debt obligations of the individual states, at 100%. The announced deal was preceded by huge insider trading in federal and state government bonds. Congressmen were among the chief speculators who traded the bonds, having advanced knowledge of the intent of the Treasury. Speculators sent people in stagecoaches all over the country to buy up all the federal and state bonds at a fraction of their face value.

Crony capitalism is, of course, not new, but it has become the dominant cancerous force in Washington DC.

Ben Franklin, always a practical observer of human nature, expressed his worry to the Constitutional Convention in 1787. He warned that when you give politicians the opportunity to "do good and do well," you are asking for trouble. He stated, "There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice; the love of power and the love of money. Place before the eyes of such men a post of honor that shall at the same time be a place of profit, and they will move heaven and earth to obtain the profit."

Politicians learned very early on that they could not grant themselves rich salaries. In the spring of 1816, Congress voted themselves a compensation bill that doubled their salary. There was a massive populist revolt like the "great Leviathan bursting into action." There was outrage throughout the country. As a result more than half of the members of Congress refused to run for reelection and only 15 who voted for a raise and who did run for reelection managed to maintain their seats. When the new Congress convened, it quickly repealed the act.

Crony capitalism has long ago united politicians with businessmen who function as political entrepreneurs. Political contacts, inside information, financial connections, and influence have replaced fair and open competition. Instead access to government officials who hand out grants, special tax breaks, and subsidies have become the corrupt path to wealth creation.

In 1966 Henry Manner made public in his classic book, Insider Trading and the Stock Market, that "the federal government is the largest producer of information capable of having a substantial effect on stock market prices."

Once a congressman establishes a blind trust, the rules of the Senate do not require you to disclose your assets each year. It creates less transparency than before. The SEC insider-trading antifraud laws under Rule 10b-5 of the Securities Exchange Act have been unjustly interpreted in such a way that the laws don't apply to Congress, because legislators are not fiduciaries or client representatives and therefore not required to keep secret information in the sale of securities secret. The SEC is after all funded by Congress.

Britain's Financial Services Act of 1986 extended the scope of the Insider Dealing Act to include all public servants, including political or government information received by all royal and civil servants, and by all outside individuals receiving information from these servants.

We must apply these standards to the United States, and make it criminally clear to hedge funds that if they receive information from government employees and trade on it, they will be liable and imprisoned.

Creating an enforceable legal code that makes trading on nonpublic government information illegal, disclosure of Congress insider trading, banning trading in stocks of companies overseen by committees of Congress, applying whistle-blower laws to Congress, disallowing "sweetheart" IPOs, enforcing and strengthening conflict-of-interest laws, disallowing earmarks in which a member of Congress receives a direct financial benefit, disallowing family members of legislators to become lobbyists, banning campaign contributions when Congress is in session, and getting the federal government out of the business offering grants and taxpayer-supported loans.

These changes along with restoring a pre-supply-side progressive proportional tax system and ridding the system that is compromised by a U.S. public policy that operates as an amoral marketable commodity.

Only then will we begin to function with a moral consciousness that will produce an ethical social and economic democracy for all.

By: Tim Duff Tonka Bay, Minnesota

 

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I am a progressive writer. I have recently written my debut novel titled THE FIND. It is due to be published this spring.
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