As I walk outside into the radiant autumn New Mexico sun, I think of that biblical line, "He maketh his sun to rise on the evil and on the good." Looking through the stack of mail as I return to the house, I spy a nice fat envelope from a source I know-- junk mail, but holding promise of a bit of juicy reading to distract me from my labors in the moral sewer of how power is being wielded in today's America. Ensconced in my chair, I begin to read.
"Dear Reader, A former U.S. Senator from Oklahoma has access to information other investors will lie, cheat, and steal to acquire," this mailing began. "Why? Because this man served on the Energy and Natural Resources Committee. They oversee all federal oil, gas, electricity and water regulation....the strategic petroleum reserve, and Federal coal, oil, gas, and mineral leasing. During his tenure in Congress, this Senator owned a clutch of energy-related stocks --including ConocoPhillips, and oil shipping and support firm Tidewater, Inc. Shares in these companies during that time went up 2,696% and 1,118% respectively."
Some break I'm getting! My hackles are rising!
The mailing ventures a generalization: "Powerful politicians have an incredible track record of getting into rich investments at exactly the right time," it tells me. And it backs this up, citing a Georgia State University study (covering the years 1993 to 1998) that "found that the stock investments of U.S. Senators beat the performance of corporate insiders by 2 to 1..."
What kind of juicy reading, you may wonder, was I expecting to come out of that fat envelope? I must be reading some lefty Naderite pitch to come across this litany of corruption, right? Well, actually, no: this is a mailing from an outfit that produces investment advisory newsletters-- and the kind of juicy stuff I expected was that maybe they thought China would allow the yuan to float, or maybe there's some biotech company that's got a new wonder-drug to treat cancer. Who knew this investment advisory outfit would be presenting this vivid description of corruption in the chambers of America's legislators?
Level upon level of corruption.
First there's the level of insider trading. I get on the phone and call my investment guy. We've been working together for over thirty years, and over the course of time have become good friends. He voted for Bush, and I do my NoneSoBlind newsletter, which gets its name from the old English Protestant saying, "There are none so blind as those who will not see"-- but still we're friends. I read to him from this pitch for the investment advisory newsletter, and ask him if members of the U.S. Senate are covered by the laws against insider trading. He assures me that they are, and he confirms that what this newsletter describes seems like evidence of a crime. That's one level of corruption.
But of course, these Senators are not just any insiders. These aren't agents of the companies themselves, private individuals whose job it is to make their firms profitable and enrich their stockholders. These Senators are people whose job is to represent the people, to pass the laws that define the game in which the people of this country engage in our famous pursuit of happiness-- a pursuit that often, in our market society, involves a competition in the marketplace for private gain. How the game is structured, of course, goes a long way to determine whether the game is fair. And that's the second level of corruption.
The newsletter evades the real issue here. "Of course, as members of this committee (and in general), Senators have access to information others do not. They're likely to know, for example, what legislation will pass and which companies will stand to benefit." Well, of course, it's a lot more than that. Their aides might be that position: access to information about what laws will pass and which companies will benefit. But the Senators have the power to determine those laws, and thus to influence significantly which companies will strike it rich, and which will not. And meanwhile, as our newsletter pitch has so vividly shown, they're owning stocks in those very companies.
Hey, do you suppose it's possible that the knowledge that one set of laws would give a Senator a ten-fold return on his money, while another would not, might ever influence how a Senator would use that power with which the public entrusted him in shaping those laws? Do you suppose it ever happens that a Senator, facing such a temptation, might allow such considerations to outweigh the question of what's fair or right?
But, of course, this newsletter pitch manifests a third level of corruption.
There's nothing new about insider trading. And for the holders of public office to abuse the public trust for their own enrichment is also an old American story. But I wonder: has there ever been a time in American history, before now, when someone would make a pitch for an investment newsletter that's so baldly amoral-- so blatantly couched as if. when it comes to winning, the issue of cheating doesn't even exist?