Insider Trading is legal for US Senators: unbelievable corruption at the heart of US government

At the heart of capitalism is a set of rules that govern how economies work – they make the whole system function. One of the pillars of capitalism is the understanding of an efficient market, which requires that everyone in the system has access to the same information. That’s why “insider trading” (using information that will be public soon but is only known to a small group of people at the moment to make investment decisions) is so outlawed. People who trade on inside knowledge are tracked down with ruthless efficiency and sent to jail. Even if they’re as nice and wholesome as Martha Stewart!

So, imagine my surprise last week when I discovered that US Senators and Congressmen and women, and their staff, are exempt from insider trading rules. It sounds unbelievable. What’s worse, is that it seems they have been using their exemptions to great effect, by trading on knowledge they have of upcoming laws and regulatory changes to buy and sell stocks at tremendous profits in companies that are about to be affected by work they’re doing behind closed doors on Capitol Hill. And even more unbelievable is that attempts to change their exemption (why should the leaders of a country be allowed to do things that would be illegal if they were not leaders?) are being blocked. Yes, you guessed it, mainly by the Republicans (but also some prominent Democrats).

Read the CBS report that sparked outrage a few weeks ago.

This is simple and straight forward corruption, jeopardising the free market system and right at the heart of American democracy.

I was outraged when I read this story. But maybe even more so, because also this past week, I was reading on the Global Poverty Project blog about how corruption is endemic across Africa, right the way down to some children needing to bribe their teachers to grade their exams in Sierra Leone. These claims come from a BAFTA award winning documentary from 2007 by Sorious Samura called, “How to get ahead in Africa” – admittedly made while Sierra Leone was in the middle of a very serious war. While I have an issue with how the documentary uses examples from two known hotbeds of crime to extrapolate across an entire continent, there can be no doubt that one of the things holding back Africa’s development is corruption.

And Western governments and media get all high and mighty about “darkest Africa” and how emerging economies have so many problems with corruption that some seem to be beyond help. But how many people are shouting about the corruption at the heart of American government and free markets?

We live in a sad world of double standards, where the rich get richer and can get away with anything, it seems.


For more on this story, and an interview with a Senator trying to do something about it, see Jon Stewart’s Daily Show reports below:

The Daily Show with Jon Stewart Mon – Thurs 11p / 10c
Stockblockers – Political Intelligence
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook
The Daily Show with Jon Stewart Mon – Thurs 11p / 10c
Louise Slaughter
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

0 thoughts on “Insider Trading is legal for US Senators: unbelievable corruption at the heart of US government”

  1. Susan Mazza says:

    It is unbelievable and extremely disheartening. We seem to have a new era of “robber barons”. That there is public conversation and outrage though is a clear sign that democracy is alive and well, yet also a reminder that it is fragile and dependent on the integrity of our leaders.

    My husband has been studying investing with a masterful coach in both the techniques and psychology of investing. He uses the term “market makers” for those people who as I would describe it legally use insider trading tactics. To make money as a trader you need to learn how to understand and respond to the trends the market makers are directing. Eye opening…

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