Hello Decentralized Way subscribers! A good friend of mine asked me how it’s possible that our politicians are seemingly all worth millions!
She asked why those who make the laws are significantly wealthier than those they make the laws for, how it happened, and what the effects are.
This is part one of a mini series titled Why Are Our Politicians So Rich? I hope you enjoy. Then back to our regularly scheduled crypto content.
Let’s hop right in.
The answer to the title of this article and series (Why Are Our Politicians So Rich?) reminds me of one of the internets favorite memes.
In all seriousness though, I’m only half joking.
Most Senators and Representatives make $174,000 per year. Paid for by you.
Some higher ranking officials make closer to $220,000 per year.
Not a small amount of money for dictating our nations policies, so I sure hope they represent us well!
Well… Sadly that’s not the reality.
In 2014, a Princeton professor and Northwestern University professor set out to test whether or not public opinion mattered when it comes to passing a policy. The results were shocking… Or maybe not so shocking depending on how you look at it.
“In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes.”
Yikes.
“Our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts.”
Tell me it gets better?
“When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.”
Let me go over that last part for you again. The preferences of the average American have essentially no impact on public policy. And this isn’t just me musing - this is backed by a study done by accomplished academics far smarter than I.
I’d say I’m surprised but I’m not. They tracked 1,779 policies and found that if the average American supports a policy, there is about a 5% chance that policy will get passed within the next 4 years. Source.
What was that line those pesky new world folks kept repeating during the American Revolution? Oh that’s right. No taxation without representation. Our whole country and Declaration of Independence was predicated on that very notion. And yet here we are, 246 or so years later, seemingly back at square one.
Ok, so if American voters aren’t calling the shots, who is?
$. Are you surprised? (Of course you’re not! You’re a Decentralized Way subscriber!)
Over the last 10 years, just across a few sectors, over $15 billion dollars has been spent lobbying our politicians.
And it is money well spent for the lobbyists.
Over the last 5 years, the 200 most politically active companies have spent $5.8 billion dollars lobbying in Washington.
Their net return? $4.4 trillion dollars.
Their ROI? 750x.
No that wasn’t a typo. These companies have made 750 times more money from lobbying than they set out with from taxpayer support. Paid for by… Yep, you! It’s also important to keep in mind that data for these metrics lags a bit, so the true numbers today are likely far greater than the ones shown above. Source 1. Source 2.
While this is clearly undermining our American Democracy to resemble a pay for play system, that’s not really the full story.
Here is just one example of the blatant corruption and conflicts of interests from two senators with access to privileged information.
I also want to be clear - This series is not intended to go after Republicans or Democrats or any other party specifically. There are a multitude of offenses across both sides of the aisle. In order to combat any cries of bias in either direction, I will be drawing attention to a violation on each side of the aisle in subsequent articles. Meaning if there’s references to Republican violations in an article, expect the next one to shine light on violations on the Democratic side of the aisle. Perfectly balanced (corruption).
At the end, I’ll also discuss how we might go about fixing these problems, because sitting here whining about it without offering a solution and advocating for change is to be complicit in their schemes.
Coming soon to this series is a look closer at our Speaker of the House, Chairman of the Federal Reserve, our Secretary of the Treasury, and a few other choice individuals who have wielded power for their own benefit.
Senator Richard Burr (R-North Carolina) and Senator Kelly Loeffler (R-Georgia) have superhuman prediction abilities
Allow me to walk through a brief timeline with you.
On January 24th, 2020, The Senate Health Committee and the Senate Foreign Relations Committee hosted a briefing for “all senators with top administration officials regarding the novel coronavirus outbreak… And how our country is prepared to respond as the situation develops.” Source. Senator Kelly Loeffler sits on that committee.
That same day, Senator Loeffler and her husband (who is the Chairman of the New York Stock Exchange and CEO of Intercontinental Exchange, the NYSE’s parent company) made the first of 29 (twenty nine!) stock transactions that would unfold through mid February, totaling between $1.3 million and $3.1 million dollars worth of equity sales.
On February 4th, 2020, the Senate Intelligence Committee received a briefing discussing COVID-19, the potential impacts, and how other countries were dealing with it. Senator Richard Burr was present that day, as he was (at the time) the Chairman of the Senate Intelligence Committee.
On February 6th, 2020, Senator Burr publicly co-authored a piece on Fox News expressing confidence in how the US is “ready to face the coronavirus today.” Source.
On February 12th, 2020, Senator Burr received another briefing on COVID-19, this time as a member of the Senate Health, Education, Labor and Pensions Committee. This briefing was from government health experts on the potential impact of COVID-19 and whether or not the US was prepared.
On February 13th, 2020, just one day later, Senator Richard Burr and his wife sold between $628,000 and $1.7 million dollars worth of publicly traded stocks. Source.
On February 14th, 2020, Senator Loeffler and her husband made 2 stock purchases totaling between $200,000 and $1 million dollars. The companies? Citrix and Oracle. Source. Two web based companies that would go on to return 50.48% and 76.3% at their peaks since, respectively.
I guess they forgot about Zoom!
Many of Senator Burr’s liquidated holdings were in the hotel and resort sector, one that would be decimated in short order just a few weeks later as COVID-19 fears briefly crushed the markets in mid March.
Senator Burr has since stepped down from his post as the Chairman of the Senate Intelligence Committee, but has denied any wrongdoing vehemently to this day.
Burr was one of only three Senators who voted against 2012 legislation to ban congressional insider trading. I wonder why.
I will let you draw your own conclusions from here.
Seems fishy (at best)… But can’t I just follow their trades and also get rich?
Ha! Good thinking… But no you cannot (in real time). See that would require transparency and accountability! Something these individuals, and many more like them, are opposed to.
Congress has 45 days to disclose trades made to the public, and frequently they drag their feet beyond that deadline. You would think this would result in a penalty or consequence of some kind… But it really doesn’t! They make the rules after all!
Some are very prompt with their filings, such as the prominent and very actively trading Speaker of the House, Nancy Pelosi. She files on the day she makes the trades but unfortunately the Clerks Office (that processes the filings and disclosures and posts them) has an average turnaround time of 35 days, or 25 business days. Source.
So in this case, it’s not really Nancy Pelosi’s fault that you can’t follow her trades. Instead, blame the snaillike wheels of bureaucracy at the Clerks Office. Seems fitting for our Government though.
And if they do file late, the penalty for this is a whopping $200! Yes, if a congressman makes millions off of a trade and files outside of the 45 day window, they pay a two hundred dollar penalty. That’s it.
But here’s the kicker.
No public record exists detailing if individuals who violated the STOCK act actually paid their fines.
If no public record exists of our elected public officials (minuscule) penalties, who are they accountable to? Anyone at all?
What’s the solution and takeaway from all this?
It’s very simple. Stop our politicians from trading individual stocks. Note this is not restricting them from access to equity markets, but merely hindering their abilities to benefit from their inside information.
In a recent poll, ~75% of Americans support restricting individual stock trading by members of congress. An unprecedented number considering how divided our country is today with trust in the Government reaching a low of 24%. Source.
And this is starting to reach consensus among (some) lawmakers with a new bill being introduced to do just this. And for the first time in a long time, there’s bipartisan support. Source.
There are two takeaways here. First, that your elected officials are not really your elected officials. Gone are the days of public servants (with maybe a few exceptions). Contrary to the intentions of our founding fathers, our government does not serve the people. They merely are servants to the highest bidder to line their own pockets.
Secondly, make your voice be heard. Write, tweet, and speak your mind. Advocate for leveling the playing field and actually electing leaders that serve the people, not themselves.
Thank you for reading! If you enjoyed, please consider subscribing to the Decentralized Way (it’s free!). Or find me on Twitter @decentralizedJ