“Captain Gains” on Capitol Hill (nber.org)

Article summary

A study using transaction-level data on US congressional stock trades found that lawmakers who later ascend to leadership positions outperform their peers by 47 percentage points annually after ascension. This superior performance is attributed to two mechanisms: the political influence channel and the corporate access channel. The study suggests that lawmakers in leadership positions have an advantage in terms of access to information and influence over regulatory actions. The findings raise concerns about potential insider trading and the normalization of corruption in American politics.

Main themes

• Congressional stock trades
• Insider trading
• Political influence
• Regulatory capture
• Term limits
• Government corruption

What commenters say

• Term limits should be implemented to prevent career politicians from accumulating too much power and to reduce the influence of lobbying.
• Sortition, or random selection of politicians, could be a viable alternative to traditional elections to reduce corruption and increase representation.
• Lawmakers should be required to put their stocks in a blind trust or be banned from owning stocks altogether to prevent conflicts of interest.
• The current system allows for too much corruption and cronyism, and a change is needed to restore trust in government.
• Term limits could lead to a loss of expertise and experience in government, potentially ceding power to unelected bureaucrats and lobbyists.
• The influence of lobbying and campaign donations is a major contributor to corruption in politics, and term limits could help mitigate this issue.
• A maximum age limit should be imposed on elected officials to prevent them from becoming too entrenched and out of touch with the people they represent.
• The problem of corruption in politics is complex and multifaceted, and there is no easy solution, but addressing the issue of insider trading and conflicts of interest is a good starting point.