A couple of weeks ago, a guy came out with a book talking about how it sure looked like quite a few members of Congress — including the leadership of both parties — were using inside information for personal gain. This is, of course, contemptible. And it’s even worse when you realize that it’s not illegal — Congress very carefully wrote the insider-trading laws to exclude themselves.
Anyway, when it first came out, I was wondering just how it could be spun to seem like no big deal. I was disappointed at first — mainly, the apologists tried to discredit the author or focus on the misdeeds of their political opponents. They didn’t try to downplay the whole thing.
Well, I’m disappointed no longer. Because the Boston Globe has risen (or, rather, sunk) to the challenge.
How do they do it? What kind of chicanery to they use to minimize the scandal?
Well, first up, they accuse Schweizer of “cherry-picking” his samples, and instead recreate the total trading activity of all the members. Then, by running their analysis against the sum, it turns out that on average, members of Congress don’t really do that well in the market.
This particular trick does a wonderful job of obscuring the misdeeds of some by lumping them in with the whole. It’s kind of like saying that of Joseph P. Kennedy’s nine children, only one of them killed a woman in a car — so, overall, it’s not that big a deal and we shouldn’t single out Ted Kennedy for special attention.
Further, by looking at the whole picture exclusively and not the components, they conceal those misdeeds. Here’s a comparison: there’s this degenerate gambler who supports his gambling addiction by robbing convenience stores. At the end of the year, he’s stolen $50,000, but lost $75,000 gambling. By the Globe’s methodology, his robberies aren’t that big a deal, because he hasn’t really benefited from them.
No, what it says to me is that these members of Congress are really bad at playing the market. If they were good, they wouldn’t need to cheat. And even with cheating, their “honest” trades tend to wipe out the advantage they gain.
But they’re still taking advantage of inside information and access the rest of us lack. For example, Nancy Pelosi’s being invited to get in on the VISA Initial Public Offering, where she made a very hefty bundle. Or John Kerry’s making a killing in health care companies while he was working on ObamaCare. And worse, they’ve made sure that they can’t be prosecuted.
I’m not surprised that the Boston Globe would publish this piece. They’re no fans of Senator Scott Brown (R-MA), and he’s one of the sponsors of a bill that would help reform that. On the other hand, they’ve heavily invested in the aforementioned Senator John Kerry (D-MA), and he got caught with his hand in the cookie jar. And they don’t seem able to see any flaws in former Speaker Nancy Pelosi, who basically took the whole cookie jar.
Dismayed, yes, I’ll cop to that. Every now and then the Globe (owned by the New York Times) does something right, and I wanted to think that this time it would be so blatant that even they’d have to say something.
More fool me.
Sorry about the earlier, unfinished version; tech issues at home.