Paul Pelosi is not an insider trading problem, but a symptom

Last week, it was reported that Paul Pelosi, husband of former House Speaker Nancy, had recently sold a significant amount of Visa stock. The sale of Pelosi came before the Justice Department announced its latest, but certainly not last, attack on business success.

The Justice Department’s baseless case is assessing its own commentary, and one is coming soon. For now, it’s worth addressing the hysteria that has emerged over the Pelosi trade.

Editorial from New York Post Office demanded in bold that stock trading by members of Congress and their family members be banned. Such a move would exacerbate a real problem while harming small investors.

To understand why, it is worth pointing out that not every activity disliked by the left and/or right requires the introduction of law. This truth should be accepted especially by right-wingers. They were intended to be aimed at limited government, but as with the proposal to ban stock trading by politically connected people, members of the right want to further empower lawmakers when it comes to legislating.

To which some will respond that “this law is different.” “This rule” aims to limit the ability of politicians to profit from “insider trading.” In fact, the proposed law is no different. He is the eternally wronged person who asks the government to do it again do something to make sure others can’t do something without government approval. No, thank you.

But the proposed ban will look worse the more reasonable and free-thinking people think about it. Seriously, stop and consider whether the allegations about Paul Pelosi are true. What if he he did sell Visa stock after having prior knowledge of the Justice Department’s plan to link it to an antitrust investigation? If so, Pelosi is one to root for.

Stock markets are the epitome of information. That’s why stock prices can fluctuate so much from day to day, but also over years and decades. As knowledge about public companies evolves, their share prices also change. Stock prices are just a look into the future based on all known information about a given company.

In this case, the sooner the information reaches the market, the better. For all investors. Really, it’s terrible to buy a stock that isn’t pricing in material news, including an ongoing federal lawsuit. To the extent that stock buyers do so, they are purchasing at a specific price that may change profoundly (for better or for worse) as new information eventually emerges.

With respect to Visa, an argument could be made that the Justice Department’s announcement of an antitrust suit has already been telegraphed quite well. One might assume that the Department of Justice (and the FTC) under Joe Biden have long made it quite clear that their disdain for the “bigs” is quite evident. But if not, or regardless of whether, selling, buying, and holding stocks saturates the stock market with valuable information. If Pelosi sold her Visa shares based on knowledge of the Department of Justice lawsuit against her, Pelosi would be doing all investors a favor.

Additionally, some people will insist that not everyone has access to information like the husband of an influential politician. This is undoubtedly true, but it does not change the fact that we are all better off the more all the well-known corporations are valued. Likewise, this does not change the larger but underrated truth that insider trading is not an easy task.

What is most noteworthy, however, is that complaining about Paul Pelosi’s dealings amounts to complaining about symptoms rather than the real problem. The real problem is that the government is so big and has so much power that it can destroy businesses. Because this is the case, people in government have knowledge that may or may not influence company stocks to rise or fall.

In short, Pelosi is not a bad guy. Once again, it is good at providing key information to the market. If critics don’t like his thinking, the answer is not to strengthen the government’s position even more, but quite the opposite shrink government power so that the Paul Pelosis of the world don’t know more than we do.