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May 28, 2013

Big-Government Advocates Shocked That Business Tries to Profit from Their Decisions

 

Members of Congress who LOVE to create big-government programs and regulations are always S-H-O-C-K-E-D when people respond to the newly created economic incentives.
 
The most recent outrage-du-jour focuses on a growing practice known as “political intelligence.”  Big investors, such as hedge funds, understand that when the Obama administration sneezes everyone else catches a cold. And so the “hedgies” want to know when and where Washington will sneeze—before it does.
 
The Washington Post, which editorially encourages big-government efforts, has a story about President Obama’s former top health policy adviser, Elizabeth Fowler, meeting multiple times in 2011 and 2012 with executives from half a dozen hedge funds.
 
Fowler now works for—surprise!—pharmaceutical giant Johnson & Johnson. (Hey, didn’t Obama claim his administration wouldn’t be a revolving door for lobbyists?)
 
The hedgies seek info that could swing the market. Medicare is so large that deciding to pay or not pay for a certain prescription drug or medical device could have a big impact on the manufacturer’s stock price. And investors would like to know that so they could profit from it.
 
In the Post article, the issue had to do with whether the Obama administration would increase funding for the Medicare Advantage program, in which about 25 percent of seniors get their Medicare coverage from private sector health plans. (ObamaCare actually cuts Medicare Advantage funding, but the administration has postponed those cuts for mostly political reasons.)
 
Hedge funds make big bets on the market, up or down, so a little hint about a forthcoming decision, even if inadvertently or innocently dropped by an official, could mean big profits.
 
The Post article provides no evidence that Fowler or other Obama officials did anything wrong, and maybe they didn’t. But it’s easy to see why hedge fund execs would want to visit.
 
Now, Rep. Louise Slaughter (D-NY) wants to put a stop to officials meeting with investors, even though she votes FOR EVERY big-government program that can make or break private sector companies and industries.
 
But the best way to reduce the demand for political intelligence, and lobbyists, is for the government to get out of the business of business. If government micromanagement and whims didn’t move markets, affecting billions of dollars in an instant, no one would care about government officials—and maybe that’s exactly the point.


 

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