If You're Mad at Sen. Richard Burr, You're Missing the Point

If You're Mad at Sen. Richard Burr, You're Missing the Point
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As of this writing, more than 20% of Americans have been told to cease activity outside their place of residence. The individuals decreeing the inability of tens of millions to work, produce and provide are politicians on the local, state and national level.

On Friday the governor of Illinois joined California and New York governors Newsom and Cuomo in telling residents to stay at home altogether. Let’s please keep in mind that California alone, if a country, would rank as the world’s fifth largest economy.

These basic, tragic truths need to be considered amid the freakout on the right about Senator Richard Burr (R-N). Tucker Carlson, who surely knows better, has called for Burr’s resignation, the normally reliable Kevin Williamson observed that “when history called, Senator Burr called his broker, and it will take more than stock profits to ensure that his retirement is a comfortable one,” plus social media itself has exploded with indignation toward the Carolinian.  

Burr’s alleged error was that after being made privy to a private report on the infectious nature and growth of Coronavirus, he sold shares of public companies owned. The senator did this on February 13th, which was four days before U.S. equity indices reached all-time highs. Conservatives are up in arms that a politician with alleged access to information not available to the rest of us sold. Oh no! A politician, plus a husband of a politician (Sen. Feinstein’s husband) sold with information that the rest of us didn’t have. Prison should be next! Inside information. Oh please.

Everyone needs to relax.

For one, the max-hysterics fanning the flames of witless hysteria miss the point. At worst, Burr is merely a symptom of the real problem. The problem is that Democrats and Republicans in Washington have for decades trampled on the strict limits set by the Founders with the Constitution. Worse, is that Republican and Democrat voters have gone along with it as evidenced by their troglodytic rapture over the outcome of presidential elections, along with House and Senate contests. Economic pundits are almost as bad with their obsessive focus on “deficits” and “debt,” as opposed to correct outrage related to the basic truth that we have both precisely because the U.S. Treasury doesn’t just take in way too much in the way of tax revenues, but that it will continue to for decades – and perhaps – centuries to come.

The outrage shouldn’t be directed at Burr, or the husband of Sen. Feinstein, rather the hysteria should be all about a federal government so large and limitless in its actions that it has a presumed role in protecting our health. No, it doesn’t. In a normal, somewhat sane, constitutionally-limited U.S. Burr would never have received allegedly private information simply because protecting us from viruses is not the job of the federal government. Some would say it’s not the job of local politicians either, but that’s a digression.

More broadly, every so often the perpetually alarmed within the electorate and within the pundit classes get worked up about the equity portfolio returns of politicians. It’s said to be a consequence of that which is undefinable to begin with: “inside information.” The outraged know not of what they speak. If we ignore how difficult it is to profitably trade on what's undefinable (inside information) in the first place, and if we ignore the obvious truth that all investors are made better off the more that non-public information is reflected in share prices, we can’t ignore that the outraged are once again shouting at symptoms like Burr, instead of the real problem which is a federal government that has long operated without limits. So long as the latter is true, politicians will know things that we don’t and they’ll perhaps profit from them.

Perhaps is italicized above simply because the outrage directed at Burr has no basis. To understand why, readers might take the time to quickly re-read the two paragraphs that begin this piece. And read them again.

Explicit in all the outrage – manufactured and real – spewed at Burr is that the economic and stock market horrors we’re enduring right now have something to do with the health and wellness implications of Coronavirus; implications that Burr was allegedly made aware of (try not laugh here) ahead of time. Except that they don’t.

Let’s not forget that Coronavirus was very much in the news going back to January, it was a known quantity that the infected would reach the freest and most open country in the world, yet stocks continued to climb to all-time highs. They did even though anyone with a pulse knew there would be at least somewhat of a global economic slowdown based on reduced economic activity in China alone. The only “closed economy” is the world economy.

What brought on the economic collapse in the U.S. was not a virus that as of this writing has killed 216 Americans. The previous number in mind, it’s not unreasonable to suggest that whatever report Burr received, the information relayed was – if anything – overstated.

Back to the sad reality we’re having to stomach at present, for Burr to have knowledgeably sold shares in February he would have had to know based on “closed-door briefings” attended that there was going to be a near total crack-up among politicians on the local, state and national level such that over 1/5th of the individuals who comprise the most dynamic economy on the world were going to be denied their right to pursue their work specialty. He would then have had to have known that following the previously described body-blow politicians would extract over $1 trillion from the private sector in order to foist central planning on top of command-and-control. No, that’s not serious.

Sorry, but it’s unlikely that Burr was privy to a political crack-up that no one else expected. The massive correction investors have endured cruelly vivifies the previous point. The horrid damage inflicted on the U.S. economy by politicians was a total shock. If Burr had actually known something, it would have been priced much, much sooner. Surprise leads to the correction of shares, and Burr’s “closed-door briefing” took place on February 13th; a week before U.S. shares reached all-time highs

The criticism of Burr is rooted in a misunderstanding of “inside information,” why massive corrections happen, plus it’s worth adding that conservative icons like President Trump and Rush Limbaugh had been wholly dismissive (arguably with good reason) of Coronavirus as a major health threat at the time in question, yet we’re supposed to believe Burr knew something they didn’t? Let’s try to be serious.

Plus let’s try to be proportional in our outrage. At present U.S. politicians are overseeing a tragic, command-and-control takeover of the U.S. economy. That’s what should anger alleged limited government proponents, not minor symptoms of the terrifying amounts of power that federal politicians presently enjoy.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They're Both Wrong: A Policy Guide for America's Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  


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