QotD: Political Economics

Leading the charge was the once and future presidential candidate and Ohio Democratic Rep. Dennis Kucinich. He shot off a letter to the SEC (along with Rep. Henry Waxman (D-Ca.)) asking the agency to hold up the Blackstone IPO while Congress puzzled out the best way to demagogue the issue.

Kucinich and Waxman fretted that small investors could be harmed, simultaneously worrying that trading Blackstone on the stock market was "exposing unsophisticated investors" to risk, while "depriv[ing] them of control over the management of the funds and of many of the protections provided by fiduciary duties typically owed to them by management."

To review: Investors are too stupid to know when they're getting screwed, but also deserve a chance to control the "management of the funds." In fact, the biggest hit small investors are likely to take is if they buy Blackstone and then Congress tanks the price by imposing a specifically targeted tax.

Katherine Mangu-Ward, "Idiot Investors? Congress protects people from making money on the stock market", Reason, 2007-06-25