Shocked, I Tell You. Shocked.

It’s not only watching porn that keeps employees busy at the SEC, as compelling evidence emerges that SEC staffers take time out to trade for personal profit on insider information about SEC enforcement actions.

Am I surprised? No. Government employees, in general, are much more likely than private sector workers to abuse positions of trust because not only is there little or no management oversight, but in most cases there is no risk as they cannot be disciplined or fired.

Look at someone like Janet Yellen, for example. She goes in front of Congress and makes all kinds of optimistic noises about what the Fed is going to make happen. But is there any penalty in the event of that not happening, or for that matter any incentive to succeed? None whatsoever. She will be paid, her private dining room will serve her, her car will drive her around, she can play tennis on her private court and so forth even if she achieves nothing. Or even, as is likely, if she destroys the economic well-being of billions of people.

The business model of government effectively incents failure.

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