Developments concerning the symbiosis of politics and markets
On another level, some have raised privacy concerns as the database will catalog rather sensitive details such as magazine subscriptions, gun ownership, and church attendance. Jakulin, however, points-out that technological efforts by the public to monitor the government are also expanding. The data-mining is symmetrical. Do see the list of such projects he compiled, as well as his work in 2004 analyzing similarities among Senators' voting patterns. This is fascinating stuff and possibly an important "Grundrisse", so to speak.
Next, anyone with an interest in legislation-linked markets will take notice of the controversy over Congressional "insider trading". Currently, it remains legal and technically ethical for members of Congress to trade stocks based on nonpublic information related to pending legislation or appropriations. A study, Abnormal Returns from the Common Stock Investments of the U.S. Senate, by Alan J. Ziobrowski and others found that between 1993 and 1998, Senators outperformed the market by 12% per year on average, whereas corporate insiders beat the market by only 6% annually. Based on his analysis, Ziobrowski has concluded that, "there is cheating going on, at a 99% level of confidence."
The SEC, which receives funding from Congress, has been reluctant to address this issue, but there is a new bill that is seeking to end such trading, as well as requiring firms that specialize in political intelligence gathering to register with the House and Senate, as lobbying firms now do. The title of H.R. 5015 is "To prohibit securities trading based on nonpublic information relating to Congress, and to require additional reporting by Members and employees of Congress of securities transaction, and for other purposes", but apparently the text also carefully includes "commodities futures". Would legislation-linked derivatives be considered "commodities futures"? Given their substantial hedging utility, let's assume so, although it's by no means cut-and-dry. Owing to partisan incidentals, there is some doubt whether or not the bill will even be passed, as Stephen Bainbridge disapprovingly observes. If it is passed, it would seem less likely that the CFTC would approve such contracts, as they are also funded by Congress. If not, legislators might be better disposed towards legislation-linked markets.
Finally, pointing even further down the road, AEI-Brookings has released a new e-book on information markets and their potential impact on public policy. Some of this collection was already available on their policy markets site, but there are some papers that you might have missed. Markets should be useful for collecting political information or hedging legislative outcomes, but thinkers such as John Ledyard, Paul Tetlock, Robert Hahn, Michael Abramowicz, and of course, Robin Hanson anticipate a time when market outcomes might influence public policy more directly.