The other night during president Donald Trump’s State of the Union address, something strange happened. About half of Congress spent the night sitting on its hands, with some members even declining to acknowledge the U.S. gold medal hockey team. Yet when Trump mentioned banning insider trading, almost the whole room stood and clapped. Which made me suspicious; when both Republicans and Democrats in Washington agree on something, it’s often because the policy benefits them—as a unified political class—not the American public. That may be what is happening with this push by Congress to ban insider trading.

Insider trading, to be clear, is not a good practice. The term applies broadly to when someone buys or sells stocks using material, nonpublic information. In the Congressional context, that might mean a lawmaker sitting on a committee learns about an upcoming regulation, contract award, or government policy change before the public does. If that info could affect a company’s stock price, trading it before the news becomes public can generate huge gains.

Various proposals circulating in Washington would attempt to close this door by prohibiting members of Congress—or in some cases their spouses and dependents – from owning or trading individual stocks while in office. In some........

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