This is the first time in my entire life I have ever heard anyone make an argument that more laws = more freedom, liberty, or capitalism.
That's an extrapolation of the theoretical that I did not make. The only restriction these insider trading laws make is on those who violate them and would have the free market become a rigged private market that unfairly controls the market for the public.
If there is a generality that
total lack of laws =
total freedom to do anything we want and that is good, then we really do disagree. I believe there are laws that prevent unfair advantage when a system of free markets are the goal. The purpose here is that when PUBLIC companies are traded in a
free market, laws or regulations must be setup in order to keep the market free. Now, if you are referring to a NON Public company aka a private business that has limited private partnerships then yes, insider deals are permitted and quite appropriate because these are not public companies.
If we were to play a game of chess would you accept that I could play where I can move my chess pieces anyway I want but you were not permitted to know those moves before I made them? But you would have to stick to the rules of traditional chess until I made my creative move first? You would not think that was fair because when I invited you to play chess, you assumed the general rules of the game of chess. When I enter the stock market to trade, I have a fair education and understanding of the rules. I expect all players in the market to abide by those rules. Insider trading is not a path to free market. It is only a path to a rigged market. Anarchy is not a path to a civil society. Pure Capitalism is not anarchy. It is a system of rules where the game is a path to wealth based on public ownership of companies. Without those rules of free market capitalism, we just have anarchy. Anarchy is not freedom, it is survival of the fittest. You should not confuse anarchy with freedom.
This is the issue. Secret deals are made even more secretly because of these laws.
If that is what it takes to violate the laws and allow the ruthless and corrupt to gain advantage then yes, laws make crooks wear masks when committing a robbery, metaphorically speaking. Laws force criminals to hide their bad acts. But eliminating laws does not make a market free and fare for all, it just decriminalizes the crooks so they can get away with using their position to rig a free market. If you legalize murder, people would do it openly and even brag on being a murderer. No police would come to arrest the murderer since there would be no laws broken. Does that make murder an accepted practice among a civil society? Likewise, if insider trading were to become an accepted practice by making it legal, then the public would not participate in the rigged market. The market would collapse and public companies would cease to exist. The end result in a capitalistic society is that all wealth would simply evaporate.
Look, I'm not a big time day trader. But since retirement 3 years ago, I have worked the markets every day, plus taken courses in economics and technical analysis. I study the rules of the market so I can "play the game" I find many people have a complete misconception of the stock, commodity, and currency and bond markets and how they affect our lives. Even the lives of people who believe what happens on Wall Street doesn't affect them. While not all the rules of the SEC are good rules and there should be more rules in other areas, there are some rules that if were not present, the entire market system would collapse. I believe refinement of the insider trading rule to apply to certain classes of people is a good thing. Congressmen who have access to lobbyists and laws that affect commerce and the economy need to be restricted in trading. If a congressman is set to know that a vote to approve a highway bill or a bridge built, he should be required to make it known if he plans to invest in a company or buy land cheap from a farmer, knowing the value will rocket as a result of his public position in government. Its called disclosure and it applies to me and you, but not congressmen or their staff. This I believe is wrong. But if those rules were eliminated and insiders everywhere could do this, then the market would cease to be a free market.
Laws won't eliminate secret deals. They just keep the deals like these a criminal act. Then the crook must weigh the risk with the rewards. I'm sure Bernie Madoff and others felt their secrets were safe.
FWIW- I don't trade my wife's employer's stock, ever. It keeps me from possibly executing on something she might have told me is going on. I do well enough without the grief.
PS- yes, I do disagree with the blogger. There is always two sides to these issues. I happen to favor rules and regulations that keep the markets free and public.
