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I’m going to elaborate here because I can’t edit my comment anymore. I’m not arguing about whether there should or should not be regulation, but about the purp
by Tinyyy 10y ago
I’m going to elaborate here because I can’t edit my comment anymore.
I’m not arguing about whether there should or should not be regulation, but about the purpose of regulation - it’s rarely about ‘ethics’. If you look at the SEC enforcements, most of them are about fraud or about a breach of duty. Fraud - you’re not allowed to lie, that is pretty self explanatory. Breach of duty - someone else places trust in you to act in their best interests, and you violate that trust. This is broad and can be applied in variety of ways, but a duty has to be established. Other than these two and some other exceptions, you’re free to do whatever you want - and that’s to maximise your profits.
Financial regulation is not and has never been about ethics. It’s about providing a market for exchange, without fear of being lied to, or worry about your agents[0] not acting in your interests. If you’re looking for equity or want to solve problems with corporations, you need to do it somewhere else.
[0] https://en.wikipedia.org/wiki/Principal–agent_problem https://en.wikipedia.org/wiki/Principal–agent_problem
- the_other 10y agoYou wrote this: > but about the purpose of regulation - it’s rarely about ‘ethics’. And then: > ... SEC enforcements, most of them are about fraud or about a breach of duty. Fraud - you’re not allowed to lie, that is pretty self explanatory. Breach of duty - someone else places trust in you to act in their best interests, and you violate that trust. Fraud and duty identify ways of operating with other people, in other words "ethics". I'd argue laws codify community agreed ethics or create a common language for debating these agreements. I think the specific argument would be better framed in terms of the standards or levels of ethics being applied, rather trying to hide a weak application of ethics behind a poorly defined role for the scope of law.
- lallysingh 10y agoI interpreted that to mean that ethics is a much larger problem to solve than just avoiding fraud or breach of duty. Which is a fair argument - the law doesn't (and shouldn't) require you to be a good person, just not hurt others.
- rayiner 10y agoPreventing fraud and breach of duty are about enforcing ethics in a very narrow sense. In a broader sense, it might be unethical for a PE firm to relocate manufacturing to China and lay off employees. But the SEC has no role (and should not) in enforcing that kind of ethics.
- kbenson 10y agoIt's not about it being morally or ethically bad in itself, it's about whether a market can function efficiently (or at all!) when you can't trust the other person to follow through on simple things. There are plenty of ethically and morally abhorrent practices that are perfectly legal and allowed.