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From the point of view of maintaining a just society, the big problem with allowing things like this is inconsistency in enforcement. Either you level the playi

From the point of view of maintaining a just society, the big problem with allowing things like this is inconsistency in enforcement. Either you level the playing field with respect to informational advantages across the board, and you prosecute bad actors with impunity, thus making it unattractive to bad actors, leaving only good-faith actors participating. Or you make it a caveat-emptor market, where no actor has any guarantee of a fair trade, leaving everyone to question any trade they want to participate in. This will drive out all the good-faith actors that know the game is rigged and not in their favor and it will leave only actors who are trading on the idea that they think that the fool at the table is not themselves. Personally, I'd be very curious to see two parallel markets for securities: one that is completely unregulated where anything goes and one where any bad actor is prosecuted to the fullest extent of the law, including multi-year jail sentences and fines that are many multiples of past ill-gotten gains. This would leave every actor with the choice of participating in the market they want to participate in, including both investors and companies. Companies could choose to list their securities on one just one of those two exchanges or both, and investors could invest only in companies on one exchange or on both exchanges. The problem with the status quo is that the only actor who knows what exchange they are playing in is is the bad actor. The good actor often will not know that his counterparty is acting in good faith or is corrupting the system until after losses are suffered. Creating a market for markets, where you can choose between unregulated and regulated markets, allows actors to choose which system they prefer to participate in and leaves regulators free to actually enforce the regulations without being soft for fear of what it may do to the market itself, which is exactly what happened in the 2008 crisis. Regulators were scared shitless of really prosecuting bad actors for fear of plunging the world further into a recession.

javert 13y ago
Sounds good to me. The regulators will never allow it, though. It decreases their own power. They would call the unregulated markets a danger to the economy as a whole. (Ironic, isn't it? Since the "Great Recession" was caused by government, as well as the fact that we're still in a slump and will be until there is major political change.) The business of the SEC is to nanny rich adults, and nobody wants that job because they just care so much about those rich adults and truly want to force them to do the best things for themselves. As if forcing people to be good were even possible.
- dragonwriter 13y ago
  > the "Great Recession" was caused by government This is true only in that it was a direct consequence of deregulation that removed regulations designed to protect against a repeat of the Great Depression.

javert 13y ago

Sounds good to me. The regulators will never allow it, though. It decreases their own power. They would call the unregulated markets a danger to the economy as a whole. (Ironic, isn't it? Since the "Great Recession" was caused by government, as well as the fact that we're still in a slump and will be until there is major political change.) The business of the SEC is to nanny rich adults, and nobody wants that job because they just care so much about those rich adults and truly want to force them to do the best things for themselves. As if forcing people to be good were even possible.

dragonwriter 13y ago
> the "Great Recession" was caused by government This is true only in that it was a direct consequence of deregulation that removed regulations designed to protect against a repeat of the Great Depression.