What's Wrong About Insider Trading? | Doug Bandow | Cato Institute: Commentary

What's Wrong About Insider Trading? | Doug Bandow | Cato Institute: Commentary: "The law bizarrely affects only one-half of the trading equation. People make money by not trading as well as trading. But it is virtually impossible to prove that someone chose not to buy or sell stock because of a legally improper tip. So hundreds, maybe thousands, of people get away with insider 'not trading' every year. Yet it isn't obvious that the operation of the financial markets is impaired in any way.

If there is a problem in the market about insider trading, it's that the market is biased by imposing criminal sanctions on only one side of the transaction. Inside information should lead roughly equal numbers of people to buy, sell and do nothing. The criminal law encourages people to do nothing. Whatever the impact, it isn't likely to be more efficient markets."

"The distinction between public and non-public information is legally decisive but economically unimportant. Perversely, the insider-trading laws seek to prevent people from trading on the most accurate and up-to-date information. The law seeks to force everyone to make today's decisions based on yesterday's data. It's a genuinely stupid thing to do."

"The market is suffused with this sort of unfairness. Professional investors make money because of asymmetries of information. Someone working on Wall Street is almost always going to be better versed on financial issues than a casual investor. People make careers picking up hints and suggestions to use in trading."

"Acting on new information moves the market toward the right or 'honest' price, as economist Donald J. Boudreaux puts it. Prosecuting people for insider trading slows the price-adjustment process. That means the price shock when the relevant news hits the market will be more abrupt and the losses will be greater for some people."

Gulf Oil Spill: Same Old Arguments | Peter Van Doren and Jerry Taylor | Cato Institute: Commentary

Gulf Oil Spill: Same Old Arguments | Peter Van Doren and Jerry Taylor | Cato Institute: Commentary: "First, we don't know for sure exactly how this happened or exactly who was at fault and why. Until we do, it's impossible to say exactly what public regulators could do to reduce risk.

Second, how much to spend to reduce risk is unclear. There are obviously diminishing returns on expenditures, and those expenditures will increase production costs and, thus, consumer prices. Nevertheless, producers have every incentive to spend whatever makes economic sense. BP has lost 19% of its market value in the stock market — a bit more than $36 billion — from the April 20 explosion until May 11, so BP shareholders are taking a big hit financially. Oil companies do themselves no economic favors by underinvesting in safety.

Third, the implicit political demand for zero environmental risk is unrealistic. As long as human beings are involved in drilling (or coal mining or petrochemical refining or nuclear power operations or oil transport or natural gas delivery), accidents will happen."

Hello Supply Side | Alan Reynolds | Cato Institute: Commentary

Hello Supply Side | Alan Reynolds | Cato Institute: Commentary: "Looked at from the proper perspective, we haven't really had any tax cuts to speak of — we've had tax deferrals."