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."

Taking Judicial Matters Seriously | Roger Pilon | Cato Institute: Commentary

Taking Judicial Matters Seriously | Roger Pilon | Cato Institute: Commentary: "Justices are supposed to apply the law to cases before them — to call balls and strikes impartially, as then-Judge Roberts put it — not decide cases according to liberal, conservative or any other political values. Yet ever since liberals viciously attacked Robert Bork in 1987, that's the way we've judged nominees.

The reason is simple: In large measure, we no longer live under the Constitution. Instead, after turn-of-the-century Progressives came to power during the New Deal, the Court began reading the document not as a limit on government but as a font of endless government powers and programs.

But those programs would eventually have to be adjudicated in the courts, which meant judges would ultimately rule over vast areas of life that the Constitution had left either to the political branches or to private ordering under the common law. And since much of that adjudication would require judges to make not legal but value judgments, it would be important to know just what values they would bring to the court. Thus has politics trumped law, and a Constitution of limited government been turned on its head."

Russ Feingold: In the News - Press Releases

Russ Feingold: In the News - Press Releases: "The American people deserve to know how trillions of their tax dollars have been used.� While millions of Americans continue to look for jobs, the Fed has been doling out huge sums of money to corporations and financial institutions, some of which may have contributed to the financial crisis. Senator Sanders’ amendment will mean more transparency for the Federal Reserve, so the public will have a better idea of how it is spending taxpayer dollars. Unfortunately, the defeat of the Vitter amendment means American taxpayers will still not have a complete picture of how one of the most powerful government agencies makes policy and spends their tax dollars."

Health Bill Floods Business in Paper | Michael D. Tanner | Cato Institute: Commentary

Health Bill Floods Business in Paper | Michael D. Tanner | Cato Institute: Commentary: "Section 9006(b)(1) — come on, I know you've read it — which requires that businesses provide a 1099 form to every vendor with whom they do more than $600 worth of business over the course of a year. A 1099 is similar to a W-2 form, but for income other than wages. Businesses will also have to file a copy of the form with the IRS."

"To pay your rent, you have to issue a 1099. Buy a new set of tools, issue another one. Software, office supplies, airline tickets, gas for your truck, they all could require filing a 1099 — and entail a huge new administrative burden.

The burden falls on the other partner in the transaction too. The business providing the goods and services would have to collect 1099s from all its customers and integrate them with the rest of its tax records."

Do Capitalists Produce Nothing? - D.W. MacKenzie - Mises Daily

Do Capitalists Produce Nothing? - D.W. MacKenzie - Mises Daily: "Investors do not produce any actual physical product; they make the planning of production more rational. The efforts of 'workers who produce real goods' are wasted if production plans are defective. Matthews does not see how successful capitalists can shift production toward goods that consumers want most urgently. Profits derive from the sale of goods that garner the highest revenues from consumers over costs. Few people can predict market trends. Investors can earn or lose billions because their decisions determine whether the work of millions of ordinary people is productive or a waste of time"

The Cairo Garbage Calamity - Anders Mikkelsen - Mises Daily

The Cairo Garbage Calamity - Anders Mikkelsen - Mises Daily: "The documentary shows there was a functioning system of garbage collection that had co-evolved with the norms of Egyptian society. The government then stepped in to 'solve the problem.' It forced everyone to pay money to companies using western techniques that hadn't been adapted to the realities of Egyptian society. The companies couldn't cope with the quantity of garbage or managing Egyptian employees. The western-style companies apparently didn't recycle as intensively and couldn't provide low-cost daily garbage pickup like the garbage village system.

The garbage companies and government would also try to persuade people to change their habits to use the bin system that was convenient for companies, but less convenient than the old system. The companies were also unable to figure out how to efficiently collect the garbage that was lying around in easy-to-access piles on the side of the streets.

At the end of the film we learn that the government then killed all the pigs in garbage villages. The pigs were the key component for processing the vast quantities of organic garbage Cairo produces year round. As one would expect, this has vastly increased the amount of rotting garbage on the streets. The situation was so bad that even New York Times articles on the subject are clear that this is an example of government failure."

Zoning Laws Destroy Communities - Troy Camplin - Mises Daily

Zoning Laws Destroy Communities - Troy Camplin - Mises Daily: "With zoning laws, commercial, industrial, and residential areas are separated from each other. The result is blocks of houses, industrial parks, and strips of stores and restaurants. People have to drive miles to go to the store, to work, or even to the park. It is rare to go to the store and see anyone you know.

But imagine a neighborhood without zoning laws. It would then be possible to have, say, a small grocery store on the corner where you could buy fresh fruits and vegetables, bread, and meat. That store would likely be within walking distance, be owned by one of your neighbors, and be designed to serve the neighborhood."

"Zoning laws force you to have your business only in certain locations. This drives up the price of property for businesses, making it harder to start a new business. If I wanted to sell cookies (and I do make some good cookies), I would have to either buy some expensive commercial property or rent a place in a shopping center, get the proper permits and licenses (another barrier to entry into the marketplace), buy stoves and mixers, etc."

"With as many barriers to starting a new business as there are, it's surprising how many do get started. It's typically done by going into debt. This makes it even more difficult for the poor to get out of their poverty. Barred from starting a business at home by zoning and other prohibitory laws, they also cannot get loans due to their poverty and bad credit. Those who do manage to figure out how to make money spend the money frivolously for fear that if they save or invest the money, the government will punish them with fines and audits. Thus, these laws contribute to poor spending habits among the poor. The government can take away your property, but they can never take away the party you threw and had a good time at."

"When our jobs and stores are several miles away, we have to drive." "All that time driving creates large amounts of air pollution, contributing to lung problems and stress."

Innovations Aren't the Problem | Arnold Kling | Cato Institute: Commentary

Innovations Aren't the Problem | Arnold Kling | Cato Institute: Commentary: "First, many of the innovations were profitable not because they added social value but because they exploited regulatory anomalies. Second, the companies that lost money on these innovations were not allowed to fall by the wayside — instead, they were bailed out.

Many pundits claim that we allowed the financial system to be self-regulating during the euphoria. This is emphatically not the case. Without the anomalies created by the Basel capital regulations, the financial system would not have rewarded these innovations."