To say the purpose of a market is to reveal insider information is how you say insider trading is a good thing without saying insider trading is a good thing.
replyThere's a ton of scholarly debate about it, and at least most of the early stuff was pretty earnest. But rather than the debate becoming more refined and nuanced over time it seems to have bifurcated along partisan (or partisan adjacent) lines like everything else, similar to the Keynesian/Misesian divide.
The proof that free markets are efficient (even in the narrow sense economists use this word) relies on an assumption of perfect information. This has been known at least since Akerlof.
replyThe Misesian folks are a lost cause, IMHO. They're hardcore rationalists, self-indulging in circular moral arguments from assumptions that don't apply in the real world.
That's what makes the insider trading argument so tantalizing--it's arguing that it helps move the market closer to perfect information. But, of course, the world is complicated and dynamic, and it tacitly depends on all kinds of assumptions and beliefs about the resulting costs and benefits. It would be nice if the debate shifted to pinning down those assumptions, quantifying them as best as possible, and then iteratively tweaking and adjusting regulatory models. But that's true of just about everything and probably too unrealistic an ask, especially at a time when one side is convinced markets are just a mechanism for unjust exploitation, and the other side is convinced regulation is what sustains inequity (to the extent inequity is something even worth caring about).
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