Of course. We don't restrict the rights of the entire population to engage in voluntary interactions to preempt crime. We punish actual criminals to deter other would-be criminals, and leave everyone else to be free.
We don't require a publishing license because someone might use their right to free speech to libel someone else. We punish the libeler.
You realize that's not in the slightest bit true, don't you?
For example: Under contract law, there are certain rights that _you are legally not permitted to give away_. You can't actually sell yourself into slavery. You can't contractually disclaim gross negligence on your part. You can't have a contract that unilaterally benefits one party without consideration provided for the other. You can't accept a contract while intoxicated. You can't contractually agree to something that is a crime. ... the list goes on.
>You realize that's not in the slightest bit true, don't you?
What isn't true?
>For example: Under contract law, there are certain rights that _you are legally not permitted to give away_. You can't actually sell yourself into slavery.
A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defending here, which is a federal agency prosecuting individuals because they entered into some investment transaction without 'permission' from said regulatory agency.
> Of course. We don't restrict the rights of the entire population to engage in voluntary interactions to preempt crime.
I gave one example of many of the ways in which we absolutely do restrict the rights of the entire population to engage in voluntary interactions to preempt crime. We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively. As another example, we place restrictions on freedom of assembly -- voluntary interactions of groups of people -- based upon location and time of day because of the potential to create a disturbance, not the fact of having done so. And so on.
>I gave one example of many of the ways in which we absolutely do restrict the rights of the entire population to engage in voluntary interactions to preempt crime.
Yes I can see how you interpreted my comment that way. I meant we should not do that. In writing it, I was thinking along the lines of "you don't do [some unethical thing]" as a normative statement, not a description of what you don't do. The wording I chose doesn't make that at all clear, so your interpretation is understandable.
>We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively.
Like I said: A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defending here, which is a federal agency prosecuting individuals because they entered into some investment transaction without 'permission' from said regulatory agency.
Extreme libertarian views like yours have been rejected almost everywhere in the world. Maybe it's your opinion that allowing scammers to manipulate people is their basic right, but no one seems to share that sentiment.
Can't we simply punish the scammers, so as to warn others not to do the same? Generally speaking the regulation of the markets doesn't do all that much to protect individual investors. We just (sometimes, rarely) punish people after the fact. How many regular investors got screwed in 2008 and how many people went to jail?
"Punish criminals to prevent crime" is ultimately a fear-based strategy. For it to work, your potential criminals have to be frightened enough of the consequences of getting caught that the rewards do not outweigh the risk. It works well when the rewards are small, the probability of getting caught and punished is high, and the punishment is considered sufficiently odious.
You can begin to outline the conditions under which it breaks down: if the probability of getting caught and punished is small, if the rewards are high, or if the punishments are insufficiently threatening. Investment scams and other organized crime is a great example. The rewards are high - millions and millions of dollars. The chance of getting caught are low - a lot of what you do will appear legitimate, and a lot of what you are doing wrong rests on intent. You have to separate the self-deluded from the con men. And if you do get caught, your punishment might be relatively light (a few years in prison as a nonviolent offender), and if you are clever with how you hide the money, you might get to keep most of what you steal.
In some sense, the SEC is like cops patrolling where they are most worried about crime. You are changing the math by increasing the risk while decreasing the reward, which dissuades more criminals than ineffectually punishing a few while others prosper.
You're not even representing my view accurately. My view is that scammers should be punished, not the entirety of the population on the premise of preempting crime.
Rejecting a person's argument on the grounds that it's "extreme [insert label]" that "everyone rejects" is not constructive.
A couple examples: restricting them from soliciting investment without going through a $6 million compliance process for gaining approval to do an IPO. Restricting people from engaging in anonymous securities transactions with each other.
This is not a sentiment that can be proven wrong. It's a statement on basic rights.
And history shows that attempts to control complex industries with cookie cutter rules imposed from on top create the most dysfunctional industries in the economy, namely finance, pharmaceuticals, and healthcare.
Much like vaccines, meat inspection, and building codes, we've forgotten what it's like without them. We (Great Britain and USA) have been making securities regulations for 400 years.
The important lesson of securities regulation is that it helps the "good" guys more than it hurts the bad guys.
When I buy 100 shares of PZZA, I want to be reasonably confident that Papa Johns is cooking pizza and not the books. That confidence, or trust in the system, reduces friction that helps both buyers and sellers of securities.
A case for mandatory vaccination can be made, as it addresses public health threats, which are negative externalities. Meat inspection cannot. You can choose to eat only government certified meat and not suffer any ill effects from non-certified meat being available on the market.
Just because you want products certified by a government body to be safe doesn't mean you have a right to force others to live according to your standards.
> A case for mandatory vaccination can be made, as it addresses public health threats, which are negative externalities. Meat inspection cannot.
Meat inspection deals with a different failure of ideal markets than direct externalities, to wit, information asymmetry. However,the market inefficiency produced by information assymetry itself has negative externalities, so it's not unrelated.
People, left to their own devices, manage complexity effectively.
For example, most people don't understand how microprocessors work. But this is addressed through an effective and spontaneous process of delegating responsibility.
The government can play a positive role in helping manage this complexity, by providing certification programs, and freely available public information. What it should not do is constrain the actions of individuals, by mandating that a particular standard be used.
There is a massive negative externality for allowing scammers to run free in a situation where the upfront ability to assess fitness-of-goods is lacking.
The cost of dishonesty, therefore, lies not only in
the amount by which the purchaser is cheated; the
cost also must include the loss incurred from
driving legitimate business out of existence.
That's not an externality. An honest business is not entitled to any customer's business. If the customer wants to squander their money away at the casino, leaving them with no money to spend at the honest business, they have that right. It's their money, and they are not obligated to spend it at the honest business.
And in any case, the market for lemons is a theoretical exercise. It does not actually happen in real markets, because there are various market mechanisms that emerge to address it.
Of course. Anyone that scams should be punished. That does not require introducing a license for engaging in some consensual activity, and prosecuting anyone that does this activity without the license. This fearful attitude that will sacrifice the liberty for the promise of security will leave you with neither.