By your logic, insider trading would be just fine.
For a market to function properly, information pertinent to traded value has to flow freely. The more you stifle that, the more rigged the market. Essentially, you sustain a monopoly that way.
Of course, people in possession of such "insider information" believe themselves in the right to profit from it. But that perspective is obviously biased and reveals a fundamental conflict between public good and private ownership. From the public perspective, the market works best when monopolies are dissolved quickly.
Land is a tough one though because the information that person x is buying it to amalgamate the land for some purpose lets the remaining land holders abuse the market power of being the hold outs for further gain. The problem is the piecemeal nature of accumulating the land for a project means you have market power abuse issues on both sides and secrecy alleviates some of that from the buyer side.
In the US (but not necessarily other jurisdictions), insider trading laws are not there to protect the broader market, but to protect other shareholders.
There is no assumption that you can’t trade on knowledge unavailable to the rest of the market just not information that should be available to other shareholders but isn’t.
It’s not about a working market it’s about preventing you from stealing from other people.
Lots of economists think insider trading should be legal, precisely because it would make the market more transparent, not less.
Lots of economists are clearly wrong, as mutually excluding statements cannot be simultaneously true.
To find out which side is which, you can employ simple logic.
If you sustain a profitable information imbalance, you prevent the market from reaching a more efficient state. You steal from everybody else that way. And incur opportunity costs that will dwarf any profits made. Not necessarily on a short-term personal level, certainly on a societal one in the long run.
People have surprising difficulties understanding, they are that society.
> Lots of economists are clearly wrong, as mutually excluding statements cannot be simultaneously true. To find out which side is which, you can employ simple logic
The world isn't black and white, and nearly zero things as complex as pros and cons of allowing insider trading can be reduced to naive boolean logic.
It is a fact for a long time a lot of economists, perhaps even a majority, are for insider trading because it provides signal to markets and pricing quicker than only allowing investors to discover problems on a quarterly clock-tick, which results in a lot more damage from asset floodgates instead of smoother transitions.
Ever read any published paper on the topic? Use Google scholar, you'll find useful knowledge there.
The whole premise of price discovery is that participants in the market profit from information imbalances. The profit motive is the incentive for people to expend effort to generate and then, through price signals, disseminate information.
No it isn't. In neoclassical economics there are no information imbalances. Everyone has access to perfect information and yet prices are formed and updated anyway.
If it were, shell games would be great as well? One like the other is simply fraud. You exploit others' lack of insight.
Doing so is unethical due to the implications it would have on a societal level if it were condoned. In particular, you likely imagine yourself regularly ending up on the better end of the bargain. You are wildly mistaken.
Why should Disney be price gouged in that circumstance?
Because they have money and they're trying to buy out the whole market. This reads like a billionaire sobbing about not having access to a senior discount at the thrift store.
That place was absolutely nothing before Disney developed it. The land was worth exactly what Disney paid for it. And there was no guarantee that it would turn into what it is now. We reward business for taking risks with their money. Disney took an immense amount of it, an absolutely outlandish amount of it. They poured money into that swamp. All on the bet that people would pay through the nose to see Mickey.
I'm not complaining about Disney making money off their investment. I'm saying that if a large company wants to make such an investment, it shouldn't dissemble by hiding behind front companies.
Sure they would. Fair isn't some objective measure, it's what the market decides. If multiple market participants see that one player is trying to corner the market, raising their price is fair. It can equally be argued that those swampland owners bought the land in the first place because they had a vision that it could one day host a unique commercial enterprise.
If your business strategy depends on deceiving people, what does that make you?
> It can equally be argued that those swampland owners bought the land in the first place because they had a vision that it could one day host a unique commercial enterprise.
Heh. On swampland? The amount of money you need to do anything with it is just huge. They bought the land for exactly what others were willing to sell it for. Nothing more, nothing less. If they thought it was worth more, they would have held out for more.
I just have to point out Disney was paying top dollar for swamp land. The whole deal worked because Florida and Disney invented a public private partnership based on Reedy Creek.
I’m not 100% sure but I believe the model is what birthed HOA and Gated communities.
Permitting certain freedoms made swamp land more valuable.
If a company, not just Disney, is buying large swaths of land specifically to develop it, that makes the land more valuable.
If a company is going to great lengths to trick sellers into thinking it’s not being bought up for development, that’s deceit and a de facto admission you know the land is more valuable because of the comps you are engaging in
Price gouged? Don't you mean, fair market value? Price is always contingent based on the information shared between the buyer and seller.
No one would call selling a rare misprint 1978 US Quarter to a collector for $45,000 instead of 25 cents price gouging. (Maybe you would, I don't know what the going rate is. But this is literally an eBay auction price from a google search just now, so let's just say that it's not an exorbitant price.)
And shouldn't you support having as much information be available as possible, or do you want people to play games and try to hide info to raise prices on people?
You've got a parcel of land. You are farming on it or renting it or doing something which generates income. Because of that, you discount your future cashflows and determine it is worth X. Disney comes along and estimates that with what they are going to do the land is worth Y, which is significantly higher than X.
If the land trades for any value between X and Y, you are both made better off by the trade.
There is nothing wrong with you trying to capture as much of Y-X as you can, similarly there is nothing wrong with Disney trying to capture as much as they can. Neither of you are "owed" the money and there is no such thing as an objectively "fair" price.
Caveat emptor is a pretty terrible way to run a society. I'd argue if you deliberately misrepresent something as basic as who you are in a transaction in order to deceive your counterparty, that should be fraud.
If the increase in value of the sellers' land is wholly due to Disney's development of its land nearby, the sellers would simply be benefiting from a positive externality created by Disney. Thus it would be Disney being shortchanged if it was unable to capture the value of that externality.
From an efficiency standpoint it is also preferable for the developer to capture the value, as naturally that increases incentives for development.
Is it okay for the buyer to lie, but not okay for the seller to ask for the truth and adjust their price accordingly? This 'anything goes' market ideology is the same framework that leads us to deceptive subscription systems, anti patterns etc. Deceiving people to make a buck is shitty behavior.
I’m pretty shocked by the whole “profiting from a deceptive transaction is ok if the counterparty believes you” attitude here. I guess I expected more out of HN. I feel like I’d have to keep my hand on my wallet and my eyes over my shoulder if I ever visited any of these guys’ businesses.
HN has for a long time (longer than I've been here) had a strong libertarian streak, and like all libertarians they always seem to believe they're the ones who would come out on top in anarchy despite all historical evidence to the contrary.
> If the increase in value of the sellers' land is wholly due to Disney's development of its land nearby, the sellers would simply be benefiting from a positive externality created by Disney
Isn't that true of any price increase due to increased demand? It seems like you're saying a seller shouldn't be allowed to raise their prices as demand increases, because they'd simply be benefiting from a positive externality created by the buyer.
A: XYZ Shell Corp (no connection to who is actually effectively buying and coming into control of this land)?
Obviously your argument will be "it's not false that XYZ Shell Corp is buying it," and sure, but it's obviously misleading in a way that affects the transaction, as it is specifically designed to do.
Fair prices when a buyer and seller agreed to as long as no one's lying. The fair price has nothing to do with how much money the buyer or seller make more lose.
For a market to function properly, information pertinent to traded value has to flow freely. The more you stifle that, the more rigged the market. Essentially, you sustain a monopoly that way.
Of course, people in possession of such "insider information" believe themselves in the right to profit from it. But that perspective is obviously biased and reveals a fundamental conflict between public good and private ownership. From the public perspective, the market works best when monopolies are dissolved quickly.