[jongjong]

My position is that prediction markets are bad and harmful but so are all mainstream stock markets. They're all prediction markets. People collaborate to pump up the value of specific assets or contracts, leading to undesirable outcomes.

It would be dishonest to ban prediction markets without banning stock markets.

The best which can be done, under the current system, is to punish unfair information asymmetries, which is practically impossible to do reliably... And even if we could find a way to punish it reliably; what would happen is that most rich people would end up in jail. Information asymmetry is almost never fair and it's how people make big money these days.

I think the best solution is to create conditions to allow people to earn big money in other ways; ways which create value. If there were other ways to make big money besides unfair information asymmetry, then skilled people would find it easier to do that instead...

Unfortunately, skill/talent does not allow you to gain an information advantage; only social connections do. So the current system is really bad in terms of wasting specialized skills/talents... Current system takes talented people and re-orients them towards adversarial games of deception where they're just a number in a sea of increasingly desperate untalented people who are better at playing the deception game... And the talented folks eventually lose their talents through lack of practice; they're so focused on learning ways to trick people and algorithms, that their actual talents atrophy; by the time they become well known, if they ever do (most don't), they've become mediocre; corrupted by their participation in the process of trying to become relevant; their main talent always takes the back seat.

[Glyptodon]

I disagree with this - plenty of people treat stock as just wanting a share of profits/ownership and not as value speculation. That said, I do think we should be making rules that devalue speculation, perhaps turn-based trading since there's no particular benefit to the world from high frequency trading or value discovery happening in 5 milliseconds instead of 5 seconds, and making it so that being publicly traded requires not having controlling owners or preferential share classes.

Edit: and with prediction markets you don't own anything. Even with commodity futures you can end up having to take possession of cows or something.

[hahahaa]

You could ban stock market trading but the market itself is a very useful vehicle for investment and has democratized wealth and retirement planning to some extent.

How to ban trading? You could heavily addon tax profits from short term trading under 3 months at 90% say, tapering to zero as time increases maybe 2 years. With zero ability to offset any losses with other tax forms.

Shorts, options et. included unless it can be proven as part of a bigger trade or insurance but then apply to bigger trade.

This could also apply to market makers making that closer to a public service.

[jongjong]

I feel like democratizing wealth and retirement has become harmful.

Now we have a small number of extremely influential people who are essentially bribing and propagandizing the masses into voting them more money... Each win gives them even more money to buy even more votes at the next election.

Politicians change but the people behind them keep accumulating more wealth.

Democratization of wealth creates massive capital centralization which creates anti-competitive dynamics; the monetary playing field is itself inherently anti-competitive by design.

I often give the example of a skilled coffee shop owner having to compete with a coffee shop 'pet project' of a multimillionaire passive investor who is running their shop at a loss... The person without passive income cannot win no matter how much better they are.

Now extend this metaphor to every aspect of the economy. There will be two kinds of businesses remaining; monopolistic megacorps receiving government handouts and small businesses which would all be some millionaire shareholder's unprofitable pet project.

Also, the biggest shareholders of various companies are using their leverage to find anti-competitive synergies between companies in their portfolios and coercing the executives of certain companies into favoring specific suppliers and clients on that basis.

[hahahaa]

I think it is the lesser evil where the bigger evil is private trillionaire companies owned by families. Murdochs and asian conglomorates everywhere. No ownership by ordinary people. Or indirect opaque ownership via something closer to SPACs than an open market. I.e. pensions getting scammed.