lambdapie

Inefficient compared to what? The choice is not between "publicize the info" and "let insiders trade", its between insider trading and no insider trading, and the information stays private.

You are implying that I don't realize that insider trading reveals extra information. But I have clearly stated in almost every post that insider trading would reveal additional information. There's no point continuing this discussion if I am responding to what you say but you're ignoring what I say. I'd ask you to keep an open mind and not assume that other people just need to be enlightened via terse replies.

Maybe some do, but there is a distinction between intentionally making people feel bad about themselves, and advertisements that simply holding up some look or personality as attractive/cool. Some people might interpret the latter as an attempt to make people feel bad about themselves, but I respectfully disagree.

When it comes to intentionally making people feel bad about themselves, I don't see much of this, since negative advertising is not very popular. Most advertising I see is motivational/aspirational, i.e. showing people an image that people believe they can attain.

I know plenty of attractive/cool/popular people, who get hundreds of likes, and don't claim to fit this victim narrative.

When high level behavior that can be described by simple equations emerges from low level laws, we call it physics. When it doesn't, we call it chemistry, biology, geology, etc. (EDIT: how could I forget econoimics :-))

There is only one thing which is more unreasonable than the unreasonable effectiveness of mathematics in physics, and this is the unreasonable ineffectiveness of mathematics in biology.

— Israel Gelfand

Some people are more attractive, cooler, more interesting, than others. It's not some evil plot by the corporations to make us feel bad about ourselves. These people are really out there. The left wing narrative that all bad things that happen to us stem from some structural power imbalance in our society, is blind to this fact of nature. So they need strange stories like this to explain away the apparent differences in how popular and cool people are.

Ok that's reasonable. I agree that in theory this argument makes sense. In practice I think the arguments that insider trading is inefficient are compelling enough (see https://news.ycombinator.com/item?id=10487779) that it's not worth pursuing this course.

Why is free market in scare quotes? And why "so-called"?

I'm not a big fan of professional bodies or mandatory qualifications. I think these tend towards rent seeking, with these bodies existing mainly to justify their own existence. In the case of software engineering, I'm especially concerned about academics with little real world experience using valid security and privacy issues as an excuse to force their own view of how software engineering should be done on everyone else.

That said, my employer has standards for security and privacy that go well beyond industry norms, so if I was working elsewhere maybe I would feel the need for better standards across the industry.

In my experience, software engineers tend to be conscientious. Caring about the big picture is a big part of open source, hacker and nerd culture. But knowledge is hard to come by. I learnt from the experts, but I doubt most engineers would be able to build a simple CRUD app form scratch without major security holes.

It would be nice to see some best practices around security and privacy emerge without forcing everyone to write Ada or Coq or completely change their approach to writing software.

Economically putting up barriers for the sake of it (aside from valid issues of qualification required for the public good) is bad policy. It's good for the people who can get the qualification, but bad for everyone else. When you average it out, it's worse for society as a whole (this is roughly implied by the Welfare Theorem's of economics).

Your argument that other professions do it is invalid. In fact the government should be more proactive in ensuring that professions only impose valid conditions on employment, and don't add spurious requirements in order to exclude people from the profession, in order to, as you say "protect [their] careers and incomes".

No, but I'd still recommend looking into content security policy (CSP), iframes, and the sandboxed attribute. Even though you seem to have developed your own notion of what isolation/security should look like, the HTML spec authors have thought very carefully about this and CSP has its own internal logic. Even if you still prefer your model, at least you will be able to explain how your model differs from CSP and why it's better.

WebAssembly binary will be syntactically (almost) identical to asm.js, which is a subset of JS. So all are equally transparent/opaque.

You can run untrusted code in an iframe (possibly with the sandbox attribute set). I think this would be what you're looking for.

Some other commenters have correctly pointed out that (1) my comment doesn't address whether the liquidity costs outweigh the benefits of extra information, and (2) why insider is different to outsiders doing research.

I do implicitly address these issues in my comment, when I compare public information with insider information. Noise traders are the goose that lays the golden eggs[0]. They irrationally trade randomly in a stock, masking the trades of informed traders. They make a trading loss on average, and these losses provide the profits of informed traders, which gives those traders the incentive for price discovery.

Although the simplest noise trader models can't capture this (as all information takes the same form) [1], public information is much less costly to the noise traders. So for example, noise traders lose a lot more if a company's earnings are leaked to a few individuals, than if these earnings are made public, because in the latter case the market maker can distinguish information from the the noise trader's trades.

So (and again, a model is really needed to confirm this) public information is cheaper in terms of its impact on liquidity, than insider information. One thing I'm not certain of is whether many insiders competing to trade on the same information would be as good as public information.

[0] See the seminal work of Kyle (1985), http://www.jstor.org/stable/1913210 and also the review article http://scholar.harvard.edu/shleifer/files/noise_trader_appro...

[1] Giving the market maker access to a meaningful information set would resolve this issue.

I didn't understand that article, probably because I'm unfamiliar with the author's other works. Is he proposing that a company be allowed to set rules regarding insider trading during the IPO? If so, I agree that in theory this would be efficient (or in the author's terminology, it would be acceptable from a consequentialist POV). But this is orthogonal to the issue. The people who want to ban insider trading would most argue that insider trading is inefficient, and therefore companies would choose not to issue stocks like this. And if they are right, we would still be in the same situation, it's just that instead of people violating a rule created by the government in order to maximize utility, they would be violating a contract created by the company in order to maximize the company's IPO price (which also happens to maximize utility).

Am I missing anything else? Did the author make a specific argument for why insider trading would prove to be efficient (i.e. why the effect on liquidity outweighed the increased information revelation?) I doubt it since the author's language suggest someone familiar with law and philosophy but not so much finance and econ.

You are right that "harming" someone is not a sufficient reason to ban an action. And as others have pointed out, researching a company carefully causes the same kind of "harm", and certainly shouldn't be banned. My intention was to refute people (like in the article I linked) who argue that all market participants benefit from and insider trader's transaction.

Once we see that this isn't the case, it becomes necessary to do a cost benefit analysis to determine the true effect of allowing insider trading. But as you say, this should be done on a utilitarian basis, not on some imagined "rights" of the counterparty to insider trading. (EDIT: I don't mean to imply that economic analysis from a utilitarian POV can't clarify what we should think of as people's rights, but rather that as you said, causing someone else to have a negative outcome does not prove that someone's rights are being violated)

I wouldn't say that I ignored the benefit or a more accurate price, since I explicitly mentioned this benefit twice. But I wasn't clear enough of the implications. To clarify: insider trading has both benefits and costs, and there is no simple argument that shows which is greater. I was primarily addressing people (like in the article I referenced) who say that insider trading is clearly and unambiguously good.

What does "if he's going to stray from the South Asian beat" refer to?

Insider trading does harm people, and does reduce liquidity. Many people who understand classical economics get this wrong [0], because financial markets are a very degenerate kind of market from the point of view of classical economics.

The fundamental error in all cases is to conceptualize insider trading as buying from someone who would have bought/sold anyway. This is precisely failing to think at the margin. It is as erroneous as saying "eating meat is ok because those cows would have been killed anyway". Put more technically, when you buy a share, you do so by shifting up the demand curve a tiny bit, with your demand, which in turn shifts the price slightly up and causes a seller to sell, who would not otherwise have. Market microstructure, together with the fact that supply/demand curves really form a single curve, can obscure this fundamental economic fact.

Given this, insider trading does cause harm to some people. And how could it not? If a person can make money from insider trading, then, to first order, someone else must lose money. There are some externalities from information revelation, but only a tiny fraction of these benefits go to the marginal buyer/seller who lost out because of insider trading.

How does this compare to public releases of information? Well unlike insider trading, public information can shift prices without any transactions occurring (or in practice, very few). This is because while insider trading only moves the price by the mechanism of moving the supply/demand curve, while public information is revealed to all traders at once.

So while insider trading does reveal information (which is a good thing) it does so in a way that reduces liquidity, because people don't want to be on the wrong side of insider trading.

I'll admit that the above narrative isn't watertight. I think it's the best analysis that can be done verbally. The only models that allow a meaningful discussion of welfare in the context of financial markets are so called noise-trader models, which explicitly model the (irrational) reasons why most people trade. The whole field is vastly complicated by the fact that theory predicts almost no trade in stocks if people were completely rational.

[0] http://www.marketwatch.com/story/why-insider-trading-should-...

You use the term "monetary velocity" as if it was some term of trade, but I have a PhD in economics and I've never seen it used this way. Are you referring to a specific school of thought or author when you use this term?

Redistributing money from people who are not going to spend it to people who will (or vice versa) is not zero sum.

This is the essence of (neo-)Keynsianism but it only applies during recessions. In the long run, redistributing money to people who are going to spend it has zero effect.

Of course redistribution has a positive effect on welfare as defined by the sum of total utility, but it doesn't increase, for example, GDP.

I don't understand your point. Can you clarify?

For reference, when I speak of "marginal effective tax rate" I mean the marginal effective tax rate after including (1) welfare payments to you, (2) the tax you pay and (3) any basic income you receive, although (3) does not directly contribute to the marginal effective tax rate, since it is zero.

UBI might be a great policy, but your argument makes no sense from an accounting point of view.

Every kind of redistribution must sum to zero across all people. Basic income is no different in this regard. So to say that basic income is different because the right and poor both receive it is pure sophistry.

Basic income is just classical economics rebranded, and basic income is not drastically different from welfare systems that are simple, rule based, and have minimal compliance monitoring, for example Australia's.

Most of the arguments for basic income apply just as well to a welfare system like Australia's. The ones that to not are the worst ones. E.g. it's said that basic income avoids disincentivizing work. And yet as an accounting identity, all redistribution schemes must disincentive work for some people. Welfare systems place a greater disincentive to work on the poorest, which to me makes sense as many of these people have a lower intrinsic incentive to work in the first place. In any case, the lower marginal effective tax rate for the poor under basic income, is only possible because of a higher marginal effective tax rate for the middle class.

Do you think this also implies that men have more incentive to become successful in their careers, if they choose the socially acceptable route? And if so, do you think this might partly explain why we see more men in high prestige/pay professions (e.g. tech)?

Unfortunately I don't have time to go into this more, but I also appreciate the tone of your reply.

A very brief summary of my position is that there is a set of "right" laws, and that is the free market with redistribution through taxation. This is not an arbitrary choice, but one justified by classical economics. Anything good for the poor that you would want to accomplish would be better done by redistribution than by unions. Except, of course, pleasing the members of a particular union, who might stand to benefit at the expense of other workers if they could increase their power.

Outsourcing a great example of this. It is actually good for people in the countries where work is outsourced to. They get more for their labor than they would otherwise, even if they get less than what a Western worker makes. If they showed "solidarity" and demanded Western wages, they would get nothing.

Can someone qualified comment on whether group selection is taken seriously among biologists now? I haven't followed the debate much but Dawkins at least has argued that group selection acts too slowly compared to individual selection to be an important force in evolution.

In either case I don't think it has much bearing on Amazon. In both cases evolution is just a metaphor/scienciness.

Parable of the Polygons[0] is another example of mathiness, where math is used to dress up a political message. The basic idea is simple and intuitive: people like diversity, but also don't like to be in the minority (e.g. they would like a 60/40 ratio of people of the same race to them vs people of different races). But when everyone applies this logic then you get completely homogenous regions.

The mathiness comes through the fact that the simulation is nothing like real life (e.g.people care about far more than their immediate neighbors) and yet the claim is that tweaking the parameters of this model gives some intuition about the quantitative real life effect.

[0] http://ncase.me/polygons/

This is what I was referring to: http://www.realclearmarkets.com/articles/2011/08/22/why_do_w...

Can you give any similar examples of violence against unions, say within the last 20 years and in the US?

Fair point, I thought you were saying before that critiques of union workers earning too much were really driven by this white vs blue collar issue, while now I see that what you were really saying is that the OP wasn't necessarily even talking about unions, just complaining about rich blue collar workers.

In fact, before I saw the rest of the thread I was going to ask for clarification about the original oil-field worker point.

I agree that manual work can have a high market rate even without unions, e.g. if it physically requires a very fit man to do the job, in addition to the right personality, dexterity, intelligence and reliability.

Oops, you're right, I overlooked that. So it would be 520 million after 100 years (22 million after accounting for inflation).

Just checked: the figure I gave was not inflation adjusted. In terms of real dollars, after 100 years your investment would be worth a measly $365,000.