Thanks Chris for this post. I want to comment on the Weiss ratings segment.
I don't see the trouble with 'insider trading'. To be blunt, I think this is a common economic fallacy.
The anticipated response goes something like: 'But how can that be fair?!!!'.
A free market is nothing if it isn't a competition to see who is better informed.
In a free market, were we to have one right now(because we don't), it would only be a problem for Weiss to buy before everyone else if Weiss had contractually agreed not to. Which would be fraud.
Otherwise, if everyone expects Weiss to buy their own stock/tokens/coins before announcing good news, they a) would factor that in to their imminent investment, and b) should also know that Weiss still needs to attract investors. So it should be expected that Weiss itself has bought to the maximum extent it sees fit.... without turning off potential investors.
In a free market any business would have to pay attention to investors. Unlike in today's interventionist markets, where subsidies(funded through wealth confiscation schemes) undermine the incentives to do so.
This insider trading economic fallacy is one of the more enduring ones and one of the most effective in propping up continued concession to government intervention in markets.
Good points. Another factor that would discourage a ratings company from front-running its own recommendations, is that people would quickly catch on if there was a suspicious price increase just before they released their reports.
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Excellent points. Well deserved an upvote.
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insider trading a common economic fallacy? the manipulation of markets and cronyism is one of the hallmarks of capitalism !!
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@clumsysilverdad
'Manipulation of markets' is only a problem in the presence of force or fraud. Otherwise each must rise and fall on his own merits.
The only way anyone evades falling due to his own bad decisions, in his business, is through protection from competition. This protection can only be granted in one of two ways: a) through voluntary subsidization of the failing business owners e.g. bailed out by family/friends, or b) through involuntary intervention i.e. the State confiscating(through the threat of physical violence) what belongs to producers. The latter happens for a price i.e. politicians are for sale. It is labelled 'Consumer Protection' but it amounts to the opposite.
So, just to re-iterate, manipulation of markets, per se, is fine. The problem, as always, is the legalized threat of physical violence, used to stifle, if not eliminate, open competition.
Cronyism, per se, is different. It is a label for Protectionism i.e. the process of State Capture, where the State promises to play the role of Ultimate Consumer-Protector but never ceases - on being appointed by the unsuspecting consumer - to convert that role into Ultimate (Privileged-)Producer-Protector. Note how this perversion is baked into the cake where individuals are not exposed to open competition. It's why we naively keep re-appointing the next political angel to represent the consumers' best interests, running into a hard brick wall, and then doubling-, tripling- and quadrupling-down until there is nothing left of a recognizable middle-class.
Finally, 'Capitalism' is a word that is fraught with double-meaning. I prefer to be clearer and to instead explicitly specify, 'Crony Capitalism' or 'Laissez-Faire Captialism'. If you do this whenever you would have otherwise used the term 'Capitalism', the picture becomes much clearer very quickly. If you are unable to make this distinction, or - for whatever reason makes sense to you - you choose not to, you are a prime candidate for capitulating to - and perpetuating - the lie that governments are there to protect consumers. They are not. They are there to protect some producers at the expense of everyone else in the market. And the producers they end up protecting just happen to be the least competent from the more competent(or at least those who are prepared to risk becoming more competent at their own expense). you only have to look at the language... competent i.e. any government who is pro- open 'competition' needs, by definition, to continually fight to limit its own role in markets i.e. in setting standards or appointing standards bearers.
Of course, this - the State playing the role of consumer-protector - amounts to the exact opposite of consumer protection. It is categorically exposing the consumer to the greatest risk whilst making it increasingly impossible(illegal) to mitigate that exposure.
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the idea of a free market itself is a utopian idea, along with the illusory protection of the commons thu privatizing in libertarian thought. markets are ubiquitously being corrupted all the time, knowledge is power, and will continually be co-opted and coerced into a smaller group of hands unless the polis demands otherwise, it is the continual struggle in benighted civilizations which may never end.
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@clumsysilverdad
'the idea of a free market itself is a utopian idea'
I think that's because many people assume a free market is something one has(handed down from on high), rather that something one does(bearing risk and being free to mitigate it).
'along with the illusory protection of the commons thu privatizing in libertarian thought.'
Don't know what libertarian thought you've consulted, but protection of the commons is illusory, for sure. 'Commons' means exclusive ownership when applied to something everyone owns... which, of course, is an oxymoron. There is no such thing.
In libertarian thought, 'privatization' simply means removing ambiguous laws, so that laws can be more consistently enforced. The bedrock of Protectionism/Cronyism is ambiguous, convoluted, overly-verbose legalese. These are the laws which strangely can't be interpreted and hence need a wise, beneficent clique of overlords to interpret it for the rest of us hapless, forlorn and otherwise-lost souls.
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interesting, thanks
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