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Those who want to criminalize “insider trading” are looking at the market as a big lottery, where everybody should have the same chance to become a winner or a loser. They want to ensure that everybody has the same random chance of picking a lucky number. In short, they believe that no one should have the right to cash in on superior knowledge about the real underlying value of a financial asset.

If they succeed in criminalizing such actions, and some- how eliminating such knowledgeable people from trading, they will indeed have turned the market into a lottery, rather than a chance to profit from evaluating situations and information and then making better evidence-based decisions. This is just another case of egalitarian thinking that attempts to deny that some people make more efficient use of their minds, work harder and smarter to develop useful information, and understand the world better than others.

The intent is to make that illegal. If the effort succeeds, the egalitarians will achieve what they already think is true – that some people are better off than others through no worth or earned effort of their own. Then financial leveling will be fully justified: tax the rich to bring them down to the level of the poor, since the rich didn’t do anything to justify their being more successful anyway.

Meanwhile, there is a new federal law – passed in 2008 and signed by President Bush – that establishes another kind of privilege, in another kind of “insider” relationship. This one relates to insider information, information that may have a critical bearing on the equity of a transaction, but that only one side of the transaction is now allowed to have or use.

The data in question are the results of genetic testing and family medical histories. Under the Genetic Information Non- discrimination Act, employers are not allowed to ask for such information, and health insurers are barred from using it in deciding whether to cover someone or in setting anyone’s Insurance rates.

In the long run, of course, insurers will compensate by raising rates on all people who have insurance. Those with more fortunate genetic histories will pay the bill for those with less beneficial genes. Employers, stockholders, and, indirectly, all workers will pay the price when companies hire people who turn out not to be able to perform the jobs they were hired to do.

Remember this the next time you hear the argument about insider information being unconscionable – unconscionable except when it’s required by law.

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