>but to protect U.S. citizens from being scammed all the time.
US citizens shouldn't be treated like children that need to protected from their own stupidity.
US citizens shouldn't be treated like children that need to protected from their own stupidity.
We don't require a publishing license because someone might use their right to free speech to libel someone else. We punish the libeler.
For example: Under contract law, there are certain rights that _you are legally not permitted to give away_. You can't actually sell yourself into slavery. You can't contractually disclaim gross negligence on your part. You can't have a contract that unilaterally benefits one party without consideration provided for the other. You can't accept a contract while intoxicated. You can't contractually agree to something that is a crime. ... the list goes on.
What isn't true?
>For example: Under contract law, there are certain rights that _you are legally not permitted to give away_. You can't actually sell yourself into slavery.
A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defending here, which is a federal agency prosecuting individuals because they entered into some investment transaction without 'permission' from said regulatory agency.
> Of course. We don't restrict the rights of the entire population to engage in voluntary interactions to preempt crime.
I gave one example of many of the ways in which we absolutely do restrict the rights of the entire population to engage in voluntary interactions to preempt crime. We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively. As another example, we place restrictions on freedom of assembly -- voluntary interactions of groups of people -- based upon location and time of day because of the potential to create a disturbance, not the fact of having done so. And so on.
Yes I can see how you interpreted my comment that way. I meant we should not do that. In writing it, I was thinking along the lines of "you don't do [some unethical thing]" as a normative statement, not a description of what you don't do. The wording I chose doesn't make that at all clear, so your interpretation is understandable.
>We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively.
Like I said: A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defending here, which is a federal agency prosecuting individuals because they entered into some investment transaction without 'permission' from said regulatory agency.
Including regulators.
You can begin to outline the conditions under which it breaks down: if the probability of getting caught and punished is small, if the rewards are high, or if the punishments are insufficiently threatening. Investment scams and other organized crime is a great example. The rewards are high - millions and millions of dollars. The chance of getting caught are low - a lot of what you do will appear legitimate, and a lot of what you are doing wrong rests on intent. You have to separate the self-deluded from the con men. And if you do get caught, your punishment might be relatively light (a few years in prison as a nonviolent offender), and if you are clever with how you hide the money, you might get to keep most of what you steal.
In some sense, the SEC is like cops patrolling where they are most worried about crime. You are changing the math by increasing the risk while decreasing the reward, which dissuades more criminals than ineffectually punishing a few while others prosper.
Rejecting a person's argument on the grounds that it's "extreme [insert label]" that "everyone rejects" is not constructive.
Just don't use cyptocurrencies. The only purpose of crytocurrencies is to get rid of a central authority in charge of everything.
If you don't care about the fundamental feature and premise of crytocurrencies, then you are much better off using the regular financial system.
And history shows that attempts to control complex industries with cookie cutter rules imposed from on top create the most dysfunctional industries in the economy, namely finance, pharmaceuticals, and healthcare.
The important lesson of securities regulation is that it helps the "good" guys more than it hurts the bad guys.
When I buy 100 shares of PZZA, I want to be reasonably confident that Papa Johns is cooking pizza and not the books. That confidence, or trust in the system, reduces friction that helps both buyers and sellers of securities.
Just because you want products certified by a government body to be safe doesn't mean you have a right to force others to live according to your standards.
Meat inspection deals with a different failure of ideal markets than direct externalities, to wit, information asymmetry. However,the market inefficiency produced by information assymetry itself has negative externalities, so it's not unrelated.
For example, most people don't understand how microprocessors work. But this is addressed through an effective and spontaneous process of delegating responsibility.
The government can play a positive role in helping manage this complexity, by providing certification programs, and freely available public information. What it should not do is constrain the actions of individuals, by mandating that a particular standard be used.
https://en.wikipedia.org/wiki/The_Market_for_Lemons
the money quote being
The cost of dishonesty, therefore, lies not only in
the amount by which the purchaser is cheated; the
cost also must include the loss incurred from
driving legitimate business out of existence.And in any case, the market for lemons is a theoretical exercise. It does not actually happen in real markets, because there are various market mechanisms that emerge to address it.
The point is that everyone is worse off in a situation like this, both customer and (legitimate) business.
It is a type of market failure, everyone loses.
The "market mechanisms" you speak of are government regulations establishing minimum standards and forms of redress (e.g., and most on the nose, lemon laws).