The argument against it is that markets would be more efficient if people were allowed to trade on information not yet available to the public
Seems like a worthy tradeoff to me
If that is true, then markets would be even more efficient is such information was made public immediately.
Matt Levine's most recent article touches on insider trading pros and cons (in relation to sports betting) and is, as usual, a great read - https://archive.is/jJ25g
While I do not agree with the OP on insider trading being good.... I also think short selling is a net negative and should be banned right along side insider trading
Why? The potential losses for shorting are infinite whereas the profit is capped, so entering a short requires high conviction. Stock markets are also a market for information: banning short selling takes away a large amount of information and has negative impacts on price discovery, liquidity etc.
If you think a stock is underpriced, you can buy it and bet your knowledge is superior to the general market’s.
Shorting is just the logical reverse, and aids price discovery in the opposite direction.
How would you incentivize people to find fraudulent companies like Enron?