Should insider trading be legalized?

Welcome to the debate arena! Today's topic: "Should insider trading be legalized?". Your opponent's style: Mao Zedong

I believe it should be, except when it is done by a decision-maker.

You're creating a carve-out that proves the opposite of your thesis. If legalized insider trading is acceptable for regular traders but banned for decision-makers, you're admitting the harm is real, not theoretical. You're just redistributing who gets punished. The distinction collapses because decision-makers have the same informational advantage regardless of title, and their trades move markets identically. Why should a board member's trade harm everyone but a hedge fund manager's doesn't? You've abandoned principle for selective enforcement, which is precisely why insider trading was criminalized in the first place. What makes the hedge fund trader's edge morally different from the CEO's?

So, my claim is as follows:

I'm ready. Lay out your claim clearly and I'll dismantle it. Make it specific—vague arguments are easy targets. What exactly are you proposing, and what's your reasoning?

Politicians should not be able to make decisions solely based on personal profits. People who have nothing to do with the decision-makers, who are aware that a fate has been decided and that there is no changing that, should be able to profit from their knowledge

You're sneaking a moral distinction where none exists. Both scenarios exploit asymmetric information at the expense of uninformed traders. The politician's abuse is wrong, agreed. But legalizing insider trading for non-decision-makers doesn't punish the politician, it rewards the information recipient equally. You've created a two-tier market where knowledge holders profit while ordinary investors hemorrhage. The real solution is enforcing politician accountability, not expanding the class of people who can legally rob the market. Why should a staffer's tip be legal when a CEO's isn't? You're treating the symptom while poisoning the entire system.

We don't want people to be making professional or political decisions based on personal benefits. But if I am aware that, say, a company is about to do a great sale and have their stock price go up, why shouldn't I be able to profit?

Because you only know that through stolen information. The company's decision happens in a vacuum—you're not entitled to profit from secrets you didn't generate. "I overheard something" doesn't create a moral claim to wealth. If you legalize this, you've incentivized leaks, corrupted internal communication, and made markets a playground for connected insiders while regular investors get slaughtered. The real issue: you want the benefit of the crime without calling it a crime. Either information asymmetry harms markets or it doesn't. You can't have it both ways. If the company's sale is genuinely good news, it'll reflect in the stock when announced publicly. Why do you need the head start?

The limit I placed isn't about the asymmetry, but about "cleaning" politics. Politicians shouldn't be able to make any public decisions based on personal motived because that's a violation of their position's nature

You're conflating two separate problems and solving neither. Yes, politicians shouldn't profit from decisions—criminalize that directly. But legalizing insider trading for everyone else doesn't clean politics, it just creates a secondary market for leaks. You've still got asymmetry, still got corruption, still got ordinary people disadvantaged. The "cleaning" argument only justifies restricting politicians' trades, not liberalizing everyone else's. You're using anti-corruption rhetoric to sneak in pro-speculation policy. Pick one: either information-based trading is exploitative or it isn't. You can't say it's corrupt for politicians but virtuous for tipsters. That's incoherent.

Politicians are an exception. For the rest of the population, why shouldn't they make trades based on knowledge?

Because "knowledge" you didn't create is stolen goods. You're not a researcher or analyst, you're a parasite on someone else's work. Legalizing this floods markets with people trading on leaks instead of fundamentals, making actual price discovery impossible. Companies would leak strategically to favored traders. Your exception for politicians proves the rule, not breaks it. If insider trading corrupts decision-making when politicians do it, it corrupts markets when anyone does it. You've just admitted the harm exists, then carved out a special privilege for yourself. That's not principle, that's rationalization.