Only if the market is known to be unregulated. The problem is that the government, and companies that operate within financial markets, create the perception that the markets are regulated and fair.
Markets have rules on competition, that's just a fact, and no one wants to live with markets that have no rules. Taken to the extreme, a shopkeeper could just kill his competitor. It's still competition (why didn't the competitor hire body guards?), and it's still a market.
Yet no one seriously objects to government interference in the market when it comes to declaring murder illegal and punishing murderers. So why is this? Probably because most people regard murder, or force in general (though not always) to be an invalid, or unproductive competitive dimension. We would prefer that shopkeepers compete on who has the best products rather than on who is the best at violently eliminating his competitors.
This suggests that there are other dimensions on which we do not want competition to occur. If one of those is "who can get their hands on information the soonest", then sure, we should definitely regulate this issue.
There is a fundamental dividing line here that you are missing.
It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force.
When you have that, you can have markets and a free society.
When you don't have that, you have anarchy on the one hand, or some form of mixed or total authoritarianism on the other hand.
Financial markets should have rules, and people who break those rules should be sued and disbarred from the market. People should be free to choose to participate only in markets whose rules they can agree with, and create new markets if they see the need. Such is a robust, free system. All of this is possible in a traditional market system that disallows initiated force. The SEC and other regulators use initiated force and do not permit such a system to exist.
> It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force.
You used the word "honest" but failed to define it. That word must have a definition, and within that definition you are implying additional values beyond pure competition. I suspect that if we tried to clearly define that word we would find many more actions that many people would argue should be disallowed, like the "initiation of physical force". But many of those things would be far more controversial. My point is that real, existing (non-theoretical) markets are more complex than you seem to believe. Market actors will always try to find the "edges" of acceptable behaviour in order to gain advantage, and in a dynamic, changing world, those edges continuously multiply, making self-regulation in real life a pretty unreasonable prospect in my opinion.
> You used the word "honest" but failed to define it.
I mean it according to the simple English definition. An honest person does not seek to gain a value by deceiving other people.
I just put in the word "honest" to make my argument more readily apparent, but I could have ommitted it, because I don't think it is self-interested to try to live under a policy of deceiving others. So the word is redundant.
> I suspect that if we tried to clearly define that word we would find many more actions that many people would argue should be disallowed, like the "initiation of physical force". But many of those things would be far more controversial.
Omitting that word, what do you think people would argue should be disallowed? Once you bar the initiation of physical force, so many common-sense things are already covered. Maybe people would argue that we should bar using drugs, for instance---that would not be covered, as it's not initiating force. But I think it's obvious that drugs should be allowed except through circuitous logic that would be irrelevant in a context with a just government---such as "it costs the public to pay for drug use because of socialized medicine."
This is a bit of a tangent, so don't feel pressured to answer this question if you don't want.
> My point is that real, existing (non-theoretical) markets are more complex than you seem to believe.
I don't think so. You'd have to give me an example.
> Market actors will always try to find the "edges" of acceptable behaviour in order to gain advantage
Certainly.
> in a dynamic, changing world, those edges continuously multiply, making self-regulation in real life a pretty unreasonable prospect in my opinion
I don't get any of that. I mean, any rational investor wants to play on a market that has known, fair rules. Otherwise, they lose money. If all the rational investors go to a good market, the people who want to cheat on an unfair market won't have anybody to cheat off of.
You don't need government nannies to make the market fair. Say I open a stock exchange to compete with the NYSE. I am going to publish clear, straightforard rules, and if I am caught cheating, people can sue my ass off and go trade elsewhere.
The same principle applies in every sector of the economy. It's hard to see in some cases, due to the nannies. But obvious in many cases. For instance, if I buy a shitty laptop from Dell, I will not buy from them again. If it's bad enough, enterprising lawyers will start a class action lawsuit.
To broaden the example, the market is obviously working quite well and "self-regulating" for most consumer goods. I don't buy something with a shitty review on Amazon. If I go to Wal-Mart, I know most of the products are decent because Wal-Mart's people won't stock shitty stuff, because people won't keep buying it and they'll lose money (and devalue their brand in the mind of the consumer that bought something shitty).
Markets have rules on competition, that's just a fact, and no one wants to live with markets that have no rules. Taken to the extreme, a shopkeeper could just kill his competitor. It's still competition (why didn't the competitor hire body guards?), and it's still a market.
Yet no one seriously objects to government interference in the market when it comes to declaring murder illegal and punishing murderers. So why is this? Probably because most people regard murder, or force in general (though not always) to be an invalid, or unproductive competitive dimension. We would prefer that shopkeepers compete on who has the best products rather than on who is the best at violently eliminating his competitors.
This suggests that there are other dimensions on which we do not want competition to occur. If one of those is "who can get their hands on information the soonest", then sure, we should definitely regulate this issue.