What we currently have is a market with the illusion of honesty. That's what insider trading laws are there to provide. It's not real trust between counter-parties in a market. Eliminating insider trading laws wouldn't change much, just lift that veil. If everyone participating in the market knows that people can be operating at a significant and privileged informational advantage, they will just take that into account when researching the market and executing their trading strategy. They won't stop trading, just trade differently.
It is likely that the repeal of insider trading laws would prompt a greater investment in discovering insider information and making that information known to the market faster. Firms that do nothing but specialize in getting insider information would crop up. Those in the know would eventually have to assume that their counter-parties may have the same information perhaps through the same information contact or through different ones that have the same info.
If you really play through the scenario of removing the restriction posed by insider trading laws, you'll see that things aren't really better or worse in terms of the greater good. Without insider trading laws, there is no victim since the victim knows they are playing a different game. The laws themselves are responsible for permitting victimization to occur in the first place since it implies the expectation of trust where there often isn't any.
It is likely that the repeal of insider trading laws would prompt a greater investment in discovering insider information and making that information known to the market faster. Firms that do nothing but specialize in getting insider information would crop up. Those in the know would eventually have to assume that their counter-parties may have the same information perhaps through the same information contact or through different ones that have the same info.
If you really play through the scenario of removing the restriction posed by insider trading laws, you'll see that things aren't really better or worse in terms of the greater good. Without insider trading laws, there is no victim since the victim knows they are playing a different game. The laws themselves are responsible for permitting victimization to occur in the first place since it implies the expectation of trust where there often isn't any.