The last instance of the property-in-value theory we shall discuss are laws prohibiting ‘insider trading.’ The complaint on the part of the advocates of such laws is that the knowledge possessed by someone, when acted upon in a commercial matter, is a violation of the rights of others. Previously we had asserted that ‘no one could act, if everyone owned the value attached to what he regarded as his.’ With insider trading we see a paradigm case of this. The legally established contention here is that a knowledgeable state of mind can convert what would otherwise be a legitimate purchase of stock into an illegitimate one, provided that the information relied upon is not homogeneously spread throughout the population. Since it never is, virtually any commercial activity with regard to stocks and bonds can be deemed unlawful. The situation is indeed worse than that. A rigorous pursuit of the ‘logic’ of insider trading prohibitions could potentially be used to preclude any market transaction.
Did a woman buy an umbrella because she heard a newscast that if would rain tomorrow? Unless everyone turned into the same weather program, and listened as attentively as did she, this would give her an unfair advantage over other people. And what of the person who attended, horrors!, a course on the case and feeding of stocks and bonds? Such studies would surely give the student an ‘inside track’ vis-à-vis those who had not attended the lectures. If the crime of excessive information can be applied to umbrellas and stocks and bonds, it can be applied to anything: to real estate, to amenities, to human capital, to factors of production. Moreover, this doctrine calls into question the acquisition of any knowledge (unless, of course, it is evenly spread throughout the entire world community). Those particularly at risk include doctors, lawyers, economists, college professors, Nobel Prize winners.
— Hans-Hermann Hoppe and Walter Block
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