The main reason we don't like insider trading is that we like participation in the market by relative amateurs. A system that allows insider trading discourages participation by amateurs, because they do not have insider information. Insiders would earn money at the expense of these amateurs, so it's better for them to stick to other sorts of investments to avoid this "tax".
This isn't necessarily a problem. As a society, we've decided that we like having amateur capital in the markets more than we want the improved efficiency of allowing use of inside information. It's a tradeoff, and while both options have their merits, society has chosen one way.
This isn't necessarily a problem. As a society, we've decided that we like having amateur capital in the markets more than we want the improved efficiency of allowing use of inside information. It's a tradeoff, and while both options have their merits, society has chosen one way.