Okay, I normally view arguments that regulation is hurting the middle class very favorably, but these arguments are very sketchy for a number of reasons:
1. Decimalization. The argument that the author is making is essentially that "market makers are only interested in working at spreads higher than $0.01, the minimum spread got reduced to $0.01, so market makets are not interested and we have no market makers anymore." Let me restate that in non-financial terms: apple farmers are only willing to sell apples for at least $10, before the government and/or the farmer's market operator mandated that apples be sold for at least $15, now the minimum price was reduced to $5, so we don't have apples anymore. The fallacy is obvious: if there's no supply at $5, then the price of apples will just go back up to $10 or $12 or $15 until there's an equilibrium again. Same with market making and spreads; if no market makers participate with spreads of $0.01, spreads will go up to $0.05, or $0.10, or maybe even $0.23 and we'll end up with a better situation than we had before.
2. Investment and public/private companies: here, the argument seems to be that investing in an early seed round is basically a lottery, investing in public companies is too late, so the middle class should invest in mid-cap firms. That seems oddly specific - the one kind of investment that government won't let us make is exactly the kind of investment that will finally make the middle class prosperous again. The coincidence doesn't invalidate the argument, but it does make it somewhat suspicious.
3. The focus on IPOs as a route to wealth creation assumes that money is generally spread out among the masses. This is increasingly false; the poorest 25% of Americans have less than zero net worth - that is to say, they literally have less to invest than a starving Ethiopian. Deregulation should focus more heavily on the processes of actually creating wealth rather than investing it even if it is ultimately welcome in both.
And the fact that the article does not even mention SOX is just weird...
1. Decimalization. The argument that the author is making is essentially that "market makers are only interested in working at spreads higher than $0.01, the minimum spread got reduced to $0.01, so market makets are not interested and we have no market makers anymore." Let me restate that in non-financial terms: apple farmers are only willing to sell apples for at least $10, before the government and/or the farmer's market operator mandated that apples be sold for at least $15, now the minimum price was reduced to $5, so we don't have apples anymore. The fallacy is obvious: if there's no supply at $5, then the price of apples will just go back up to $10 or $12 or $15 until there's an equilibrium again. Same with market making and spreads; if no market makers participate with spreads of $0.01, spreads will go up to $0.05, or $0.10, or maybe even $0.23 and we'll end up with a better situation than we had before.
2. Investment and public/private companies: here, the argument seems to be that investing in an early seed round is basically a lottery, investing in public companies is too late, so the middle class should invest in mid-cap firms. That seems oddly specific - the one kind of investment that government won't let us make is exactly the kind of investment that will finally make the middle class prosperous again. The coincidence doesn't invalidate the argument, but it does make it somewhat suspicious.
3. The focus on IPOs as a route to wealth creation assumes that money is generally spread out among the masses. This is increasingly false; the poorest 25% of Americans have less than zero net worth - that is to say, they literally have less to invest than a starving Ethiopian. Deregulation should focus more heavily on the processes of actually creating wealth rather than investing it even if it is ultimately welcome in both.
And the fact that the article does not even mention SOX is just weird...