More/less regulated is a silly paradigm to think through... especially for long regulated industries. There is no more or less. Regulation are not quantitative, usually. It's about what the regulations are, and what enforcement looks like.
Even the term "regulator" doesn't mean quite what it sounds like. It doesn't just mean "rules governments make." Those are laws. To the extent this article is calling for anything, it's calling for policing... which is also something a regulator does.
> "it is hard for honest people to raise money on the markets (the original purpose of stock markets), but scammers are still there. If stock markets weren't horribly over-regulated, would the VC industry even need to exist?"
Maybe not on some a chalkboard model of the world. In the actual financial world, "penny stock" markets exist for lower cap companies. They are less regulated, for exactly the reason you are alluding to. From the article itself:
"Traded on the lightly regulated over-the-counter, or O.T.C., markets, penny stocks face fewer rules about publishing information on financial results or independent board members. Wall Street analysts don’t usually follow them. Major investors don’t buy them."
VCs exist. OTC markets exist, they just aren't a popular place for startups to raise or for institutions to invest. VCs are. Reality is not a naive theory, so it's hard to say exactly why. We can think theories about why this is. To find out if they're true, we need to find evidence in the world. It's fine to propose that just not rational to conclude that honest people can't raise money because OTC regulators are too busibodied. It's irrational to conclude that without some corresponding facts from the world corroborating it. I'm not talking about absolute proofs... just something.
More/less regulated is a silly paradigm to think through... especially for long regulated industries. There is no more or less. Regulation are not quantitative, usually. It's about what the regulations are, and what enforcement looks like.
Even the term "regulator" doesn't mean quite what it sounds like. It doesn't just mean "rules governments make." Those are laws. To the extent this article is calling for anything, it's calling for policing... which is also something a regulator does.
> "it is hard for honest people to raise money on the markets (the original purpose of stock markets), but scammers are still there. If stock markets weren't horribly over-regulated, would the VC industry even need to exist?"
Maybe not on some a chalkboard model of the world. In the actual financial world, "penny stock" markets exist for lower cap companies. They are less regulated, for exactly the reason you are alluding to. From the article itself:
"Traded on the lightly regulated over-the-counter, or O.T.C., markets, penny stocks face fewer rules about publishing information on financial results or independent board members. Wall Street analysts don’t usually follow them. Major investors don’t buy them."
VCs exist. OTC markets exist, they just aren't a popular place for startups to raise or for institutions to invest. VCs are. Reality is not a naive theory, so it's hard to say exactly why. We can think theories about why this is. To find out if they're true, we need to find evidence in the world. It's fine to propose that just not rational to conclude that honest people can't raise money because OTC regulators are too busibodied. It's irrational to conclude that without some corresponding facts from the world corroborating it. I'm not talking about absolute proofs... just something.