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Speech by SEC Commissioner Peirce: Prosperity’s Door

SEC | Commissioner Hester M. Peirce | Aug 26, 2021

SEC Commissioner Peirce - Speech by SEC Commissioner Peirce: Prosperity’s DoorSpeech delivered at The FINRA Certified Regulatory and Compliance Professional Program
Georgetown University

Thank you, Jim [Angel], for that kind introduction. It is a delight to be here with you tonight to talk about the future of financial markets regulation. I commend all of you for putting in the time to understand better both the fundamental underpinnings and practical realities of securities law and the role it plays in our rapidly changing markets. Tonight, I look forward to exploring with you what that role should be as we look to bring more and more people into these markets as investors, entrepreneurs, and financial professionals. Before I begin, I must offer my standard disclaimer, which is that the views that I represent are my own views and not necessarily those of the Commission or my fellow Commissioners.

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Several weeks ago, economist Steven Horwitz passed away. Hearing the sad news of his death inspired me to read one of his speeches, which was itself inspiring and helps to lay the groundwork for what I want to talk about tonight. Professor Horwitz spoke of how human diversity is the key to human prosperity. He wrote:

We are fortunate to live on a planet populated by 7.5 billion people, each of whom has his or her own unique genetic blends, learned skills, and particular preferences and goals. Each of us brings something distinct to the human conversation. The challenge is how to turn those differences into productive cooperation rather than destructive conflict in a world where most of the planet are strangers to one another. . . . The answer to this puzzle is exchange. Exchange enables us to overcome our differences by providing a way for us to interact not just despite those differences but because of them. . . . Contrary to what critics say, free markets do not shut the door on the most vulnerable among us. The door to prosperity is open to everyone.

Horwitz is not alone in celebrating the way markets push open the door to prosperity. Since at least the 18th century, economists and philosophers have marveled at the power of free exchange to break down barriers between people by creating the incentives for them to look past their differences to a shared interest that can transform those differences from a source of mutual suspicion and resentment into a creativity that far exceeds the sum of those differences.

Increasingly, though, we hear criticism that our economy and our financial markets do not in fact work for everybody, that they produce increasing inequality, exclude the disadvantaged, and discriminate in the provision of opportunities for employment and career advancement. Proposed solutions to these problems often appeal to people like you and me, regulators, regulatory experts, and lawyers who are paid to use our own ingenuity to design and implement technocratic solutions. The prospect of engaging in social engineering can be quite enticing to us, as it plays to our predilections and strengths. If, however, Professor Horwitz is correct—that people, left to their own devices, will come together in acts of mutual enrichment to exchange not only goods but ideas, capital, and labor—we should resist the allure and instead examine what our prior social engineering efforts have wrought. If we find that some individuals cannot access markets or cannot take advantage of opportunities that markets offer, our own solutions to past problems may be to blame.

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Let us think tonight about how we might be able to open the door to prosperity wider for everyone through changes in how we regulate our securities markets. These markets have served the United States and the world well for centuries. We can spread the wealth and prosperity these markets create by ensuring that even more people participate in them as investors, users of capital, and financial professionals. During our time together tonight, I hope that instead of talking about the complex technocratic top-down approaches that appeal to our regulatory sensibilities, we can explore solutions that rely on regulators getting out of the way and allowing the market to do its work.

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