The workings of a free marketplace can be distorted by private manipulation as well as by governmental intrusion. One recurring argument for federal controls on the American market has been that private abusers of the market already impose worse controls on it. To eliminate this argument the Reagan team's thrust to free the market from government must also free it from nongovernmental harm to fair and open competition.
Thus it is encouraging to see that one of the main enforcers of marketplace justice, the Securities and Exchange Commission (SEC), shows no disposition to go to sleep in the shadow of threatened cutbacks. Recent actions against "insider" trading in stocks are reportedly part of a stepped-up SEC effort to combat such illicit profiting.
The latest episode, involving leaks from a law firm employee, became a sad parable: a son allegedly passing information to his father, the father acting on it and then having to give up almost $100,000 in wrongful gains.
The temptation to beat the free and open market by using insider privileges is an insidious one. But it can be resisted or, if indulged, turned from in the spirit of repentance and reform which we would like to think is being shared by the father and son in the parable.
It even caught up with that symbol of businesslike rectitude, Calvin Coolidge , who after he left the presidency used insider information to buy a stock for a lower price than it was listed when it went on the open market. This lapse is said to have contributed perhaps to the depressed attitude observed in his later years. Since President Reagan promptly put a picture of Coolidge on the Cabinet Room wall, Silent Cal might be a reminder to the assembled department heads of how vulnerable the free market is and how zealously it needs to be preserved. Recend history confirms how vigilant not just the SEC but all parts of government must be not to allow or serve the misuse of the marketplace.