> I think I just don't understand what the difference is between an insider who sits on a board (illegal) or has a nephew who's an SVP at the company (illegal) and a politician setting the laws that shape the whole industry (legal apparently?) or gets tips from same (legal apparently?).

This example is just standard issue corruption. Politician gets to exempt themselves, so they do.

> It's always seemed fundamentally flawed to me that the exchange laws are designed to prevent people benefitting from insider information but then the entire purpose of the stock exchange is to make money by leveraging information asymmetry to make choices other rational actors wouldn't make because you have more knowledge or data than they do.

Insider trading laws are designed to prevent people that can affect business outcomes from benefiting by affecting those outcomes. For example, a senior executive screwing up a crucial delivery to gain money from short positions.

The idea is society benefits from the assumption that all executives are ideally holding long positions on their business.