Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What value do we create here?

astatespacetraveler.com

Post reply on HN
Print view View original

21–30 of 60 posts

Re: What value do we create here?

#21

Post by xxzz »

cwp wrote: post #18
lrm242 wrote: post #14

Earlier quoted context omitted.

Because while they shaved 600ms of your execution time they also lowered your spread by 50 basis points, making it cheaper for you to unload your bond holdings on the market.

So? That's that's a tiny benefit, even to me, let alone society at large. Our society already has very efficient allocation of resources. Devoting significant resources to increasing that efficiency by tiny amounts is just a waste. I'd prefer Carter devoted his intellect to making it cheaper to put cargo into low-earth orbit, than to making it cheaper to sell bonds.

A tiny benefit multiplied by a billion people and several trillion dollars per day suddenly isn't so tiny anymore.

Re: What value do we create here?

#22

Post by albertsun »

The first two comments on the site provide a great insight into the question.

The first commenter posts to try and explain what value is being created.

Efficient markets -> lower transaction costs -> greater access to the markets by everyone. Why is that un-noble? Isn't Art.sy doing the same thing?

All true. Then Carter responds agreeing and writes a bit about what Art.sy is doing.

Art.sy is not saving the world, but our goal is to create a fundamental change in the way art is bought, sold, and appreciated. We envision a dramatically different future where artists can pursue their passions more sustainable, and where everyone else will be more inspired by original art.

The first commenter isn't wrong about why creating liquidity has value, he just hasn't gone far enough. So there's greater access to the markets by everyone. What good does that do? There are several more steps before getting eventually to the production of things that have real value.

Art.sy does the same thing, but hasn't lost sight of the end goal. The reason for providing a more efficient and liquid market is so that more artists can create more original art.

Re: What value do we create here?

#23

Post by albertsun »

tullius wrote: post #19
lrm242 wrote: post #15

Earlier quoted context omitted.

Please define "things that have real value".

Good question, sounds like value is being defined way too narrowly here. The value of farm equipment isn't the intrinsic or salvage value of the metal and other raw materials it is made out of, the value is equal to (value of crops yielded with the use of equipment) - (value of crops yielded without use of equipment). Just like the value of liquidity is clearly evident by the liquidity preference in debt markets. An…

You're talking about money value, not "real value." (I guess that might not be the clearest term for what I mean)

The value of farm equipment is in more crops being produced.

The value of liquidity is less clear. An upward sloping yield curve means people are willing to exchange more money for shorter term debt. That money can then be used to invest in the creation of more products. It's not until that point that it's clear what "real value" is being produced.

Re: What value do we create here?

#24

Post by stoic »

swombat wrote: post #4

Not very well written. The point is unclear... I had to read xxzz's comment to really figure out what he meant (probably because to me as to xxzz, "increasing the liquidity of the secondary bonds market" doesn't sound like "worthless value" at all, so the main point of the article contradicts my sense of values). I think the question "How do we add value?" is important, but only in the sense that it can help you figu…

This is exactly what I was thinking as I read the article. I think of it as a sort of mantra that can be applied in a variety of directions, whether you're a startup founder, an early-stage employee, an employee of a larger organization, or just a human being trying to make the most of your time.

i.e., "Am I doing something worthwhile?" -- which could mean different things depending on the context, the goals or principles of the person, or what have you. I guess it depends on how you define "value" :)

Re: What value do we create here?

#25

Post by lionhearted »

Qz wrote: post #10
xxzz wrote: post #2

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? Second of all, providing liquidity is very important. Sure, you are only shaving off a few basis points, but…

Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'.

> Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'.

Considering how many in the world aren't starving, ill, undereducated, and unemployed, I'd say we're doing an utterly frigging amazing job of 'efficiently allocating the world's capital'.

Seriously - the question isn't, "Why are some people poor?" It's, "Why AREN'T some people poor?" Poverty is the natural state of humanity - we evolved from being apes and crawled out of forests, jungles, and caves. The fact that there's any literacy, lifespan over 30 years, immunization from disease, infrastructure, and knowledge is marvelous in and of itself. The rate that those things are growing lately is astounding. Humanity is doing a pretty amazing job lately.

Re: What value do we create here?

#26

Post by lionhearted »

albertsun wrote: post #17
lrm242 wrote: post #15

Earlier quoted context omitted.

Please define "things that have real value".

Things people want that aren't a means to get something else. Burrito? Yes. Clothes? Yes. Art? Yes. Money? No. Liquidity? No.

Liquidity provides mobility - there's been a couple times in my life that I'd have converted to any religion on the planet if their chief deity promised me a buyer at even half the market value of the asset I wanted to sell.

People don't want liquidity the same way they don't want a tune-up in their car. Nobody wants "a tune up", but people want a working auto that doesn't break down. No one wants liquidity, but a heck of a lot of people want to sell something they have so that they can get on with their life, move somewhere else, buy a new home, invest in something exciting, and so on. If you think freedom and mobility are valuable, then liquidity is valuable too - because liquidity can be very important in letting you do go where you want and do what you want when you have something important you need to sell or relinquish before moving on.

Re: What value do we create here?

#27

Post by moultano »

Qz wrote: post #10
xxzz wrote: post #2

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? Second of all, providing liquidity is very important. Sure, you are only shaving off a few basis points, but…

Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'.

Unfortunately, capitalism ensures that "efficiently allocated" means "allocated in proportion to the combined wealth of the purchasers." It is, however, _very_ good at that. I really wish liberals had the balls to redistribute wealth directly and explicitly, and then let the free market provide the services (instead of filtering it through a government program first.)

Re: What value do we create here?

#28

Post by losvedir »

lrm242 wrote: post #14
cwp wrote: post #13

Earlier quoted context omitted.

Yeah liquidity is great, but only up to a point. If it takes me six months to sell my house at "market price" that really sucks. I'd welcome a little real estate speculation, and the liquidity it brings. But if bond traders shave 600 milliseconds off the time it takes to sell my bond holdings, so what? People may be willing to pay for that, but society doesn't benefit.

Because while they shaved 600ms of your execution time they also lowered your spread by 50 basis points, making it cheaper for you to unload your bond holdings on the market.

Making it cheaper for WHO to unload their bond holdings?

The person who buys and holds for some time wouldn't notice the fractionally smaller spread. The majority of trading today is done automatically, and it's all this trading that sees the benefit. But, again, how useful is this sort of trading? Surely at some point it must move from "efficiently pricing securities" to gambling with the froth.

How would trading change if the goal weren't to flip your security to someone else a bit down the road, but to hold it for its intrinsic value, as higher transaction costs would encourage?

Re: What value do we create here?

#29

Post by tullius »

albertsun wrote: post #23
tullius wrote: post #19

Earlier quoted context omitted.

Good question, sounds like value is being defined way too narrowly here. The value of farm equipment isn't the intrinsic or salvage value of the metal and other raw materials it is made out of, the value is equal to (value of crops yielded with the use of equipment) - (value of crops yielded without use of equipment). Just like the value of liquidity is clearly evident by the liquidity preference in debt markets. An…

You're talking about money value, not "real value." (I guess that might not be the clearest term for what I mean) The value of farm equipment is in more crops being produced. The value of liquidity is less clear. An upward sloping yield curve means people are willing to exchange more money for shorter term debt. That money can then be used to invest in the creation of more products. It's not until that point that it'…

I understand how you are defining value. I am just rejecting that definition because it is both different from how people typically define the term and not particularly useful. For instance you are claiming that software has no value, only the consumer end-products you create with it. Most people would say software has value equal to the increased efficiency it gives you. In that same vein I am claiming liquidity has value equal to the increased optionality it gives you. How does your definition help me better understand the world?

Re: What value do we create here?

#30

Post by tullius »

xxzz wrote: post #2

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? Second of all, providing liquidity is very important. Sure, you are only shaving off a few basis points, but…

I personally don't see any harm in asking the question "How much value does my job create?" While finance is an exciting field that does provide significant benefit in certain areas (i.e., liquidity, efficient pricing) the majority of the field is engaged in enormous zero-sum games, much like a casino. I think it's no wonder so many people get burned out in finance while entrepreneurs stay active and excited in what they are doing.
Post reply on HN