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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.
I think the most obvious creation of value comes from my view of how video games increase the value of technology. Video games tax the underlying hardware and software technology to its limits causing those underlying systems to shift towards greater utility under market pressure.
If value is seen by its utility, then I would say that it is inevitably the result of market pressure to have a better product. Where money is concerned, profit pushes improvement. This is just part of the underlying structure the economy.
If you are asking about social incentives, it is a personal one for the programmer. He feels fulfilled writing the program. Is it not the same self-fulfillment that his manager was seeking- the idea of meeting his ideal self's human potential? It may not be the same goal, but the main crux of the argument is in self-fulfillment.
But all of that is off-topic considering the headline.
If you are looking for an argument that would give merit that this job "creates value," I would say that it feeds the families of those who work at that company by making it more sustainably profitable.
I'd weasel my way out of answering the question directly. I would counter that you can ask the same thing about what value marketing gives. Sure the companies have useful products, but what does all that money spent on image branding and market testing product color and style pallets give? Hell, even the TV programming they place it against can be absolutely vapid and lacking in any moral or mental fortitude.
But back to my off-topic rant up above. When the general economy hires talent, we generally view that the use of such talent not only increases the talent pool by demand but also the training quality of future professionals by the increased use of such training facilities (universities, researchers, hardware, market). Relying on only measuring directly viewable metrics is a nice and dandy, but the big picture approach (although based on ideals and doesn't correlate 1 to 1 in reality) is a general notion that is hard to argue against.
tl;dr The more you use a resource the more it improves (towards efficiency). This includes talent.
[Long time lurker. Please forgive me for length] I think the most obvious creation of value comes from my view of how video games increase the value of technology. Video games tax the underlying hardware and software technology to its limits causing those underlying systems to shift towards greater utility under market pressure. If value is seen by its utility, then I would say that it is inevitably the result of mar…
What a thing to say with that username :)
Actually, and considering value, I guess my ultimate dream job was building stuff that provided no value whatsoever but fun for me (and others as an added bonus).
I'm starting to find too frequently that stuff that provide value actually provide no value at all. Especially on the business software side of things, the idea is usually to ease the lives of the users but in reality, users hate whatever is thrown at them, and with good reason, it usually solves them an existing problem by creating two new ones.
I had an interview with one in the past and while the models that they used were fascinating and I could get lost in them forever driven by pure mathematical interest - it seems unbalancing.
While HFT does provide liquidity and the ability to instantly make a market, it also makes companies and trades look more liquid than they are. More than half of the stock exchange's trades are made by high frequency traders.
There are ups and downs and each situation should be weighed individually.
Overall, I'd say the epiphany that the author had is sadly something that many people miss. We then turn around and we wonder why the world is such a bad and dangerous place.
Earlier quoted context omitted.
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.
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…
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? I might be projecting, but having hung out with Carter (the author) a few times while he spent this past sum…
In other words:
"Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?"
http://www.pbs.org/wgbh/pages/frontline/president/players/sc...
Earlier quoted context omitted.
Please define flipping a security when you're holding a futures contract for the near month. You need to step back and understand the totality of the complex financial markets before you presume to understand peoples motivations by dictating to them how long they should hold a financial instrument. People use the markets for varying motivations and their holding periods are one, of many things, that vary.
Why are you holding the contract? You're an airline hedging against rising oil prices? You're a multinational corporation locking in a reasonable exchange rate when dealing with overseas manufacturers? You're a speculator who thinks the market isn't properly anticipating the impact of a weather pattern? All these seem fairly reasonable to me. I define a "flipper" as someone whose sole purpose in owning a security is…
Huh? The vast majority of people own stock because they think that they'll be able to sell said stock for more money later. (Yes, they'll take dividends along the way, but since there are short-term traders who "harvest" dividends, that doesn't change things.)
With bonds, there are folks who plan to hold to maturity, but they're in the minority. Other folks are just looking for fixed income for "a while" until they come up with something else to do with that money.
> If most of the trading boils down to huge groups of firms selling back and forth to each other, it doesn't seem to matter to me whether the spreads shrink or not.
Sure it does - you benefit from the decreased spread whenever you trade.
If you really think that the spread doesn't matter to you, feel free to throw $1/share my way every time you buy or sell.
Earlier quoted context omitted.
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…
Sorry, the meaning I've been trying to get across is intrinsic value and I think we agree. I'm not trying to say that liquidity has no value. It clearly does have value. My point is that liquidity's value comes from its secondary effects of allocating resources more efficiently. It's important to have this awareness because increasing liquidity might not always be the best way to increase the efficiency of allocation…
It doesn't matter whether it's the best way, just that it's effective. You typically get better results by applying many improvements than you do by just applying the "best" improvement.
And, liquidity isn't just about improving allocation.
> Software tools have value equal to (amount of things produced with them) - (value of things produced without them).
Actually not. The value of anything is the benefit of said thing minus its cost. It's otherwise independent of the value of other things.
You may decide between two things based on their relative value, but that's different.
Earlier quoted context omitted.
Why are you holding the contract? You're an airline hedging against rising oil prices? You're a multinational corporation locking in a reasonable exchange rate when dealing with overseas manufacturers? You're a speculator who thinks the market isn't properly anticipating the impact of a weather pattern? All these seem fairly reasonable to me. I define a "flipper" as someone whose sole purpose in owning a security is…
What you call "flipper" is normally called a "speculator". Also, speculators add value to the market because they push prices toward the true values. If an asset is expected to be more valuable in the future, speculators will buy it now, raise the prices, thereby encouraging consumers of that asset to use less of it. This ensures that more is available for future use. Also, speculators also add liquidity for consumer…
Like what the people flipping houses did to housing prices?