to me this is a perfect example of how incredibly indifferent capitalism can be to creating value. no one is bad here, per se, but its useless as far as i can tell, and someone gets very very rich. nothing wrong with capitalism of course, but i feel the need to keep harping of the fact that it doesn't necessarily imply anything about value or desert. edit: every time i make a comment along these lines, its interestin…
Beyond the "providing liquidity" argument, another side effect of HFT and arbitrage strategies that one might see as valuable is the promotion of global invariants across the financial network, which is rather complicated distributed system. Would it make sense if there were two very different prices for something at two nearly identical venues? If large block of a stock is dropped on one exchange, would it make sens…
i dont disagree with arbitrage and liquidity, and a globally invariant price for goods. i just think HFT isnt really improving that in a meaningful way. i ask you- at what timescale does it stop mattering? thats really what im saying. not that liquidity and invariant prices are suspect, but that things are happening on such a minute time scale that it doesn't matter. hey, i could be wrong, but no one has argued why going from milliseconds to picoseconds is improving our lives. thats the thing i would like explained.
>> What does it mean to "create value?" By what standards is value assessed?
tough to pin down, but surely its more than how much money it makes you... right? of course it varies from person to person. but i think its very lazy to say that its "whatever someone will pay for it". then value changes when laws change. i think most people probably agree that some things that are able to be sold for alot are not a value to society. i think its fair to say that there are some basically invariant things that are valuable.
>> In the absence of any direct harm to another, under what circumstances should someone be deterred from engaging in profitable activity
probably shouldn't be deterred. my point was that it looks like this is more like a game people are playing, with no real positive externalities. didn't say it was bad prima facie. i think its weird that people are very strongly clinging to the idea that it has some wonderful benefit to society. seems like a pretty weak argument, and kind of pathetic. its ok to to just admit its a game, and its for the players. poker players dont go around claiming they are providing everyone a service. i just get the sense there is an ingrained idea in our culture that there is some nobility in "finance" that i dont think belongs there in some cases.
>> Is the assumption that profits accrue to those who provide value to others utterly false, or just false in this (and possibly other, isolated) case? If merely the latter, why in this case?
not utterly false, but far from universally true. very difficult, broad topic that i am, or course, not in a position to say definitively. we can all point to cases where almost everyone agrees that someone gets overpaid, or underpaid. seems like a lot of people readily accept the dual premises that success == making money, and that money is a proxy for value. i take issue with both- i think its important to think about success and value more fundamentally. it seems like a lot of people have a tautological idea that you are paid what you deserve because its what you got paid...