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aaronchall

> zero value to society

What value are financial services? Do you

- have a bank account? checking? savings? money markets?

- monitor your accounts online? do transfers?

- have an investment account? save for retirement?

- have life or disability insurance? pool risks and hedge against them?

- have a city or country that needs to raise money, borrow from others?

- have a company that needs to issue stock for capital investments?

People earn, save, invest, borrow, and build their dreams. Finance makes it possible.

I'm sure you just want to pay the rent, but finance is very competitive and if your firm created no value for society, it would go out of business.

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> if your firm created no value for society, it would go out of business.

This is silly wishful thinking. There are plenty of businesses that are sustainably built on screwing people over or simply extracting money from them.

> What value are financial services?

I don't think he's talking about financial services like retail banking. I think he's talking about HFT activities other than market making. Legal front-running, etc.

>screwing people over or simply extracting money from them.

People enter these transactions because there's something in it for them, even if you think it's too little.

So you are upset they didn't say "approaches no value" instead of "no value"?

It’s literally incorrect that businesses can sustainably provide no value. It may be the case that they can sustainably offer deals you wouldn’t take, but how we get from there to the business being immoral, useless, or deserving of a ban is more nebulous.

If people are systematically taking deals you wouldn’t, there might be a broad societal problem (why is tht crappy situation anyone’s best option?) or an information problem (why don’t they know better?) but the business offering the deals is probably not a logical or useful target if you want to address the larger problem.

> It’s literally incorrect that businesses can sustainably provide no value.

That depends entirely on the definition of "value".

If a business exists solely to move money/stock around, that action does not create "value", in the sense that juggling oranges does not create "value".

Trading stocks is an effort to take advantage of the fluctuating relative value each stock has, so that individuals can take home the "profit". Such "profit" is not created, but sifted out of the economy. Is that 100% worthless? No, but it's darn close.

The size of the financial sector swelled to about 9% of GDP in 2010 from around 5% in in 1980. Perhaps that is what the thread was referring to. Nearly doubling in size when finance doesn't produce anything real. They are a middleman. Would certainly like to see nationalization of large parts of finance such as simple checking accounts, insurance, and the big one, lets double down on Social security so that people can have dignified retirements regardless of what their work was. We dont need a big financial sector to have a great economy; Its a brain drain. Smart people should be working on real world problems like diseases, automation, efficient cheaper construction, environmental remediation, etc. that improve the standard of living for society.

A lot of that is simply busy work and can in turn be automated. A huge bank like Goldman is essentially a middleman - and middlemen can also be trimmed down. For example, I was just talking to a friend who works at Goldman as a trader. 75% of his job is to answer the phone and deal with clients issues (eg “why is my account frozen?”). His job honestly sounded like a customer service job. He’s also the person who signs off on wire transfers, something that could easily be automated.

So much of the “value” Goldman supposedly creates is due to them creating an artificial need for it.

So, why do you think it hasn't been done yet? You make it sound like there's a ton of money to be made in this "automating Goldman Sachs out" thing.

You are equating optimization to making money.

When it's about optimizing costs - yes, I am. That's exactly what optimizing costs is about.

I think you're slightly confused at the distinctions between prop shops, hedge funds, asset managers, and model driven quant desks at investment banks. Having worked at at least 3 of these, I can tell you again:

On the sell side, it's just pricing and hedging out each other's increasingly complex structures. HFT Market makers have some merit in providing tight liquidity and low spreads. Don't even get me started on buy side speculation.

If you want to learn more I’d also suggest reading a book called Flash Boys. It’ll give you huge insight into what OP is talking about.

Flash boys is mostly incorrect and at points misleading, and this is coming from somebody whose entire job is trading systems to avoid hft "picking off" my institutions orders/market activity. I can write more once off mobile but there's good material online about why that's better written than what I would write.

Thank you, I’d be very interested in learning more!

Could you please link to the counterargument to Flash Boys?

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