Whenever I hear someone say this, I never see an explanation for why it's actually a waste. People are usually just jumping on the 'finance is evil' bandwagon. Well, capital markets are vitally important to the global economy, and the presence of investors like AQR are a huge reason why markets are as efficient as they are.
I tend to think there are better ways for bettering society than philanthropy though, and these vary wildly in effectiveness. In this case the millionaires in this fund focused primarily on some cancer charities. I understand that these tend to resonate emotionally since everyone is at risk, but really they are quite suboptimal ways of channeling funding relative to the needs of the world or maximising ethical return on investment.
Liquidity is important, but efficiency is more important. When we identify fraudulent companies, for example. The sooner the better, right?
Or, when we identify the next Google, and give them the resources (money) they need to build a new world-changing product. The sooner the better, right?
Finance helps accomplish this but with overhead. Finance tends to have power over itself and there is little motivation to minimize itself because there isn't a third party checking its power.
So "finance" is a tax on everything everybody does. It has made itself complex enough that few people not profiting from it understand it, and it does a good job convincing the world it is necessary.
Your experience is exactly the reason why it exists to the extent it does today -- nobody can explain to a lay person why finance is a necessary evil nor what is wrong with it.
Bottom line: in making markets more efficient, the financial industry makes the economy as a whole a lot less efficient by siphoning off a huge chunk to feed itself.
Not that that is viable or realistic.
Until we have politicians and a voting population discussing actual issues instead of whatever is happening now, there are no realistic viable alternatives. (and it's not hard to believe that many powerful, influential, intelligent people are intentionally pushing politics to be foolish so that nobody has any interest in improving real issues)
There are other objectives for investors than just total return, like risk management, that justify fees in many cases.
> Bottom line: in making markets more efficient, the financial industry makes the economy as a whole a lot less efficient by siphoning off a huge chunk to feed itself.
That's a huge leap that absolutely requires some evidence to back up. This is the typical argument, but it's not convincing without any data, and just plays to the emotional "finance is evil" crowd.
Operating with 1% of peak efficiency seems insane, until you understand that Google doesn't hire people to make products, they hire people to increase their market cap.
This is a delusional system that is opposite of 'market efficiency'.
Eventually the system will collapse in a horrific crash and we'll start over with something that doesn't violate common sense or laws of physics. For now all you can do is grin and take it.