1. Companies need to raise capital.
2. Those companies want to raise capital at a rate closest to the true value of shares in their enterprise.
3. In order to do that, the people who buy those shares need to know that they can resell them later, at a similarly efficient price. This is called a "liquidity premium". If your shares cannot be quickly resold at an efficient price, you are incurring a negative liquidity premium.
4. Because of the foregoing, it is extremely valuable to society for markets to price things efficiently. This is a service that needs to be performed by someone. That someone is, for the most part hedge funds.
The ideal scenario (which we are tending towards) is that there are a very small number of extremely sophisticated players that keep markets efficient for everyone else. The more money David Shaw makes, the less money there is for other people to make. Which means we need to employ fewer and fewer people in the business of asset price discovery.
Price discovery is an important and necessary function, and the fact that there are these few people making tons of money from it is actually kind of a great thing for the world. All those billions David Shaw made represent many millions not going to other people in finance. Which means those minds are freed up to work on other productive things.