Mother capitalism deems that our brightest young minds best serve humanity in two tasks. Keeping the public passively scrolling, and moving money at speed to make wealthy people more wealthy.
So the story here is that over the last twenty years they stole the lunch from the traditional market makers like eg banks.
Of course, they got rich in the process. But they started from relatively modest means, compared to the companies they took on.
Michael Lewis's 'Flash Boys' is an hilarious account of this process. Well, it's involuntarily hilarious, because to tell his story, Lewis needs to cast Goldman Sachs (!) and other big banks as the victim. See the rebuttal 'Flash Boys: Not so fast' by Peter Kovac for more insight.
Obviously, the people who own the automation will want a cut of the rewards, like any other business.
Obviously NASDAQ and electronic trading systems are a good innovation. But firms basically doing arbitrage or exploiting uneven network latency are not that economically productive.
> Inefficient market spreads and network latency is not worth remediating.
Well lowering market spreads is all about increasing the returns for capital, and incenctivising overfinancialisation. It's hardly curing cancer is it?
At worst it's actively harmful if you believe that the current state of turbo-financialised capitalism has its drawbacks.
> Network latency
Not really sure what you're talking about but surely spending billions of dollars to bring rtt latencies to 50 micros or whatever is not really a great use of money and top engineering talent. Again, it's playing an arbitrage game but not really delivering any value.
I want liquidity, low spreads, price discovery. You seem to forget that “not delivering any value” is just like y’know according to you…
EDIT: The funny part is even the exchanges and hft firms agree with me see PLP/speed bumps on exchanges like Eurex lol
I honestly can't tell what your concrete points are. I come from the position that economies are naturally occurring phenomena which cannot be centrally planned or controlled. If people can find ways to profit off market inefficiencies, they should! The HFT/Quant firms make their arbitrage money (value for them) and all market participants in return see: (non-exhaustive list)
1. Better price discovery 2. Tighter spreads 3. Higher liquidity
Which is value for everyone else.
If your bar is that "all smart people should be working on curing cancer or andrepd-approved endevours" then almost nobody in the economy is providing value. Is my lowly SecEng job at $MEGACORP good enough? What about my buddy who writes firmware for toothbruhes? Are professional starcraft players wasting their talents?
> EDIT: The funny part is even the exchanges and hft firms agree with me see PLP/speed bumps on exchanges like Eurex lol
This debate has been going on for ages, and it's silly to pretend that it's been settled and everyone agrees with you.
This is a challenge to untangle. It sounds like you're saying that there is no point trying to regulate, legislate or control what happens in the economy at all. But that sounds bonkers to me.
For starters, there are (and should definitely remain) absolute limits to business activities. We've moved on from Victorian-era child and slave labour for good reasons, even though such a situation was "naturally occurring" at the time. Moreover economic activity is dictated by cultural mores - if your service is morally reprehensible in some way then you won't get much business whatever your matgins are. Economies are inherently subject to the laws and customs of the agents.
Secondly, some regulation is pretty clearly beneficial. For example, there's a recurrent tendency for market power to concentrate in modern economies; we need robust anti-trust regulation to prevent consumers from getting ripped off and to prevent fragile supply chains. A well-conisdered balance of public and private provision supports the least well-off in society while allowing room for the fruits of individual flourishing.
Thirdly, we must consider what makes one economic system better than others. One way to measure this is to look at how efficiently it converts resources to social utility. I'm far from convinced that it's efficient to employ our brightest minds to build trading models with brief lifespans so that investors who are already well-off become slightly more so. It's worth investigating what regulations and incentives could put those minds towards things of greater value - solving climate change, cancer, sending humans into space etc... .
I really do not appreciate this mischaracterization of my position. Focus on my actual words. I don't care about 'winning' this online argument. I take effort to engage because I am disturbed by the number of intelligent people who believe if only _THEY_ were in charge (or at least the right person), we would be able to fix all of society's problems.
> For starters, there are (and should definitely remain) absolute limits to business activities...
I agree with everything that follows. Government needs to be around to keep the peace. I want to be explicit: When I say "centrally planned/controlled economies" I am NOT talking about the general concept of regulation. If you are debating in good faith, this should be obvious. Look at all the history of failed states who tried to implement top-down control of their economies.
Also, YSK that not all regulators are government entities.
> Thirdly, we must consider what makes one economic system better than others. One way to measure this is to look at how efficiently it converts resources to social utility.
Never before in history has mankind been so prosperous. What system would you like to emulate? The US capitalist system is not perfect (and never will be)...but it blows all of its peers out of the water in terms of economic prosperity. Here's a couple data points: (Please read the technical definitions if you are truly interested in this subject)
- https://en.wikipedia.org/wiki/Disposable_household_and_per_c...
- https://www.numbeo.com/property-investment/rankings_by_count...
> I'm far from convinced that it's efficient to employ our brightest minds to build trading models...
This is where my "closeted dictator" quip comes from. Nobody is "allocating" these minds...they are acting on their own free will. Why should you or anyone else be the arbiter? What if individuals disagree with your beliefs? Space exploration is a great example of a debatable "worthy endeavor"
Yes, so it means GP is right! Modern capitalism in tech is about rewarding the two aforementioned tasks.
No, sponsor contracts, advertisements.
Because endless growth is the only reason these once fun spaces have been hyper focused to be as addictive and stressful as possible to the "whales" of scrolling. That's why, when their own internal reports say "people spend unhealthy time on our platform and it's making them unhappy," it gets passed up the chain of command and whittled down by internal incentives until it dies as an issue.
Individuals hold some blame, but to put most of it on them is to ignore what growth demands. You're supposed to doomscroll and engage and worry. That's the business model. Facebook is in the same business as Cigarettes and Casinos. When I see someone on an air tank playing slots, literally crying when they spend their last dollar, I will not waste my breath blaming them. Just like I won't blame the doomscroller, anxious that they need to stay "informed," who hasn't met the basic needs in their own life.
> The minds that want to scroll are the same as the ones that make money on the scrolling
No? Where are you getting this? I don't think the people guiding these companies want to spend 6 hours scrolling TikTok. This is not the way most people live their lives.
I meant they are all humans. We're all sort of the same. If you disagree just think of your opinion of any other species, or about a group of people a thousand years ago, and you see what I meant.