We allow those who don't harm others to continue doing what benefits them - until such a time as it is shown to be harmful - then we stop it. HFTs have not been shown to be harmful.
Just add a "in financial markets" after "No one" and you get my stamp of approval.
HFT harms society because it cuts off the number of investors that can do active trading. It's net effect is the same as regulations the keep out entrepreneurs from innovating in things like health care and drones and car manufacturing.
By this same logic society was better off having more people employed over turning dirt by hand in fields..
Concentrating trading in a few hands is the problem we had - too big to fail. HFT will lead to barriers to new entrants (because of increasing startup costs).
No. You're confusing things. High frequency trading had nothing to do with financial bailouts. To my knowledge, no high frequency trading shop has ever been bailed out or deemed too big to fail.
>HFT will lead to barriers to new entrants (because of increasing startup costs).
Please explain this, how does HFT increase startup costs?
I'm not sure who you think benefits the most out of high frequency trading, but it's not huge banks like Goldman Sachs. My understanding is that the best high frequency shops are relatively small. They're made up of a mix of programmer and quants, not traditional investment bankers.
There's a reason these industries are hard and should be hard - these are serious industries with serious consequences. Health care - screw it up and you kill someone. Drones - screw it up and you kill someone. Cars - screw it up and you kill someone. Finance - screw it up and you lose the retirement savings of your investors.
These are not games to be played by unsophisticated people or green entrepreneurs. This does not mean that the extant incumbents are any good - it merely means that new players does not automatically confer innovation goodness (see natural monopolies/booms).
As to regulation on healthcare/drones/cars etc. things aren't perfect, that's all I'm saying. I think things are too restrictive right now, I'm not arguing for abolition of all regulations.
edit: Yes, retail investors should be trading more. That's the idea behind the recent rise in crowdfunding. Innovation happens a lot faster in small c capitalism than in big C capitalism.
But I'll gladly take part and take people's money while the times are good.
I don't particularly care either way - I make money no matter what the market.