It disgusts me how much talent is wasted on nonsense like this. Like Haim is alluding to in the documentary, imagine if all these smart people focused on real problems instead. If this isn't a good argument for a transaction tax, I don't know what is. Say all you want about increasing efficiencies etc, but it's pretty clear to me that what the world needs is investors, not day traders.
And who's going to give those investors their shares and exits when they want to trade?
The question that needs to be answered is where trading stocks crosses over between moral to neutral to immoral.
If we assume:
nanoseconds = worse than Hitler
decades = saintly Warren Buffett
then there must be some timescale at which trading becomes good or evil.
The challenge is that the faster traders operate as counterparties for the slower ones (and for each other). They absorb risk, provide liquidity, and establish definitive prices.
One way to enforce a speed limit would be to have a crossing auction every second (similar to what they do prior to the open, or when a stock is halted, or for an IPO). If you wanted to be an active trader, you would participate in many such crossing auctions during the day.
Human beings with a brain, in discussion with other humans, creating the kind of world they want to live in. Just like everything else in the world is decided.
It makes no sense at all to pretend that humans are too stupid to understand what is and is not good for our planet. The whole point of having language and intelligence is that it should be used, not just discarded with some discredited hand wave that "if we just do nothing, everything will work out for the best!"
> It makes no sense at all to pretend that humans are too stupid to understand what is and is not good for our planet. The whole point of having language and intelligence is that it should be used, not just discarded with some discredited hand wave that "if we just do nothing, everything will work out for the best!"
Centrally planned economies have been tried. The Soviet Union discouraged a lot of research into areas like psychology that they saw as pointless; artists had to conform to traditional styles. It didn't turn out very well. Letting the market allocate resources has a lot of inefficiencies, but it works better than any alternative that has been tried.
> Letting the market allocate resources has a lot of inefficiencies, but it works better than any alternative that has been tried.
I don't think we've ever tried having the market solely allocate resources. I think pretty much every government has regulated trade, collected taxes, that sort of thing. What seems to have worked best would be letting the market allocate resources to some extent, but collecting taxes and investing in long term goals (such as research and infrastructure). But maybe this isn't necessary, maybe in a truly free market there would always be genius entrepreneurs like Elon Musk appearing every now and again to progress humanity. Still, there's a massive difference between the kinds of long term planning that modern western democracies already do and a communist dictatorship.
The question of Neoliberalism versus The Soviets is a completely false dichotomy. In the real world, Western-style social democracy has appeared to work best when tried, and that is not, by any means, a pure market system.
(Indeed, in a certain sense, neoliberalism can no longer be called a "pure" market system, since the government becomes property of the financial and landowning rentier classes, and is used to fight a class war by actively suppressing all other profits and wages in order to increase rent and debt.)
I don't understand how you can think this is the be-all-and-end-all of economic thought. You are literally regurgitating a line ("Letting the market allocate resources has a lot of inefficiencies, but it works better than any alternative that has been tried.") you were probably taught in middle school without the slightest hint of irony.
I'm not saying it's untrue because it's taught early, but I am saying that it seems you haven't done much due diligence beyond that.
I think you misunderstood my point. I meant who should decide for someone else what he/she ought to work on? Who should decide for someone else what kind of world that person should want to live in?
I think you're creating a false dichotomy here. It's perfectly possible for a government to encourage people to work in certain areas without descending into tyranny.
Most modern democratic governments already regulate their financial markets, and already invest in research grants, infrastructure projects and support for start ups. The fact is, providing incentives to work towards long term goals is exactly the kind of thing that free markets aren't good at.
The fact is, providing incentives to work towards long term goals is exactly the kind of thing that free markets aren't good at
To claim that markets are not "good" at this kind of optimization entails the belief that they should be.
I'd argue that capital allocation in the face of risk and uncertainty is a hard problem, and that while governments (in their role as infrastructure providers) make the problem easier, they (governments in their role as social planners) enact policies to alter the risk landscape to achieve desirable social/economic ends and sometimes rents for specific interest groups.
>(governments in their role as social planners) enact policies to alter the risk landscape to achieve desirable social/economic ends and sometimes rents for specific interest groups.
Yes. And this is a GOOD thing. Because society as a whole (not to mention the human fucking species) is better off when certain special interest groups are advantaged: Children. The Elderly. Parents. Altruistic people. Social services. Healthcare. Investment in basic science research. Space exploration. Protecting the environment.
...and when certain people are disadvantaged: Killers. Psychopaths. Rapists. Thieves. Bullies. People who exploit market inefficiencies. Monopolists. Oligarchs that buy elections and bribe politicians. Aristocrats who throw their weight around to abuse and bully.
If you think certain types of people ("special interest groups") should NOT receive advantages or disadvantages based on their value to the human species... well... then you are f u c k i n g d u m b.
Who decides these things? WE DO. SOCIETY. YES, LIBERTARIANS, SOCIETY IS REAL.
Well, to be fair, governments also do things like create internment camps for Japanese Americans, Gitmo, horrible prisons, genocides, etc.
The worst atrocities of history are generally Government power run amok, where governments use propaganda mechanisms to rally the public into a frenzy and then do horrible things (like the Iraq war, Holocaust, etc.)
There is a big difference between the constructive activities of governments (solving coordination problems, building roads and other infrastructure, basic criminal justice) and the perverse social engineering that corrupt governmental organizations seem to universally gravitate toward.
I don't think that is entirely fair, as it seems to presume the scale of atrocity for any government necessarily outweighs the scale of its benefit. It isn't the case that events like you describe (genocide, internment camps, the Holocaust) are inevitable or constant. Governments do these things, when they do, because governments are the only power structures capable of it -- one would have to prove that corporations given the same opportunity or power would somehow not engage in anything similar. Other governments also fight against them. The only difference between a company hiring Pinkertons to shoot striking miners and an army killing civilians is in scale, I don't believe it says much about the implicit evil of government versus the implicit good of a free market.
Most of these events had some measure of popular support. Many people wanted to put the Japanese in camps. Many people wanted to rid Europe of Jews. A lot of Americans wanted the Iraq war, and a lot of Americans want prisons to be horrible, believing we're a Christian nation and that a Christian nation should punish the wicked and smite the infidels. It is, I think, a mistake to presume that government even in the act of tyranny necessarily separates people from the better angels of their nature through deception or coercion.
I don't disagree with any of your points (and they are well put).
However government is viewed by many as a legitimate purveyor of lethal force, both locally (everything from cops w/ guns to the death penalty) and remotely (intercontinental missile strikes, rendition, and foreign occupation).
Since governments typically have significant control over the media (by being able to classify information or more direct measures) there exists a significant self-perpetuating propaganda regime, which I think calls into question the basic legitimacy government is thought to enjoy, and along with it the mandate to use lethal force.
Most of the things we consider atrocities are the abuse of lethal force. When a militia member in Africa forces a child to murder his parents, we consider that unequivocally wrong, yet when a government murders his parents we consider that a legitimate projection of lethal force, perhaps only b/c we don't know the details.
So while governments do have some legitimacy and do a lot of good, the basic structures (consent, monopoly on coercion, and propaganda) are ripe for abuse and (I'd argue) transition into covert/improper use of force as they stabilize and their purpose becomes widely viewed as oriented toward peacetime activities.
>So while governments do have some legitimacy and do a lot of good, the basic structures (consent, monopoly on coercion, and propaganda) are ripe for abuse and (I'd argue) transition into covert/improper use of force as they stabilize and their purpose becomes widely viewed as oriented toward peacetime activities.
I agree with you. But I also feel that cynicism, while justifiable and oftentimes necessary, can itself be a blinder to the degree to which the faults of government can tend to take root in any power structure of any significance. Government can fall prey to abuse, and often does, but this doesn't necessarily mean that a lack of government in and of itself will limit abuse where any one group of people has any power over another. If government isn't a legitimate purveyor of lethal force or significant social planning then who or what is?
>the faults of government can tend to take root in any power structure of any significance
Absolutely.
>cynicism, while justifiable and oftentimes necessary, can itself be a blinder
I agree with this as well, and think that the proper course of action for the individual citizen is to uphold his civic duty and actively dissent, rather than merely resorting to cynicism.
Dissent can take many forms, but generally ought to provide a check to the tendency of government (or any kind of institution) to abuse its' power.
I'll tell you who. Everyone should decide together. Like mature adults with a brain. This is how society is and always has worked.
Parents decide how to raise their kids.
Bosses decide how their employees will act.
Elected leaders decide on what norms the country will have.
You are promoting a kind of ridiculous individualism that is completely disconnected from reality. No one is an island. We all exist in a community and a society and the rules of our society are determined--ideally--through mutual discussion, thinking, negotiation, agreement.
"Who should decide for someone else?" WTF are you talking about? Society should decide social issues. That's who.
I'm not trolling I'm just ranting. You're not going to change my mind--I've already assumed that you're an uneducated computer nerd with no understanding at all of people or society. I just come here to rant at libertarians. I make a new account every time because if you swear or sound "uncivil" some of the moderators will blackball you.
How would you define uneducated? Do you consider yourself educated?
Why do you consider yourself someone who understands people?
Also, why do you use profanity in your HN comments. Profanity can certainly add some rhetorical impact at times, but your use of it comes off a bit more like trolling than rhetoric.
I don't give a shit what computer janitors think about my language. I fucking swear because I fucking swear. Real people swear. Swearing is an excellent way to express your distaste.
I'm educated because, factually, I am fucking educated. Computer nerds--even the ones with computer science degrees who are fewer and fewer these days--always receive extremely narrow technical educations and are complete idiots when it comes to anything that isn't code. This is why they are libertarians. Libertarianism is the dumbest mass movement since puritanism. It's utterly bankrupt of culture and can only exist in the minds of people who severely overestimate their knowledge.
I come here to vent my hatred for libertarians. There are lots of libertarians here. They think the best way to solve major social issues is literally to do nothing and have no government, no community, no society. It's the dumbest ideology ever but it's very well funded by Koch, Thiel, etc. The Tea Party and austerity politics are the achievements of libertarians.
In my perfect world libertarian billionaires would be convicted of crimes against humanity and sentenced to death.
First, the profanity does not add any kind of flourish to your writing. I'm not the least bit offended by profanity. I'm just mentioning to you that your use of it is awkward, like toilet paper stuck to a shoe. Whether I agree with your point or not it just makes it worse than it would have otherwise been and does not add the zing or oomph you apparently think it does. It also feels to me a bit like the way a non-native speaker of English might mimic "everyman" use of profanity he'd seen depicted in a movie.
Second, for someone who claims to value community and society you are not engaging in a constructive discussion or making any kind of argument. If you have any intelligence or education it is certainly not evident from your remarks. No disrespect if you are actually educated or intelligent, but my guess at this point is that you are a 10 year old kid trolling for laughs and trying to learn Ruby on Rails.
It's not about offending people, it's about venting my feelings. I'm aware that I'm just yelling into a void. But venting is it's own reward.
Also I'm definitely not going to put any thought or work into a hacker news comment. Don't throw your pearls before swine and all that.
What HN never fails to offer up to me is libertarians such as yourself who indulge my rants and raves. So thank you. Like a 50 year old fat man showing his penis on ChatRoulette, your talking to me makes me feel like I have an audience.
I decided to humor you b/c such antisocial behavior is unusual on HN and I thought maybe you had a constructive argument (one that could possibly persuade someone) lurking behind the trolling.
Give HN a chance and please desist from deliberately polluting it.
You think bosses just spring up out of the ground? Or political leaders? Or parents? All of these authorities are created by society through social processes and their behaviour is determined by social processes. Parents are given authorities XYZ based on social consensus, but denied authority to e.g. abuse their kids. Bosses are given authorities ABC but denied other authorities and so on. These roles are all socially defined and came about through social processes.
"Who should decide?" The appropriate authorities that have been selected by social processes to have that authority. Your question is so fucking dumb because it pretends to be oblivious to the fact that legitimate authorities are put into power precisely because the community has delegated the job of deciding to them.
Your question amounts to saying "It's wrong that the legitimate authorities who have been elected, selected, chosen to decide questions within their sphere are making decisions within their sphere! What right do those legitimate community chosen leaders have to make decisions on behalf of the community!?"
Fucking idiot. The community leaders have the legitimate authority to make the community decisions precisely because the entire purpose of their office, and the reason they were put in that office, is so that they would and could make those decisions.
You're begging the question. "Who should decide?" is a retarded libertarian talking point that just emphasizes how little you understand co-operation and the entire fucking purpose of government.
"Who should decide?" The fucking GOVERNMENT. THAT IS WHY THEY EXIST. TO BE THE ONES WHO DECIDE.
It's really a balance - you say the world needs "investors" and not "day traders". By this, I am assuming you mean those who purchase shares using a buy-and-hold strategy as opposed to those who seek to profit off of short term swings.
It's difficult to have one without the other. Day traders and speculators supply the liquidity that enables long-term investors to buy in when they choose to do so. This does improve the efficiency of the markets, as there has to be another side to every trade.
To take it to the extreme: If everyone was a buy-and-hold investor, what would happen? IPOs and infrequent sells from buy-and-holds existing would be the only supply of stock. Would this be efficient? (Note: I'm not asking this as rhetorical question as I actually don't know the answer)
I am not arguing for or against HFT, as I've read both sides (from "they provide liquidity and lower spreads" to "they are akin to parasitic front-runners") and am not sure of where the truth lies. Instead, I'm just arguing against this concept that "day trading" provides no value.
Yes, did you see the angst when that one trader got stuck with a stock "overnight" ? He acted like having a stock overnight was the stupidest possible thing. Imagine holding a stock for 12 months! Goodness!
Day traders help stabilize the prices and ensure liquidity. Sure, they screw over other day-traders to get that position, but long-term investors overall benefit from this sort of squabbling.
These HFT guys are complaining about fractions of a penny. Meanwhile, illiquid markets such as the Bond Market have real issues going on, where bid/ask spreads are completely opaque, and pricing on the same bonds are vastly different from broker to broker. (with differences measured in hundreds of dollars... not fractions of a penny)
If HFT is indeed lowering the cost, how come they are making the money and not the retail traders?
This last quarter I may have bought/sold on the order of 10K shares max. If there's a $0.0001 tax per share traded, it would've cost me $1. That's ambient noise level.
If HFT is indeed lowering the cost, how come they are making the money and not the retail traders?
This sounds like an odd question if you transpose it to any other market where automated systems have lowered costs:
"If Amazon is indeed lowering the cost of buying books, how come they are making the money and not the consumer?"
"If Expedia is indeed lowering the cost of booking a plane ticket, how come they are making money and not the traveler?"
"If Toyota is indeed lowering the cost of manufacturing a car, how come they are making the money and not the auto buyer?"
Retail traders benefit from the cheaper trades facilitated by high liquidity in automated trading. There wouldn't be anywhere near as high liquidity in many of these stocks if there weren't automated systems trying to make money on penny price shifts.
That's a great point about Amazon. In fact, Amazon is playing the role of both exchange and market maker. Can you imagine the shitstorm of comments if a stock exchange tried that?
It's not only about bid-ask spreads; I find this a gross oversimplification of what HFTs bring the market.
Other things:
- Prices around the world across all exchanges are kept in line. If you need to hedge your Yen exposure and can only trade in Europe, you will get the closest possible price as someone in Asia or the US. This is true across all asset classes. This lack of massive arbitrage may get a lot of investors/hedgers/speculators significantly better prices.
- Derivatives on almost any asset are similarly tight as their underlying assets. No longer are you crossing wide/illiquid markets to hedge back month products or options. In a lot of markets, you can trade tight/liquid markets at almost any tenure; this is potentially a LARGE cost savings particularly compared to what some of the markets looked like a decade ago.
- Stat Arb + Relative value spreads are kept in line with their variance structures. Stocks move in line with their eigen components, options move smoothly with their volatility structures, futures at various tenures are priced in line with their synthetic interest rate exposure. Without being able to accurately price something, most participants are able to get a 'good' price on almost anything.
While a lot of the HFT is indeed zero sum between firms, the net economic effect of their activity is certainly not. The amount of $ that most firms make from the HFT business is really not that large; most of the big trading firms have made their fortunes from large speculative/fortunate events, not from being the best at constantly collecting a 1/10th of a tick of edge over and over.
That would only be true if you had to pay the tax and nobody else did. Assuming the result of the tax is less liquidity, higher volatility and bigger spreads, it could cost you quite a bit more.
Not all of them are making money. Most of the money is just being shuffled around between various firms. At any given time you can find an HFT firm making money and another one blowing up.
