A frictionless market with a lot of liquidity should (in theory) result in rapid, accurate and transparent price discovery, which in turn should result in more

A frictionless market with a lot of liquidity should (in theory) result in rapid, accurate and transparent price discovery, which in turn should result in more optimal asset allocation, which in turn should result in people being able to get what they want at a lower price. In practice, many markets are far from frictionless, and far from liquid, and pricing far from transparent, which is where most (all?) of our problems come from. The best (and most ironic) example comes from the financial services industry itself: Although markets are the daily bread of the industry, it is ironic that the market for financial services is opaque and noncompetitive. How else could such profits be sustained? How else could the two and twenty compensation convention survive, if it weren't for the fact that the industry acts as an unofficial cartel? When we complain about financial services, we often forget that the rhetoric of many free-market neoliberals is pure hypocrisy: what they practice is 180 degrees apart from what they preach.