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It's only neutral (at best) if you don't consider opportunity cost. Is the best way for the country/society/humanity to deploy a bunch of smart people with a de

It's only neutral (at best) if you don't consider opportunity cost. Is the best way for the country/society/humanity to deploy a bunch of smart people with a decade and a half of education truly an attempt to try to cheat the speed of light? If trades took 2x as long to execute as they currently do, what exactly would be the harm?

scotty79 8y ago
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integrate-this 8y ago
Well, you would have lost out on a lot of innovation for one. I would be willing to bet that nearly half of the world's high performance computing specialists cut their teeth with a trading firm at one point or another. By your logic, there would have been no benefit to video games or going to the moon even though each of these things have helped deliver large amounts of technological advancement. IE, Facebook is a giant waste of resources but they employ many of the world's smartest engineers. Because of that they've spawned things like ReactJS which has completely changed web development for thousands of other companies.
QuackingJimbo 8y ago
The "brain drain" argument is fair, but you can successfully apply the brain drain argument to anything short of curing diseases or feeding the hungry I consider HFT to be no worse of a brain drain than, say, Instagram, or any similar virus
ycombobreaker 8y ago
People are not "deployed" into HFT, they exercise their free will. Their livelihood is not your opportunity cost.
t1lthesky 8y ago
Even supposing that HFT adds no value to society (which is an incorrect assumption as many commenters have already pointed out), this particular argument is pretty inane in my opinion. There are perhaps 4-8 significant players in the HFT space, all employing anywhere between a few hundred to a thousand people. Probably less than 5000 people total, and if you only include programmers and quants, maybe less than 2000. Google alone has 30000 programmers. How many of them are optimizing ads for eyeballs vs “benefiting the country/society/humanity”? What about the thousands of programmers making video games mechanics more addictive for children? I think it’s silly to focus on one tiny industry, and demand that those people should be working on things for the good of humanity, when the fact is the vast majority of humans just work for their own livelihood. I mean, what do you think 95% of the people in SV are doing? Not every company is trying to cure cancer or explore space... HFT is such a small, niche, industry, and also extremely productive per employee relative to most other industries. (the primary reason for comp being so higher). It replaced the thousands of manual traders that used to be responsible for arbitrage and market making with automated robots, dramatically increasing market efficiencies while reducing the amount of human capital required to provide those services. I find all the virterol towards hft from SV very puzzling, as it seems to exemplify all the things that SV espouses!
vostok 8y ago
> It's only neutral (at best) if you don't consider opportunity cost. I might be missing something, but isn't opportunity cost a good argument for HFT? HFT employs far fewer people than pre-HFT trading that came before it.

scotty79 8y ago

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integrate-this 8y ago

Well, you would have lost out on a lot of innovation for one. I would be willing to bet that nearly half of the world's high performance computing specialists cut their teeth with a trading firm at one point or another. By your logic, there would have been no benefit to video games or going to the moon even though each of these things have helped deliver large amounts of technological advancement. IE, Facebook is a giant waste of resources but they employ many of the world's smartest engineers. Because of that they've spawned things like ReactJS which has completely changed web development for thousands of other companies.

QuackingJimbo 8y ago

The "brain drain" argument is fair, but you can successfully apply the brain drain argument to anything short of curing diseases or feeding the hungry I consider HFT to be no worse of a brain drain than, say, Instagram, or any similar virus

ycombobreaker 8y ago

People are not "deployed" into HFT, they exercise their free will. Their livelihood is not your opportunity cost.

t1lthesky 8y ago

Even supposing that HFT adds no value to society (which is an incorrect assumption as many commenters have already pointed out), this particular argument is pretty inane in my opinion. There are perhaps 4-8 significant players in the HFT space, all employing anywhere between a few hundred to a thousand people. Probably less than 5000 people total, and if you only include programmers and quants, maybe less than 2000. Google alone has 30000 programmers. How many of them are optimizing ads for eyeballs vs “benefiting the country/society/humanity”? What about the thousands of programmers making video games mechanics more addictive for children? I think it’s silly to focus on one tiny industry, and demand that those people should be working on things for the good of humanity, when the fact is the vast majority of humans just work for their own livelihood. I mean, what do you think 95% of the people in SV are doing? Not every company is trying to cure cancer or explore space... HFT is such a small, niche, industry, and also extremely productive per employee relative to most other industries. (the primary reason for comp being so higher). It replaced the thousands of manual traders that used to be responsible for arbitrage and market making with automated robots, dramatically increasing market efficiencies while reducing the amount of human capital required to provide those services. I find all the virterol towards hft from SV very puzzling, as it seems to exemplify all the things that SV espouses!

vostok 8y ago

> It's only neutral (at best) if you don't consider opportunity cost. I might be missing something, but isn't opportunity cost a good argument for HFT? HFT employs far fewer people than pre-HFT trading that came before it.