5 ms·

How about a tax on capital gains that is inversely proportional to the time the financial instrument is held? The biggest cost HFT imposes on the world is the

How about a tax on capital gains that is inversely proportional to the time the financial instrument is held? The biggest cost HFT imposes on the world is the brain drain - there are so many super intelligent people working in the arms race that is electronic trading. Imagine if all of those smart people were doing something productive instead of helping people buy and sell options 1 microsecond faster.

tom_b 16y ago
I believe you are presuming that all those super intelligent people are hacking on high frequency trading algos because of the big $$$ being made for it. I think hacking on those things would be great fun. Others might as well. I do like the idea of putting some kind of brake (or field-leveling force?) on the actual act of high speed trading - without any real economic insight of my own, it seem flaky/shady.
deleted 16y ago
[deleted]
aurem1 16y ago
The main problem with your argument is that you assume some central authority is able to correctly judge what activities are worthwhile and what activities are not. They tried that in the Soviet Union and failed miserably. "Something productive" is very hard to define and that's why we let the marketplace define it.
baberuth 16y ago
I find the "talented people not fulfilling their potential" argument terrible. That's often cited as one of the costs of HFT, but its really true of a lot of human pursuits. It just so happens that the prevailing sentiment is that finance, and HFT in particular are particularly immmoral, so its a popular notion; I find it as "bad" that hordes of talented engineers work on optimizing ad revenue for Google. Humans will always be underemployed from some perspective ("Oh but she could be doing X"). Penalizing them for not operating in a way that is consistent with your (or anyone's) world view is far more sinister.
- pg 16y ago
  The fact that smart people's time is also wasted on other types of work doesn't mean there is no such thing as wasting time. Do you really believe it's meaningless to talk about time being misspent? Would you call it sinister for example to criticize someone for spending their time murdering people at random?
  - aurem1 16y ago
    I think the point here is that there is no effective standard by which we can define "wasting time". Many people would consider a lot of the startups you fund as "wasting time". Indeed any particular activity could appear useless. But we prefer a market-driven system because in aggregate we are worse than the marketplace at identifying such activities.
  - joebadmo 16y ago
    I imagine he would call the murdering part sinister, as opposed to the time spent doing something other than what is optimal. I agree with the GP that the opportunity cost argument is so wholly dependent on the judgment of the debated activity that it doesn't really pertain one way or the other. That said, HFT doesn't strike me as something that adds value to the economy.
    - pg 16y ago
      Baberuth and I are talking about whether it's sinister for A to criticize B's actions, not whether B's actions are sinister.
      - baberuth 16y ago
        Correct pg, though for the record, I do also avoid murder whenever possible. A criticising B is not a problem. A preventing B from doing something is sinister (life, liberty, pursuit of happiness).
      - joebadmo 16y ago
        "Would you call it sinister for example to criticize someone for spending their time murdering people at random?" I'm saying it depends on what A is criticizing about B. It is not sinister for A to criticize B's action. I'm not sure if it's sinister for A to criticize B's misallocation of time spent. It's a weird thing to think about. I think it's weird to think about because, as was my point earlier, the judgment of whether the time was misspent is wholly dependent on the judgment of the way the time was spent.
andrewf 16y ago
Imagine if all of those smart people were doing something productive instead of helping people buy and sell options 1 microsecond faster. From each according to his ability?

tom_b 16y ago

I believe you are presuming that all those super intelligent people are hacking on high frequency trading algos because of the big $$$ being made for it. I think hacking on those things would be great fun. Others might as well. I do like the idea of putting some kind of brake (or field-leveling force?) on the actual act of high speed trading - without any real economic insight of my own, it seem flaky/shady.

deleted 16y ago

[deleted]

aurem1 16y ago

The main problem with your argument is that you assume some central authority is able to correctly judge what activities are worthwhile and what activities are not. They tried that in the Soviet Union and failed miserably. "Something productive" is very hard to define and that's why we let the marketplace define it.

baberuth 16y ago

I find the "talented people not fulfilling their potential" argument terrible. That's often cited as one of the costs of HFT, but its really true of a lot of human pursuits. It just so happens that the prevailing sentiment is that finance, and HFT in particular are particularly immmoral, so its a popular notion; I find it as "bad" that hordes of talented engineers work on optimizing ad revenue for Google. Humans will always be underemployed from some perspective ("Oh but she could be doing X"). Penalizing them for not operating in a way that is consistent with your (or anyone's) world view is far more sinister.

pg 16y ago
The fact that smart people's time is also wasted on other types of work doesn't mean there is no such thing as wasting time. Do you really believe it's meaningless to talk about time being misspent? Would you call it sinister for example to criticize someone for spending their time murdering people at random?
- aurem1 16y ago
  I think the point here is that there is no effective standard by which we can define "wasting time". Many people would consider a lot of the startups you fund as "wasting time". Indeed any particular activity could appear useless. But we prefer a market-driven system because in aggregate we are worse than the marketplace at identifying such activities.
- joebadmo 16y ago
  I imagine he would call the murdering part sinister, as opposed to the time spent doing something other than what is optimal. I agree with the GP that the opportunity cost argument is so wholly dependent on the judgment of the debated activity that it doesn't really pertain one way or the other. That said, HFT doesn't strike me as something that adds value to the economy.
  - pg 16y ago
    Baberuth and I are talking about whether it's sinister for A to criticize B's actions, not whether B's actions are sinister.
    - baberuth 16y ago
      Correct pg, though for the record, I do also avoid murder whenever possible. A criticising B is not a problem. A preventing B from doing something is sinister (life, liberty, pursuit of happiness).
    - joebadmo 16y ago
      "Would you call it sinister for example to criticize someone for spending their time murdering people at random?" I'm saying it depends on what A is criticizing about B. It is not sinister for A to criticize B's action. I'm not sure if it's sinister for A to criticize B's misallocation of time spent. It's a weird thing to think about. I think it's weird to think about because, as was my point earlier, the judgment of whether the time was misspent is wholly dependent on the judgment of the way the time was spent.

andrewf 16y ago

Imagine if all of those smart people were doing something productive instead of helping people buy and sell options 1 microsecond faster. From each according to his ability?