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The lesson in the first part of your comment is very important, but the second paragraph is a miss: "there's something fundamentally wrong about speculating wit

The lesson in the first part of your comment is very important, but the second paragraph is a miss: "there's something fundamentally wrong about speculating with food". Absolutely not. Besides being one of the oldest types of speculation, speculation on food provides farmers with a guaranteed sale price for their product months in advance. Without futures contracts speculation, farmers would have to assume ALL the price risk. And more of them would fail as a result of market fluctuations. As it stands, the futures markets allows for expansion of finance and insurance in the industry, which ultimately improves stability in the entire food supply chain.

antonvs 4y ago
The issue is more whether the profits from an activity like that are reasonable. One could imagine taxing such profits at a much higher rate, just to pick a simple change that’s compatible with the current system.
- SuoDuanDao 4y ago
  But price discovery is a public good.
  - antonvs 4y ago
    Sure, but what’s its value? It doesn’t make sense to compensate people for significantly more than the value of the work they’re doing.
    - SuoDuanDao 4y ago
      Maybe we should set up a market to discover the fair price of price discovery. Oh wait, that's the derivatives market.
- chrisco255 4y ago
  There is no objective formula for determining what is reasonable. That's an entirely subjective thing. Everyone tries to buy low and sell high for anything they produce. A manufacturer will try to get the cheapest price for all of the raw materials that goes into their goods and they will try to charge the highest price they can. They are only ever kept in check by competition and alternative choices in the marketplace. And the market functions to regulate profits by producing more supply whenever there's an imbalance.
  - antonvs 4y ago
    The market is not the only possible judge here. Anyway, I didn’t say anything about objectivity. Of course “reasonable” is subjective. But if we have some basic values, we can make objective judgements about what furthers those values and what doesn’t. For example, we could decide that it’s not conducive to an equitable society to allow single individuals to make and keep billions of dollars on some small number of trades. And in fact, that was the case for decades before Reagan cut the highest marginal tax rate from 70% to 28%, which directly led to staggering inequality today. Modifying what the original commenter said, there’s something fundamentally wrong with profiting massively on speculation with food.

antonvs 4y ago

The issue is more whether the profits from an activity like that are reasonable. One could imagine taxing such profits at a much higher rate, just to pick a simple change that’s compatible with the current system.

SuoDuanDao 4y ago
But price discovery is a public good.
- antonvs 4y ago
  Sure, but what’s its value? It doesn’t make sense to compensate people for significantly more than the value of the work they’re doing.
  - SuoDuanDao 4y ago
    Maybe we should set up a market to discover the fair price of price discovery. Oh wait, that's the derivatives market.
chrisco255 4y ago
There is no objective formula for determining what is reasonable. That's an entirely subjective thing. Everyone tries to buy low and sell high for anything they produce. A manufacturer will try to get the cheapest price for all of the raw materials that goes into their goods and they will try to charge the highest price they can. They are only ever kept in check by competition and alternative choices in the marketplace. And the market functions to regulate profits by producing more supply whenever there's an imbalance.
- antonvs 4y ago
  The market is not the only possible judge here. Anyway, I didn’t say anything about objectivity. Of course “reasonable” is subjective. But if we have some basic values, we can make objective judgements about what furthers those values and what doesn’t. For example, we could decide that it’s not conducive to an equitable society to allow single individuals to make and keep billions of dollars on some small number of trades. And in fact, that was the case for decades before Reagan cut the highest marginal tax rate from 70% to 28%, which directly led to staggering inequality today. Modifying what the original commenter said, there’s something fundamentally wrong with profiting massively on speculation with food.