It’s an important function, but the guys making these bets frequently pull down $10-$100M per year, each. That’s a huge toll to extract from the productive economy for playing this game.

And then there are the guys managing things like pensions, skimming a percentage every year, just because they happen to be locked into that position, meanwhile underperforming a basket of index funds. Just happily eating away at the retirement savings of thousands-millions.

I think the comment was a roundabout way of saying this is a clear market failure. There are more societally important things these people could be doing instead of shaving another ms off a transaction or finding minuscule option pricing inefficiencies. That the market is not correctly remunerating those options is the failure.

> For example, the tariff tantrums caused by trump proposing 100%+ china tariffs where he crashed the markets last spring, leading to a moderation in policy.

"Akshually traders are good bcuz they crash the market when the president does insane things" is not the own you think it is.

Company X sued by company Y shouldn't automatically translate to company X did a bad thing. Companies get sued all the time.

Very wrong. Arbitrage is not “insider trading”.

We let the market dictate how society's resources are allocated. And we see, as a result, how the market is actually not at all interested in the satisfaction and well-being of the people in society.

I don’t think you have to go from here to planned economy straight away. There are capital gains taxes between the current level and 100% which might produce better outcomes.

While true, another is that “crop harvesting efficiency” and medicine are both more a biology/chemistry problem which may not interest the same people so it’s unclear they’d even attract the same thing.

It’s also missing that advancements in one field, particularly computer science, computation, and AI creates significant infrastructure that can be applied to those tasks in never before seen ways.

And finally, physical problems evolve much more slowly and is more capital intensive and requires a lot more convincing of other people. Digital problems by comparison are more “shut up I’m right, here’s the code that does X”. It’s easier to validate, easier feedback resulting in quicker mastery, etc. Not saying it’s completely bulletproof in that way, but more true than in physical sciences these days. So just throwing more people at the problem may not necessarily yield results without correct funding which historically was provided by the government (hence the huge boom in the 60s) but as the low hanging fruit were picked and government became more dysfunctional, this slowed to a crawl.

For example, personally I probably could have ended up working on fusion research if I had more economic security growing up and it felt like the nuclear industry was booming instead of constantly underdeveloped (both fission and fusion). But instead I’ve worked with computers because I felt like it was a boom segment of the economy (and it has largely been while I’ve worked) and the problems felt interesting (I’ve worked on embedded OSes, mobile OSes, ML, large distributed systems, databases, and now AI) and like there’s always interesting products to build to help improve the world.

>not status orientated

Should we view those who chase status as a bad thing, or look to those who assign status that is then chased? If the average person cares more about who won last night's big game than some work done to improve medication, should we really have anything to say about those who decide to optimize their lives by what society actually rewards?

I noticed this way back in grade school. Good grades were, if anything, a net negative prestige, while sports were a positive prestige. It made me wonder what the school was actually optimizing for, because the day to day rewards weren't being given to the studious. (The actual reward function was more complicated, such as good grades being a boost if one was already a sports star, but these were exceptions to the norm.)

Finance and investment banking is about resource allocation. To get the stuff like agriculture innovation etc done, you need money. You need someone to look and say, this is worth investing money in. This is far from trivial. The investment firms try to predict what technology or company is going to make something profitable. This allocation task is very important. There are many ways to fail at producing anything useful. Intent purity is not sufficient.

Of course the suspicion towards this is eternal. People always hated the traders as opposed to the farmers. But trade is crucial. And it relies on estimating what value things have and rewards correcting over the incorrect beliefs of uninformed people. This kind of information based knowledge work was always disliked by most people as it seems lazy. And for sure there are zero sum and rent seeking aspects or insider trading etc. But it's not so simple as to say that all investment and finance jobs are negative and working on farm efficiency is always better.

I would imagine that increasing crop yields would do social good primarily via decreasing the amount of cultivated farm land, especially since we're well past Jevons paradox territory with calorie intake I imagine.

While the pharmaceutical industry is large, the marginal researcher does still seem to have a pretty positive impact from an outside view.

The most positive use of human time probably looks something like antiwar advocacy, but I don't really think that most quants have the social skills for that tbh.

I think energy is actually the most underserved sector, with maybe high tech manufacturing as a hidden second.

Just look at what happened when AI took off in the US and our ongoing struggle to get global warming under control - only China is taking a serious stab at this which is why they’re absorbing AI more effectively than we are.

Also semiconductor manufacturing has clearly gotten way too concentrated and there’s not enough experimentation with new designs (eg throwing more at existing DRAM designs instead of building new designs like in-RAM compute to shift the power and performance by an order of magnitude or 2 thereby easing the pressure of how much is built).

It’s been a few years since I looked deeply into it, but I think we produce enough to have everyone survive but not necessarily thrive. At the time, it came out to something like 1700 kcal per person. Even if we did have enough, the next problem is logistics of allocating that food to everyone who needs it.

We do have a lot of policy levers that are tilted in favor of making money in finance, though, and we could change those levers.

  - The carried interest loophole
  - We could add small transaction taxes
  - We could raise capital gains taxes
  - We could be a little more focused on enforcing antitrust
  - We could raise higher end marginal tax rates to reduce the relative attractiveness of off-scale payrate jobs
  - We could provide better universal services to do the same

Ads maybe, but finance controls almost all of the world.

The thing is the same hardware does both, Deepmind should be the best example of a company that's developed both.

Also there is no such thing as 'cancer' it is '_____ cancer' which seems to be about one of a million different things. So technically you have to cure cancer a million times. Expanding our compute ability and smart algorithms to solve the medical issues are a far more scalable option than having humans work on it alone.

I'm sure people (society) wants cheap food, free universal healthcare, free public transport, so why don't we have these things?

Under capitalism each of these individual systems needs to turn a profit to be deemed worthwhile instead of treating the system as a whole and taking into account the economic externalities and benefits to the entire system.

What exactly is the point of making a unverifiable statement(s) like this?

As someone who has worked in the industry, I've yet to see any compelling argument that high frequency quants are making any meaningful contribution to society. Maybe on the low frequency end, but slightly higher market liquidity doesn't serve that large a social good imo.

I think I have a very different idea of what "exactly" means; I would expect set equality, but at best you're using it to describe a massive superset.

Isn't Jane Street mostly into HFT arbitrage?

The Rockefeller and Ford foundations funded the most successful crop improvement programs. I imagine finance tried to persuade them to use that money somewhere else.