Yeah but building stuff to sell is fairly different from making trades faster or other market stuff?

It's another level detached from real value

How is it different? We could make an argument that the efficient allocation of capital is what drives the rapid expansion of solar. It provides loans for businesses and individuals, it helps investors raise money, it rewards companies for doing well, it allows farmers to hedge crops. It is not perfect but it helps facilitate most of our modern society. Not perfect but which system would be better?

If you could either improve hft by some percentage, which slightly increases market liquidity and has downstream impacts, or you could work on making the manufacturing cost of solar panels the same percentage cheaper or making then some percentage more efficient, the latter option is more direct.

I think it would be good if our best minds went to work on directly creating better things instead of indirectly moving money around efficiently so that other people might eventually find success.

I get the intuition, making solar panels cheaper feels more “direct” than making markets more liquid. But that framing underestimates how much “indirect” efficiency matters.

Capital has to get from savers to builders. Liquidity, tighter spreads, and efficient pricing lower the cost of capital for all projects, including the ones building better solar panels. If financing those projects is cheaper and faster because markets function well, more of them get done.

It’s easy to glorify the visible widget (solar panels) and discount the invisible infrastructure (capital markets), but the latter is what makes scaling the former possible. The system needs both.

There is a difference between 1) doing something valuable that is then rewarded with money through market mechanics and 2) maximizing money as an end in itself. The former is a great feature of capitalism, the latter is its tragedy and Achilles heel.

In the first case, money is important (if you completely ignore it, you can’t deliver value sustainably), but in a perfect world it should be more like fuel and an indicator that you are doing something right.

Already said it before but the efficient allocation of capital benefits all of us. From the farmer hedging their crop prices to the local manufacturing company that is drawing a loan to expand their business. What system would you have in its place?

Off the top of my head, for the manufacturing company, why not have people invest in it? If it is doing something good, people will buy shares, and the company will gain the money to expand. For the farmer, if the issue is harvest instability, why not amortise the cost accordingly?

That sounds tidy in theory, but in practice it’s rarely that simple. Investors don’t just fund “good” companies, they fund opportunities with risk/return profiles that make sense relative to alternatives. Plenty of companies doing socially useful things struggle to raise capital because the payoff is long, messy, or uncertain.

Same with farming. “Amortize the cost” only works if margins and credit markets allow it. A small farmer facing price volatility, weather risk, and thin margins doesn’t have the same access to capital markets as a Fortune 500 manufacturer.

The whole point of efficient markets is to reduce those frictions, to better allocate risk and capital so that good projects (whether in manufacturing or farming) don’t just work “in theory.”

For me, no better system exists in the world. It’s not perfect but until there is something that works better I will have the agree with it.

> Investors don’t just fund “good” companies

Exactly what I am lamenting in my original comment. Investors chase returns, i.e. money for its sake.

As long as that is conceptually a thing, it is a no-brainer to fund a bad company if you are sure its shares will go up in price during the term of your investment; it is also in your interest (and acceptable within the “money for its own sake” framework) to ensure its shares do go up by helping hype it up; etc.

This all, I believe, is a source of strong and far-reaching negative externalities, which I am far from sure are trumped by its potential benefits.

> A small farmer facing price volatility, weather risk, and thin margins doesn’t have the same access to capital

Why do you need access to capital in order to price in the risks or the cost of relevant insurance? (That’s what I meant by amortising, I might have used a wrong term.)

Why are you “facing thin margins” like it is not an open market where you set your prices and your margin is your choice?

Returns-chasing isn’t some moral failure, it’s the mechanism by which capital gets allocated. If you strip that out, you don’t get fewer “bad” companies, you just get less disciplined pricing of risk and more capital scarcity overall.

On farming: margins aren’t simply “a choice.” Prices are set in global commodity markets, not by a farmer unilaterally. Thin margins are structural, and access to capital or insurance is exactly what helps them survive volatility rather than get wiped out.

I am not sure why you think farmers get to set price on a commodity item. They don’t and because of that will often leverage future contracts or other hedges to bake in prices early.

> less disciplined pricing of risk

I think it’s up to every participant’s discipline and that’s fair enough. If one sets prices in too much, another local farmer will sell more. If another local farmer undercuts on price, they’ll suffer more when times are tough and weather is bad.

> more capital scarcity

If there is a lot of capital knowingly feeding ethically problematic and/or incompetent companies due to an expectation of return (and then ensuring that return by promoting those companies), then less capital is absolutely better.

Regarding the rest of your comment, I’m not as advanced in this subject, so to me you seem to only list more issues with the system as is.