I'm undecided about HFT's ability to provide liquidity in the market. There are certainly some drawbacks (e.g. you have to have high capitalization to afford HFT colocation), but there might be some tangible long-term benefits as well.
But I'm more concerned about how much of a waste it all is. Jeff Hammerbacher famously quipped that "the best minds of my generation are thinking about how to make people click ads," when referring to developers pounding at the doors of google's and facebook's recruiters. HFT is similarly unfortunate. Somewhat useful maybe, but overall a depressing use of brilliant minds.
As someone who works in HFT, you have hit the nail on the head about the real problem with it. It isn't front running, or instability, or unfair trading or any of that. It is simply that so many very smart people are working on it, instead of other more useful ventures. Of course, I feel the same way about data mining social networks.
It seemed fairly clear to me that the parent wasn't saying that at all. What he was pointing out was that discussion of, and concern about, faster access to information, decision making and execution causing volatility in the market isn't new. That's not a straw man at all.
Also, as an aside, it's worth nothing that Hammerbacher only said that after making millions working at Facebook. I'm pretty sure that makes him an asshole.
* - For fairness, you could execute trades within a generation in a pseudorandom order determined by a random key, which is cryptographically committed to prior to the opening of trading, then reveal the key after the market closes to prove that you executed them in the correct order.
But you're incented to do the same thing! So if you're going to put in an order for 200 maybe I should put in an order for 400? You can see where this is going...
People worry about HFT destabilizing the market. It seems to me that would be a much greater risk if you're incentivizing people to put in crazy orders that they don't actually want to do just to grab the percentage of demand that they desire.
This seems to disincentivize putting up for sale more than the seller wants to sell, and to also disincentivize "Sybil attacks" where the seller has an incentive to create false identities for himself. (Just a thought experiment, would be happy to know what I'm missing here :-)
One trader can act faster than another, and a millisecond(s) can be shaved of with the right location of your server (co-located near the exchange).
When markets went over to computerised trading, it was argued that the human element of open-outcry trading was vital in preserving a culture of honesty and integrity.
Critiquing HFT is myopic, because it's based on a meaningless definition of "high frequency". HFTs are doing what traders have always done. There's a legitimate argument against speculation, but it's pointless to single out speculators that deal in the very short term. Singling out the newest technology is just a cheap shot, there's no fundamental difference between trading on a millisecond horizon or a minute or hour horizon.