All complex systems have obvious flaws. That these flaws can be plugged by intrusion and central planning doesn't mean we don't create other ones that perhaps are less obvious or take longer to manifest.

I'm an empiricist first - which makes me tend toward conservative, since conservatism is a preference for tried and tested solutions, which is basically empiricism - and I think the evidence is well in the "a smallish government is good and necessary" camp. I don't think it's a settled question though. The city states of Greece for example were amazing hubs of innovation without a centralized state. I see no reason that what we have today is likely to be superior to a state that does defense, a police force and a barebones legal framework (plus case law equity).

Disincentivizing rent seeking behavior is probably a good thing. Does it work, though? Is the sum of what we have under this system better than what we would without? I'm not convinced. The government is printing vast sums of money and literally giving it to rent seekers. We're talking trillions. We subsidize (completely useless, net harmful) things like ethanol.

Against this you're considering controlling HFT, a hyper competitive industry under which the market seems to work better than any other market in the world. And for which there are free market solutions. There are exchanges on which HFT is banned. Few people seem to want to trade there. To me this indicates a consensus that most people are not concerned about HFT.

China - a government - sent the price of rare earths through the roof. So the free market started building more mines. OPEC - governments again - set the price of oil for a long time and reaped obscene profits.

What exactly do you think is going to be worse than this? There are fat, rapey Saudi princes sitting on hundreds of billions where a free market, non government system would have meant oil was sold at far closer to cost.

Governments have other externalities. For example, welfare and free health care causes less intelligent, less motivated, less economically useful, more impulsive, more mentally ill people to outbreed (both in volume and time to reproduction of each generation) productive, mentally healthy, intelligent people, where otherwise they would be unable to. Iterated over several generations at an exponential rate - we're not there yet - this is a disaster for the human race and the opposite of what has brought us to this point.

The above may or may not play out. But it is a likely practical outcome, and one that's not anticipated, and one that (in the long run) could sink the whole system, by faultily central planning the resolution of the tension between compassion and incentivizing robustness, achievement and self sufficiency.

I'm not saying government is bad. I'm saying that the jury is still out, and there are good reasons to think it may actually be a strong net harm, and good reasons to think it might not be. I don't accept your view that it's certain to be a net good or even certain not to be majorly harmful.

I'm not suggesting that we create a protected class of 'experts' who's job it is to move money.

I'm saying to put in some kind of minimum competency test.

There's nothing to be gained by having financially illiterate people move their money on a whim.

Are you arguing that because they occasionally fling their money at successful businesses that it's justifiable?

Yes I am.

And also because they often fling their money at unsuccessful businesses. That is a good thing, not a bad thing, if you think it through.

That's not an externality of government. That's a product of bad governance. All you need to do to correct it is to make welfare contingent on sterilization.

You haven't made a persuasive case for why.

It's not good for the average joe investor. Why are the gains to others more than proportional?

This is a joke right?

Let's also ban alcohol because some people lack self-control or have genetic disorders (oh wait...). Please, no nanny state government policies, if you want someone to tell you what to do, move back in with your parents. And it's pretty ironic hearing this sentiment on a poker forum.

I don't agree. In fact you contradict yourself below:

Some may benefit from adjusting their strategies.

Market makers aren't in the primary business of valuing assets or making directional bets. They're just their to make markets.

What?

If we could isolate the people who have severe problems associated with alcohol abuse and exclude them from the market place we would. The reason prohibition isn't practical is because it's impossible to exclude the people who have behavioral problems without limiting the choice of people who're using alcohol responsibly, which is the vast majority. Heroine can be used responsibly by a segment of the population too, and if we could make it available to only those people it would be a good thing but because of it's high rate of abusive we take extra measures to try and stop people from taking it up.

"Some may benefit from adjusting their strategies. "

Yea, some. We know exactly which ones. The people who have very low levels of financial literacy will in every case be better off buying funds instead of individual stocks. And we can predict who these people will be very easily.

"Market makers aren't in the primary business of valuing assets or making directional bets. They're just their to make markets. "

Wrong term, plug in the word investors.

I'll read the rest when I have time.

HFTs trade stocks, don't they?

It's that obvious, huh? Prove it.

It's been years since I read this, but I remember it being interesting:

http://www.cftc.gov/idc/groups/publi...hcrash0314.pdf

Can you rephrase?

If someone wants to buy alcohol or heroin (which should also be legal), even if the state deems them unfit for consumption, they will get their hands on them. At the end of the day, people are going to do what they're going to do. Better to keep these transactions above the black markets, where the products are safer and funds aren't transferred to fund "real" crimes.

If heroine was available at convenience stores you really don't think it would have an impact on rates of abuse? You don't really think that policy can't impact peoples' behavior.

Being in favor of legalizing isn't the same as being against regulation.

If heroine were legally available, would you go out and try it (assuming you aren't a degen)?

But yes, it will definitely change behavior, in the sense that addicts will pay less for their addictions and will be less likely to resort to crime. In Sweden, they took an extreme measure of considering heroin addiction a medical condition and gave it away for free. As a result, they saw a decrease in crime. Also, the drug revenue wouldn't pocketed by thugs who violently claim to own some of our streets.

But practically speaking, heroin is an extreme example. We should start the discussion with drugs that are at least safer than alcohol and cigarettes.

If you want discuss this further, make a new thread in Politics.

Yes, I'm sure if you give addicts unlimited heroine they won't go around robbing people to get money to support their habit. That's not an argument for making it readily available to the general public. It just illustrates how all consuming and destructive of a habit it is, and why we should do whatever we can to stop people who clearly wouldn't be able to handle their **** from going down that path.

The point is pretty obvious and it has nothing to do with the nuances of regulating heroine - there're clearly places where it's appropriate to use policy to guide consumer behavior. Everyone accepts age as a limiting factor in peoples ability to make decisions and it's not as if once you pass 18 you become perfectly informed, reasonable and rational.

To keep this on topic let's just switch the analogy back to stocks.

We all recognize that a lot of people who're trying to trade are basically naive as the reality of their chances, and are hurting themselves. The question is only whether it's justifiable.

Whether those losses are more than offset by the incremental changes in the cost of raising capital / liquidating assets - that's a reasonable question.

Measuring the losses depends on how incompetent a person we're talking about. If it's a guy who put aside 5% of his portfolio to play the market as entertainment it's not really a problem. It can be a lot worse than that though. How would you even go about estimating how many people have compromised their retirement by making risky investments?

If you just plain don't care about the well being of anyone stupid enough to make such terrible choices as an adult that's... not an uncommon perspective. But there's nothing noble or fair about allowing dumb people to walk off a cliff just so we can turn their corpses into dog food.

So you would advocate a law eliminating the ability of individual investors to invest, using the rationale that some investors are bad at it and need to be stopped?

I suggested that there be a more stringent test of competency for people to be able to move large fractions of their net worth into financial instruments that seem inappropriate for them.

Uh no, it illustrates that addicts will not resort to crime, because they can afford it by working, while being a productive member of society. And Milton Friedman claims that the use of extreme drugs (e.g. heroin, crack) is due to safer drugs being too expensive. Lastly, I don't want to stray too far off topic, but there have been studies of decriminalization of drugs leading to less addiction and drug related violence. You don't solve teen pregnancy by banning contraception, likewise you don't reduce drug and gang related violence by outlawing drugs.

As for trading, I don't care of you're an econ major or a fresh out of school MBA grad, everyone starts out a novice in this business.

Do you support tests for other activities adults do? Who sets the pass/fail line?

Unfortunately Sweden is pretty backwards when it comes to illegal drugs. We have had some few cities trying it handing out clean needles to addicts, but nothing compared to our neighbours Denmark and Norway who I assume you were thinking about.

As for heroin it seem that some people who feel really ****ty get very addicted to heroin, but rats and most humans who feel okay don't get that addicted to heroin.

Define stringent, competency, large, instruments, and inappropriate

This isn't about criminalizing - it's about excluding certain segments. Nobody thinks that children should be able to walk into a corner store and buy heroin, and there're adults out there who're less functional than some children.

If offering the substance to people who're already junkies reduces crime that's an argument for making it available to people who're already addicts, not to people who haven't yet picked it up.

In the case of drugs you can never with any certainty say that someone is made worse off because I guess on some level you can just dismiss them as having some kind of a death wish. Of course it's often that they didn't understand the nuances of the chemical dependency. But for people who've never had anything major go wrong in their lives, it's convenient to look at the world through a lens where everyone is basically rational and people deserve what they get.

It's not just low functioning people who make mistakes though. I knew (of) a lawyer who in his 60s blew most of his retirement savings 'playing the market' (he died a few years later from alcohol related issues). And I only know this because my aunt left him shortly after and gave us the juicy details - people are usually too proud to admit their financial mistakes. It's not so much that he was (particularly) dumb as it was that he was too confident in something he knew very little about, and that kind of hubris isn't uncommon with people who've done well working the same job their entire lives.


If you can show that a significant percent of the people engaging in an activity are doing so at their own peril, and you can stop those people from doing it without limiting the choices of others who are making sound choices then sure. Why would you be against that?

The fact that there's ambiguity about where the line should be doesn't mean that it shouldn't exist.

If a tiny transaction tax is going to hurt you as a trader you need to find a new line of work cause you're bad and should feel bad.

Its like people who cry "if only the rake were less I'd make money"

L
O
L

if a poker room jacked up the rake at 2/5nl from 5% max $5 to 25% max $50 would those people have a legitimate complaint?

the bern isn't proposing a "tiny" transaction tax. he's proposing something that is so outlandish it has zero chance of working. it will push trading to other instruments, overseas, basically anywhere but the markets he's trying to tax. it would succeed in ending HFT as we know it, but it would end almost all other trading too. it would never bring in the income he projects in his pipe dream proposals.

in the long term it would mean companies would either stay private or move overseas, making damn sure that the 99% can't even invest the money they earn and the wealth gap would just grow more and more.

i could rant about this stuff forever. i'm actually a pretty big bernie fan on a lot of his policies, but this is one thing he either completely misunderstands or pretends to because the anti-wallstreet position has emotional appeal.

liquid financial markets are good for everyone. dead financial markets are terrible for everyone.

Freedom?

If Bernie was elected, what are the odds he can get this type of legislation passed? 1/100,000?