Why exactly should people like the system that is the closest thing we have to unfriendly intelligence, paperclip maximizer style, and which is probably the best example in favour of the SI’s beliefs? This is weird.
Also, the markets are all too closely approximated by a system of very simple agents betting on random, few ending up rich, most ending up poor, and distribution ending up very similar to reality (power law distribution). I don’t see why we should like a system that would produce power law distribution on identically skilled agents.
You focus on the bad aspects of markets (they make some people rich, using some randomness) and ignore the good aspects (many people have their needs satisfied better than if they had to do everything for themselves). Maybe this is what most people do—we take the good parts for granted and complain about the bad parts.
An analogy would be an unfriendly intelligence (powerful but not FOOMing; sometimes creating food, sometimes paperclips) that would make many people say: “intelligence is bad, we should destroy all computers, and hope that the next generations of humans have less IQ so this problem will not happen again”. -- The hate makes sense, the solution does not.
How exactly is not having this extremely speculative stock and currency trading running at the timespan of milliseconds became ‘having to do everything for themselves’? Or are we speaking of the market where i buy groceries?
This needless back-and-forth trading can be immediately eliminated with 5% tax on those operations (i.e. you sell stock or currency worth $1000, you pay $50). Hell, 1% would cut much of crap out (5% may be too severe). Would it make everyone ’have to do everything for themselves”? Let’s look, I pay sales tax whenever I sell anything I make for actual consumption, it’s way more than 5% , and it didn’t force anyone to do everything by themselves.
How exactly is not having this extremely speculative stock and currency trading running at the timespan of milliseconds became ‘having to do everything for themselves’? Or are we speaking of the market where i buy groceries?
Both are parts of one continuum. Somewhere in the middle is e.g. a possibility of making billions by creating Google.
A proper tax can make a part of this continuum mostly unprofitable. We just better be careful not to remove unnecessarily big part. Good luck finding a rational solution for such politically charged topic!
I think you need to justify the “needless” in your description of such back-and-forth speculative trading, as it a) has gone unquestioned b) is not self-evident, and c) otherwise begs the question about whether we need to actually do anything about it at all.
Seems generally correct at the first sight, but to be more sure about it, I would like to read an analysis by an economist who is able to consider more side effects than I am aware of.
The specific impact on society could also depend on many small details, like how exactly is the tax specified, what exceptions are there, how exactly the tax must be documented and paid, in international business how is it decided which government will get the tax, etc.
For example if A must pay 1% tax when selling something to B, and then B must pay 1% tax when selling the same thing to C, would it be possible to create some arbitrage system that would convert it to only one transaction from A to C, thus avoiding paying half of the tax? What if people only did business with virtual dollars, and once in a month converted those virtual dollars to the real dollars, paying the 1% tax only for real dollars that change hands? Would such system allow to replicate the current nanosecond stock trading, making this tax mostly meaningless?
On the hand, if the law would tax every virtual currency, it could end with World of Warcraft players having to include every XP gained for killing a murloc into their tax report. Perhaps a tax expert would be required to estimate the value of LW karma in dollars, too.
I am not an economist, nor do I play one on TV. My current studies (mostly maths, modelling and statistics) do contain a sizeable econ component, however, so I pay attention to these things.
I also have plenty of other things I could be doing with my time. Would you appreciate me talking at length about the pros and cons of financial transaction taxes?
Would such system allow to replicate the current nanosecond stock trading, making this tax mostly meaningless?
This back-n-forth trading can probably only exist if the rules of it are actively enforced by governments acting against own interest on money of third parties (taxpayers). I don’t think that this system can be recreated by bunch of self interested agents. Let the virtual currency be, my taxes won’t be paying for stability of that currency or for enforcement of any kind of rules on it. For the libertarian dream there must be a big badass government enforcing zillion laws and regulations against it’s own interest. Take that out and the dream evaporates.
What is the problem with high-speed trading in your opinion? I see a lot of people wanting a Financial Transactoons Tax, but I have yet to see étaples of what it would accomplish or prevent?
The arguments in favour of speculation, in general, rest on assumption of intelligent trading and diversity of strategies. The short term range, however, is entirely up to software tools, whose decisions are stupid and have identical systematic errors. I think the short term trading is going to go out with a bang first time there’s any interesting software-level exploitation—either a direct hack or adoption of one bot whose decision theory makes non-trivial use of understanding of other instances of itself. Bang as in, a millisecond level bubbles and crashes followed by decision to roll it back and regulate or prohibit.
As have been pointed out on e.g marginalrevolution.com, one reason HFT is so popular is because the minimum stock price increment is one cent. HFT might conceivably lose much of its allure if this lower bound is changed to, say, .01 cent.
I’m not convinced trading must be intelligent to provide beneficial information to the market. I’m also not convinced all HFT systems have identical systematic errors. Can you give some examples?
Why exactly should people like the system that is the closest thing we have to unfriendly intelligence, paperclip maximizer style, and which is probably the best example in favour of the SI’s beliefs? This is weird.
Also, the markets are all too closely approximated by a system of very simple agents betting on random, few ending up rich, most ending up poor, and distribution ending up very similar to reality (power law distribution). I don’t see why we should like a system that would produce power law distribution on identically skilled agents.
You focus on the bad aspects of markets (they make some people rich, using some randomness) and ignore the good aspects (many people have their needs satisfied better than if they had to do everything for themselves). Maybe this is what most people do—we take the good parts for granted and complain about the bad parts.
An analogy would be an unfriendly intelligence (powerful but not FOOMing; sometimes creating food, sometimes paperclips) that would make many people say: “intelligence is bad, we should destroy all computers, and hope that the next generations of humans have less IQ so this problem will not happen again”. -- The hate makes sense, the solution does not.
Hm, interesting. So, with the analogy, you’re agreeing with what PM did say, but disagreeing with what they didn’t say. :)
How exactly is not having this extremely speculative stock and currency trading running at the timespan of milliseconds became ‘having to do everything for themselves’? Or are we speaking of the market where i buy groceries?
This needless back-and-forth trading can be immediately eliminated with 5% tax on those operations (i.e. you sell stock or currency worth $1000, you pay $50). Hell, 1% would cut much of crap out (5% may be too severe). Would it make everyone ’have to do everything for themselves”? Let’s look, I pay sales tax whenever I sell anything I make for actual consumption, it’s way more than 5% , and it didn’t force anyone to do everything by themselves.
Both are parts of one continuum. Somewhere in the middle is e.g. a possibility of making billions by creating Google.
A proper tax can make a part of this continuum mostly unprofitable. We just better be careful not to remove unnecessarily big part. Good luck finding a rational solution for such politically charged topic!
Well, one percent tax would eliminate very huge fraction of needless back and forth speculative trading, while doing nothing to hurt Google.
I think you need to justify the “needless” in your description of such back-and-forth speculative trading, as it a) has gone unquestioned b) is not self-evident, and c) otherwise begs the question about whether we need to actually do anything about it at all.
Seems generally correct at the first sight, but to be more sure about it, I would like to read an analysis by an economist who is able to consider more side effects than I am aware of.
The specific impact on society could also depend on many small details, like how exactly is the tax specified, what exceptions are there, how exactly the tax must be documented and paid, in international business how is it decided which government will get the tax, etc.
For example if A must pay 1% tax when selling something to B, and then B must pay 1% tax when selling the same thing to C, would it be possible to create some arbitrage system that would convert it to only one transaction from A to C, thus avoiding paying half of the tax? What if people only did business with virtual dollars, and once in a month converted those virtual dollars to the real dollars, paying the 1% tax only for real dollars that change hands? Would such system allow to replicate the current nanosecond stock trading, making this tax mostly meaningless?
On the hand, if the law would tax every virtual currency, it could end with World of Warcraft players having to include every XP gained for killing a murloc into their tax report. Perhaps a tax expert would be required to estimate the value of LW karma in dollars, too.
I am not an economist, nor do I play one on TV. My current studies (mostly maths, modelling and statistics) do contain a sizeable econ component, however, so I pay attention to these things.
I also have plenty of other things I could be doing with my time. Would you appreciate me talking at length about the pros and cons of financial transaction taxes?
Yes, please!
I would, if you have something interesting to say.
This back-n-forth trading can probably only exist if the rules of it are actively enforced by governments acting against own interest on money of third parties (taxpayers). I don’t think that this system can be recreated by bunch of self interested agents. Let the virtual currency be, my taxes won’t be paying for stability of that currency or for enforcement of any kind of rules on it. For the libertarian dream there must be a big badass government enforcing zillion laws and regulations against it’s own interest. Take that out and the dream evaporates.
What is the problem with high-speed trading in your opinion? I see a lot of people wanting a Financial Transactoons Tax, but I have yet to see étaples of what it would accomplish or prevent?
http://www.economist.com/node/21525456 for the starter.
The arguments in favour of speculation, in general, rest on assumption of intelligent trading and diversity of strategies. The short term range, however, is entirely up to software tools, whose decisions are stupid and have identical systematic errors. I think the short term trading is going to go out with a bang first time there’s any interesting software-level exploitation—either a direct hack or adoption of one bot whose decision theory makes non-trivial use of understanding of other instances of itself. Bang as in, a millisecond level bubbles and crashes followed by decision to roll it back and regulate or prohibit.
Wow, sorry about the stupid autocorrects above.
As have been pointed out on e.g marginalrevolution.com, one reason HFT is so popular is because the minimum stock price increment is one cent. HFT might conceivably lose much of its allure if this lower bound is changed to, say, .01 cent.
I’m not convinced trading must be intelligent to provide beneficial information to the market. I’m also not convinced all HFT systems have identical systematic errors. Can you give some examples?