[Workaccount2]

There is an extreme case of diminishing returns at play here, and unfortunately the amount of money that flows through these markets is so incredible that it becomes worth it (more than worth it) to commission the top minds of society to push the limit as close to 1 as absolutely possible.

Derivatives have great value to industry. Derivatives that require the fuel of 15 math Phds to lock in fractions of a percentage pricing inefficiencies so their firm can pocket the difference do not have much value at all.

It's like employing Harvard Med surgeons to remove gold dust from gold market sidewalks, and calling it "gold market efficiency".

[eadmund]

> Derivatives that require the fuel of 15 math Phds to lock in fractions of a percentage pricing inefficiencies so their firm can pocket the difference do not have much value at all.

They have at least as much value as the total compensation of 15 math PhDs, otherwise that work would not be done.

[daymanstep]

It is bizarre that people conflate money with value.

A scammer who makes $1m dollars a year does not generate any value, in fact he removes value from society.

[andrepd]

It's remarkable how on every single discussion on this topic the Circular Argument is eventually brought up lol

[mhh__]

That isn't really what the math people are doing. Pricing is easy.

[Infernal]

And yet if there was so much gold dust lying on the sidewalk that you could pay 15 Harvard med surgeons enough to pick it up and still have some left over, would you just not?

[Workaccount2]

That is the issue.

The amount of gold recovered by them as a function of the entire global gold market is a minuscule rounding error. A loss so small that when distributed across every market participant (as it would be if left alone on the ground), would amount to no practical discernible difference in anyone's life.

But having 15 less top notch surgeons not doing surgery? There stands to be many practical discernible differences in many people's lives.

Keep in mind, the surgeons are not the only ones out there. There are large armies of grunts combing those streets 24/7 picking up all the easy pieces. The surgeons are there to get the dust that everyone else misses. It's an enormous waste of talent.

[lotsofpulp]

Gold is not analogous to trading.

If you subscribe to the theory that markets allocating capital based on supply and demand is beneficial for society (even if detrimental sometimes in the short term), then traders provide the utility of contributing to the proper allocation of resources in society (which is constantly in flux).

The fact that smart people opt to go into trading (or selling advertising) rather than research is a consequence of government underpaying scientists (or the volatility is too high, or the path to quality of life at work is too low).

Either way, if the situation is that society needs more scientists or doctors or whatever, then the government should be paying more to incentivize those choices.

[albumen]

Markets influenced by traders can lead to misallocation of resources, as traders often prioritise short-term profits through speculation rather than investing in productive, long-term projects beneficial to society. Traders frequently increase market volatility, contributing little to meaningful innovation or economic growth.

Additionally, even if governments improved pay for essential roles like scientists or doctors, the outsized financial rewards from trading would still attract talent away from these critical areas. Therefore, depending on markets and government incentives alone ignores the negative impact traders’ profit-driven strategies can have on society’s overall well-being.

[FridgeSeal]

I think I’d rather have the surgeons saving peoples lives tbh.

[lotsofpulp]

Then make it so one does not have to sacrifice their 20s and harm their health to become one.

Expand the number of medical schools, the number of residency positions, etc. Reduce tuition or pay graduates and residents more. Reduce unnecessary learning requirements so that one can expect to have a life and become a surgeon. Reform tort law.

None of these are under the purview of trading firms or the people that work there.