Interestingly, the article announced that we are about to complete a tunnel, which costs hundreds of millions of dollars not to transport passenger or freight but to carry fiber-optic cable, which would save "three milliseconds" of the communication time between future markets of Chicago and the stock markets of New York. Wow! (and meanwhile, four years ago, we did cancel another "desperately needed new rail tunnel" nearby )
This expensive 3 million second is to serve the "high frequency traders". Obviously these traders must have benefited a lot to be able to influence someone to pass / or to pay for this tunnel. However, aren't these arbitrageurs? Yes, their value is that they get the market back to the equilibrium, which is important. However, they are not producing anything, they are not adding any value to the economy, and also not investing into the future, they are basically take advantage of the inefficient market ... by "millisecond".
Well if it is their money, they have the right to do it. If it is not they may have the power to do it. No matter what, personally it seems kind of wrong how much we value present (to the extent of millisecond) rather than the our future (education and environment) !
http://www.nytimes.com/2014/04/14/opinion/krugman-three-expensive-milliseconds.html?ref=opinion
3 comments:
This is very interesting considering a lot of scrutiny that high frequency trading receives. High frequency trading causes a lot of speculation in the market and brings no value to the American economy as a whole. It is obvious that the financial industry has been growing at faster pace than the rest of the economy and its constant innovations and modernizations make it even more difficult to understand how the markets work and what affect they have on global economic upswings and crashes. This tunnel will certainly benefit a few and have no value for the majority of people in America.
Is this efficient or is this just a waste of resources to profit the wealthy?
I agree with Duong that we should think about the future not by milliseconds but by decades.
It is very interesting that the same region had cancelled a project that would benefit many people, including potentially the "working" class, while approving a project that would only benefit very few people, theoretically. One almost has to wonder if America has a developing "oligarch" community, those with large stores of money and the ability to buy power, similar to the group we saw in the documentary on Russia earlier this week. Likely, if it is happening, it's much more subtle than in Russia, because Americans would like to believe that "all are equal" and in the democratic process.
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