Arbitrage in general is not a "net negative." It's a net positive, which is why arbitrageurs earn a profit; they are compensated for a service that generates value for someone else.
To quote from Larry Harris' textbook [1]: "Arbitrageurs ensure that prices do not vary much across markets. When prices diverge, they buy in cheaper markets and sell in more expensive markets. The effect of their trading is to connect sellers in cheaper markets to buyers in more expensive markets."
Arbitrageurs effectively "port" liquidity from one market to another. This is the value they provide to others.
Thus I'm not sure I would describe this as arbitrage; or at least it's not the term the GP is looking for.
It isn't the name of the actual mechanism for the financial gain. It's a title for the idea of doing something wasteful, perhaps even net negative for society, for a very minor personal surplus. In this example, the guy wasted gas, created traffic, occupied employees time, put wear and tear on vehicles and roads and spent two days driving in circles...all for $2000.
People are free to do what they want, and the "exploitation" is fair game, but it seems odd to me too.
He also had fun, or at least his writeup sounded like he enjoyed his adventure.
Right now I'm remodeling my home. It's laborious, costly, consumes resources that could be spent on building housing for those less fortunate, occupies the time of employees at the home stores I frequent when I ask questions, but I enjoy it. One has a hard time calling it "exploitation", but aren't I exploiting resources that are available to me for personal gain (albeit in a very literal definition)?
Not sure why people are downvoting this comment, even if they disagree with your assessment of the FT poster's behavior, since you were pointing out what the OP was looking for.
I just refer to it as the perilous incentive structure of late capitalism.
6502nerdface|10 years ago
To quote from Larry Harris' textbook [1]: "Arbitrageurs ensure that prices do not vary much across markets. When prices diverge, they buy in cheaper markets and sell in more expensive markets. The effect of their trading is to connect sellers in cheaper markets to buyers in more expensive markets."
Arbitrageurs effectively "port" liquidity from one market to another. This is the value they provide to others.
Thus I'm not sure I would describe this as arbitrage; or at least it's not the term the GP is looking for.
[1] http://www.amazon.com/Trading-Exchanges-Market-Microstructur...
forgetsusername|10 years ago
It isn't the name of the actual mechanism for the financial gain. It's a title for the idea of doing something wasteful, perhaps even net negative for society, for a very minor personal surplus. In this example, the guy wasted gas, created traffic, occupied employees time, put wear and tear on vehicles and roads and spent two days driving in circles...all for $2000.
People are free to do what they want, and the "exploitation" is fair game, but it seems odd to me too.
dublinben|10 years ago
uxp|10 years ago
Right now I'm remodeling my home. It's laborious, costly, consumes resources that could be spent on building housing for those less fortunate, occupies the time of employees at the home stores I frequent when I ask questions, but I enjoy it. One has a hard time calling it "exploitation", but aren't I exploiting resources that are available to me for personal gain (albeit in a very literal definition)?
llamataboot|10 years ago
I just refer to it as the perilous incentive structure of late capitalism.
fennecfoxen|10 years ago