[ebertucc]

Could you link a book that has shaped your thinking on this? Or some keywords to search? I'm not too informed on economics but the distinction between productive and unproductive economic activity sounds plausible to me.* Do you disagree with this distinction itself?

* Naive examples of what I think of as "unproductive activity" are high frequency trading, gambling, and most advertising.

[hogFeast]

Marx, Adam Smith, Ricardo, pretty much every early economist wrote about this...I think Aristole even wrote about this (very briefly: the statement that some industries are extractive is saying that the price they charge isn't related to production costs, asking where value came from was economics until the late 19th century).

And if you go back further, any period in which there was economic turmoil saw attempts to make this distinction. If you look at the late 16th century, when population pressure is starting to build up after the Black Death, you had engrossing laws. Some of these were regulations for product quality (i.e. the wheat content of bread iirc) but some of this was just plain, old: oh, these traders are evil. The most obvious historical example would be the regularity of genocides against certain groups (Jewish people, Chinese, Armenians...all were accused, very successfully I might add, of predatory behaviour).

Gambling isn't unproductive...that makes no sense. That is like saying restaurants or making films is unproductive. Advertising isn't unproductive either...that is an even worse mistake than gambling.

HFT is difficult because...is sub-second liquidity actually valuable? Probably not. Definitely, we need liquidity providers, definitely we need someone looking at prices and trying to react to information faster...but a lot of HFT is just mindless nonsense where you work out the price of X based on the price of everything else. In bad times, these relationships break down, liquidity dissolves, and you are seeing real fragility in markets even with information that moves globally (tbf, that isn't only HFT but bad regulation...ironically, these were intended to stop traders making too much money...classic). But has it lowered costs? Yes. Massively (investing two decades was nothing like today, even over the last five years the amount costs have fallen is staggering). Has it made trading easier? Yes. Massively. And do we need liquidity providers regardless? Yes (ppl forget, if you aren't paying HFT guys a fraction of a penny/share, you are paying the broker a few dollars/share).

Btw, everyone says these are unproductive because they don't see the hard work that goes into them. It is easy to throw stones when you think only the things you do has value.

[ebertucc]

> Btw, everyone says these are unproductive because they don't see the hard work that goes into them. It is easy to throw stones when you think only the things you do has value.

I'm sure it is hard work. The question I'm more interested in is whether it's work that should be done at all, and it's not obvious that "it's worth doing if people are willing to pay for it" is the right answer. That's more of an ethical concern than an economical one, though; I'm probably conflating "labor that is good/bad for individuals/society" with "productive/unproductive labor" since other comments mention exploitative pricing and rent-seeking, which weren't what I had in mind.

Thanks for the reply.