Re: "libertarians take government for granted. It is a privilege to be able to write complex contracts, to undertake long-term investment, and to know that tomorrow armed predators aren’t coming to destroy or capture everything you own."
Unlike anarchists, libertarians don't take government for granted. Libertarians want government to focus on transparent rule of law; timely and impartial administration of justice; and presumptions of individual liberty. They abhor government mission-creep. They value exit more than voice. They emphasize 'securities against misrule' (Bentham) in government: federalism (decentralization); separation of powers; checks and balances; jury trial; etc.
An example of an eNGO non-profit creating an unintended evil outcome that benefited the organization with increased donations would be Greenpeace's successful blocking of Golden Rice. Their activists organized and supported the physical destruction of research crops and took legal actions around the world to block Golden rice resulting in 500,000 blind children and about a million dead children per year in the developing world.
They also actively oppose aquaculture (growing aquatic animals for food) while they campaign against raising cattle to minimize the ecological destruction by agriculture worldwide. However, aquatic animals don't have to waste energy standing up or keeping warm so it only takes about 1 kg of dry fish food to make a kg of live salmon but it takes 5 kg of feed to make a kg of live cow, 3 kg of feed/kg of live pig, and about 1.7 - 2 kg/kg for chickens. If you correct for meat yield being much higher on fish the advantage of meat production by fish/shrimp is about a factor of 2-3 more efficiency in meat on the plate/kg of feed-stuffs (soy, corn, other grains, fishmeal, feather meal, etc.). They won't admit that aquaculture, chicken farmers, pig farmers, and cattle producers are all competing for meat on the plate, and going for higher food conversion efficiency will protect the environment.
In the US, the eNGOs and activists have effectively blocked aquaculture industry growth (zero growth in the US) while worldwide aquaculture is now larger than all commercial fisheries with double-digit growth rates. Bottom line, we import 90% of our seafood and the US has the largest EEZ (Extended economic zone -- our fraction of the oceans) for off-shore aquaculture of any country.
Another great essay, and much to unpack there. I'll focus on one very specific point of Arnold's: "To me, trading appears excessive relative to what the market needs for price discovery. Some people buy low and sell high, but their gains are offset by the losses of those who buy high and sell low...." In addition to Arnold's other point that trading providing liquidity, trading serves another purpose besides price discovery. Trading also enables better risk sharing. If I own shares in a company that rises in price, even if I expect the share price to rise further, I might want to sell some shares to offload some risk and diversify my holdings better.
In addition to risk sharing, trading creates metrics for judging traders, who are being measured against ... other traders. The "market" isn't real, traders who buy and sell are real. It is because of trader bragging rights (& bonuses) competition with other traders that the price discovery benefit is done so well.
Great traders, like Buffet (was; still is?) help rich investors allocate capital towards firms more likely to be profitable. Arnold did mention the liquidity advantage of lots of trading.
"zero-sum" is an important issue. Almost all short term (<1 yr) decisions are short term, but longer term investment, when done well, is where positive-sum comes from. If a managed fund returns positive 1% or even negative 1%, where an index fund returns 2%, it can look like excess trading - but the short-term buy-sell transaction requires both sides. To win requires a losing side to lose. The price discovery only occurs because of the transactions & results.
The rise in index funds implies that more investors are also concluding there is excess trading, based on too many active traders failing to beat ... the average of all other traders, "the market".
Today, concentration of investor power in BlackRock, Vanguard, State Street, etc., thru their index funds and other more active funds, is concentrating too much investor power in too few top executive hands. EGS being pushed by BlackRock is a far bigger problem than "excess trading" (if that's even a real problem).
Re: "libertarians take government for granted. It is a privilege to be able to write complex contracts, to undertake long-term investment, and to know that tomorrow armed predators aren’t coming to destroy or capture everything you own."
Unlike anarchists, libertarians don't take government for granted. Libertarians want government to focus on transparent rule of law; timely and impartial administration of justice; and presumptions of individual liberty. They abhor government mission-creep. They value exit more than voice. They emphasize 'securities against misrule' (Bentham) in government: federalism (decentralization); separation of powers; checks and balances; jury trial; etc.
An example of an eNGO non-profit creating an unintended evil outcome that benefited the organization with increased donations would be Greenpeace's successful blocking of Golden Rice. Their activists organized and supported the physical destruction of research crops and took legal actions around the world to block Golden rice resulting in 500,000 blind children and about a million dead children per year in the developing world.
Over 100 Nobel prize-winning scientists produced an open letter on this tragedy effectively accusing Greenpeace of "crimes against humanity". https://supportprecisionagriculture.org/nobel-laureate-gmo-letter_rjr.html
This letter was from 2016, so they know about the science of their evil outcome. Greenpeace has doubled down since then as this stance is a profit maker (donations from the scientifically ignorant) for the about $400 million tax-free worldwide organization. From their website: https://www.greenpeace.org/southeastasia/press/44595/golden-rice-commercialization-to-further-drag-down-filipino-farmers-amid-climate-covid-struggles/
They also actively oppose aquaculture (growing aquatic animals for food) while they campaign against raising cattle to minimize the ecological destruction by agriculture worldwide. However, aquatic animals don't have to waste energy standing up or keeping warm so it only takes about 1 kg of dry fish food to make a kg of live salmon but it takes 5 kg of feed to make a kg of live cow, 3 kg of feed/kg of live pig, and about 1.7 - 2 kg/kg for chickens. If you correct for meat yield being much higher on fish the advantage of meat production by fish/shrimp is about a factor of 2-3 more efficiency in meat on the plate/kg of feed-stuffs (soy, corn, other grains, fishmeal, feather meal, etc.). They won't admit that aquaculture, chicken farmers, pig farmers, and cattle producers are all competing for meat on the plate, and going for higher food conversion efficiency will protect the environment.
In the US, the eNGOs and activists have effectively blocked aquaculture industry growth (zero growth in the US) while worldwide aquaculture is now larger than all commercial fisheries with double-digit growth rates. Bottom line, we import 90% of our seafood and the US has the largest EEZ (Extended economic zone -- our fraction of the oceans) for off-shore aquaculture of any country.
Another great essay, and much to unpack there. I'll focus on one very specific point of Arnold's: "To me, trading appears excessive relative to what the market needs for price discovery. Some people buy low and sell high, but their gains are offset by the losses of those who buy high and sell low...." In addition to Arnold's other point that trading providing liquidity, trading serves another purpose besides price discovery. Trading also enables better risk sharing. If I own shares in a company that rises in price, even if I expect the share price to rise further, I might want to sell some shares to offload some risk and diversify my holdings better.
In addition to risk sharing, trading creates metrics for judging traders, who are being measured against ... other traders. The "market" isn't real, traders who buy and sell are real. It is because of trader bragging rights (& bonuses) competition with other traders that the price discovery benefit is done so well.
Great traders, like Buffet (was; still is?) help rich investors allocate capital towards firms more likely to be profitable. Arnold did mention the liquidity advantage of lots of trading.
"zero-sum" is an important issue. Almost all short term (<1 yr) decisions are short term, but longer term investment, when done well, is where positive-sum comes from. If a managed fund returns positive 1% or even negative 1%, where an index fund returns 2%, it can look like excess trading - but the short-term buy-sell transaction requires both sides. To win requires a losing side to lose. The price discovery only occurs because of the transactions & results.
The rise in index funds implies that more investors are also concluding there is excess trading, based on too many active traders failing to beat ... the average of all other traders, "the market".
Today, concentration of investor power in BlackRock, Vanguard, State Street, etc., thru their index funds and other more active funds, is concentrating too much investor power in too few top executive hands. EGS being pushed by BlackRock is a far bigger problem than "excess trading" (if that's even a real problem).
Well said. This is great reading for people contemplating their careers.