Keep It in the Lab
A professor of science, technology, and society at Colby College responded to Kevin Bullis’s article on the serious attention now being paid by prominent scientists to geoengineering schemes to combat global warming (“The Geoengineering Gambit,” January/February 2010).
At MIT’s “Engineering a Cooler Earth” symposium last October 30, audience responses to “Should We Try?” were more supportive and robust than those to “Can We Do It?” Of course we cannot and should not do it, since climate engineering is untested and dangerous. The American Meteorological Society’s policy statement on geoengineering (also adopted by the American Geophysical Union) recommends more research of an interdisciplinary nature on any proposals to geoengineer climate. It urges coördinated study of the historical, ethical, legal, and social implications of geoengineering, and it calls for the development and analysis of policy options, including restrictions on reckless efforts to manipulate the climate. As I recently told the U.S. House Committee on Science and Technology, support is urgently needed for historical studies of existing environmental treaties, international accords, and efforts to govern new technologies. Any other geoengineering research should be conducted in labs and with computer models, not out of doors.
James Rodger Fleming
The Price of Everything
Commenters on Bryant Urstadt’s article on high-frequency trading (“Trading Shares in Milliseconds,” January/February 2010) had a vigorous debate over the legitimacy of the practice. Urstadt’s reporting highlighted the ways by which high-frequency traders seek to use technology to exploit opportunities in the market–but also the dangers to markets that some experts feel are introduced in the process.
Tell me exactly what product or service these companies provide? I understand they make money by gambling on being faster than the next guy, but what do they produce that helps America’s GDP? … [T]he value of America is in the products and services. Finance is a support function. We need our engineers building things, not moving money.
Those that have the view that high-frequency trading does nothing for the economy also probably think that equity markets do nothing for the economy and that the whole thing is simply a huge casino. Right …. Wrong. Equity markets price capital. In an increasingly automated world, this is the single most productive task humans are capable of engaging in. Said pricing leads to an efficient distribution of capital, which in turn results in a better quality of life in the aggregate. High-frequency traders simply engage in arbitrage: they prevent pricing abnormalities from materializing and therefore make pricing more efficient.
Why do I get the feeling that you were spinning exactly the same line about CDOs just a few years ago? And that in a few years’ time you’ll be saying just the same about the next brilliant idea to emerge from Wall Street after HFT has caused another financial crisis, impoverishing millions of people (except, of course, the traders)?
The most productive task in the world? The best paid, possibly.
My experience is that the financial markets work very well for small investors. I’m an “old-fashioned” buy-and-hold investor who makes small (~$1000) purchases. Commissions are now very small ($0 to $5), trades are executed instantaneously, and, as mentioned in the article, the spreads are only a few pennies per share. Even in the depths of the market turmoil, everything functioned normally and I was able to execute trades. It is hard to imagine that HFT doesn’t contribute to the proper functioning of markets. … The real problems lie with investor psychology. Successful investing is about as interesting as watching paint dry. Investors, however, try to make it into a night at the casino.