August 26, 2013--Warp Speed

When I got my first PC, I connected to the Internet via a dial-up telephone line. To me the Net felt like the most amazing innovation since Gutenberg invented movable type. This was in the early days of Google and even then the amount of information readily available by surfing the Net was astonishing.

Over time, "readily available" evolved in meaning.

My connection to the Internet back then took a minute or so to activate. To wait such a short time and then to have access to a seemingly infinite amount of knowledge felt more than worth the wait.

But quickly, Internet connectivity via cable systems and then through various forms of broad-band wirelessness made waiting for a dial-up connection seem endless. Even five seconds felt like eternity.

Now, I am so spoiled that if anything takes more than a second I feel frustrated and deprived. I want everything to be instantaneous.

Speed has its advantages as well as its downside.

When an idea pops into one's head (which often occurs in what feels like a nanosecond--insight, inspiration, creative thought) it is good to be able to record this in the moment so as not to see it evanesce as quickly as it manifested itself; and, if instant further information or elaboration might be helpful, being able to do this quickly often secures and enriches the initial perception. At those moments I want my brain firing at warp speed and my access to Internet-derived information instantaneous.

The downside can be the too-quick codification of a spark of innovative thought that would benefit from rumination and careful elaboration. This very much includes allowing half-baked ideas with little potential to melt away, to clear the space needed for devotion to those ideas with more promising potential.

And then in the economic realm, as we have seen in recent years with the largely-automated stock market, speed itself can add uncertainty and even chaos rather than precision to an already uncertain and chaotic system.

After a number of crashes that paralyzed markets and caused hundreds of billions in loses, retrospectively, it was determined that pushing for more and more speed in executing trades was itself a major cause of the problem.

According to a recent Web posting by the New York Times, it is claimed that the need for speed comes from a market in which high-frequency traders expect to be able to get in and out of positions within a second. "Better," and literally, in less than a second. Any market that cannot offer such speed will be at a competitive disadvantage.

On the surface, assuming speed is actually a benefit, there may also be a self-perpetuating process at work--because competitors' ways of trading may be quicker, this means that to be in play, regardless of other desirable qualities, everyone has to be equally obsessed with speed in and of itself.

Speed for its own sake? Speed for more efficient or effective markets? Speed to allow for more transparency? Speed to be able to provide safeguards?

Actually, little of the above.

Again, according the the NYT, "speed is not compatible with safety features that could cause suspicious orders to be delayed while someone--a slow person, perhaps--checked to see whether something was amiss."

It may be valid to claim that speed in these kinds of transactions is especially and perversely desirable if one wants to obscure what is in fact happening. Speed can be useful to some who are attempting to pull a fast one, to get something accomplished so fast that it cannot be reviewed or regulated. Or before others, who are moving slower, can fairly compete.

There are credible reports which show that some, who want to gain an advantage in certain trading situations, where, for fees in the millions, they purchase privileged information for less than a half-second before it is shared with the wider public. That half-second advantage allows arbitrage-like trades to occur without monitoring or even competition; and as a result can net someone off the mark a split-second faster risk-free billions.

But when these same capacities of otherwise little intrinsic value are created and then spin out of control, as we are frequently seieng, everyone but those on the sheltered inside are left to live with the debris and absorb the costs of the fallout.