Michael Lewis's new book Flash Boys, about the inherent unfairness of high speed trading, is the talk of Wall Street and the financial media. The backlash to the book is a familiar refrain: "Everyone already knows that." Well, that's the point, isn't it?
Michael Lewis (pictured) is a superstar author, and the more arcane and technical areas of finance do not often find themselves in the spotlight of a superstar author, so it is only natural that the denizens of the high speed trading world and all of its assorted offshoots are gobsmacked by all of the attention they're getting in the non-financial press because of Lewis's book. Among those who know all about high speed trading already, this wave of attention soon creates a sense of resentful disdain: "Hey, this guy's not so special. We've known about the awful legalized corruption that is high speed trading's tax on investors for years now. What's the big deal?"
We all expect the trading industry itself to fight back, of course. That's just self-preservation. One industry group released a preemptive statement (apparently before reading the book) trying to cast the issue as big misunderstanding, saying they "recognize that the rapid pace of change in the equity markets and the complexity of modern trading technology have caused considerable confusion and suspicion among investors, and we strongly support all efforts to promote better understanding of modern markets."
It's easy to dismiss the pleas of those with a direct monetary self-interest in preserving the status quo. But much pushback to this—or any—book that pushes what are usually niche subjects into the mainstream consciousness comes from the cabal of in-the-know pundits and media member who cannot help but to consider things like this a step on their toes. After all, this is no secret; the financial media has been talking about this for years; it's not fair that Michael Lewis gets all of the fame for this issue. And so (perhaps not even on purpose!) a little bit of sneering dismissiveness inevitably creeps into the tone of coverage about an issue like high speed trading which is suddenly thrust into popular prominence. Andrew Ross Sorkin today, for example, explains that this is all much more nuanced than you've been led to believe:
Most of the big money that high-frequency traders make is by competing against other big institutions. Mr. Lewis argues that high-frequency traders, with their unfair advantages, are putting the little guy's pension fund in jeopardy. That may be true, but only partly: Where do you think high-frequency trading firms are getting the money to invest? Pension funds. So it gets complicated very quickly.
In fact, this issue is not complicated at all. No matter who is financing the high frequency traders, their tactics are unfair, detrimental to the public, and should be banned. But, hell, if all these people have known about this all this time... and the issue is so clear-cut... then why hasn't anyone stopped it? And here we get to the real cause of the backlash against Lewis and every other outsider, whistleblower, or non-club-member to tug on the general public's coat and tell them what's going on on Wall Street: it makes everyone who already knew about all of this look like cretins. Sure, fine, none of this is "new."
But you motherfuckers were never going to do anything about it!
"Everybody already knows" lots of bad things. When someone comes along to generate enough outrage to change those things, they should be applauded. The privileges of being an "insider" are cheap if you don't do anything good with them.