You are correct that I don't understand the definition of zero-sum that you propose. Can you break this down a bit?
Your definition is "A transaction is zero-sum if it doesn't change the amount of value." And I'm having trouble with that because I can't see the linkage between 'transaction' and 'value'. And then you state "The stock market
is mostly zero-sum." which I don't understand at all, how can a system be fractionally zero sum by your definition?
This is the way I see it, a zero-sum system (note that I think of it as a system and not a single transaction) is one where the sum across the system of all events is zero. So for example if you have have a series of financial transactions across an expense account there are a list of expenses journaled as negative amounts and a list of re-imbursements journaled as positive amounts and when you add them all together the answer is zero. (And when it isn't zero then you either have unpaid expenses (negative) or have been over reimbursed (positive)). Another example might be in chemistry when you are balancing a chemical equation and all of the electrons and molar weights of different elements have to be the same before and after the reaction.
And that is the reasoning I use for my definition of a zero sum system. A system is zero-sum when all inputs and outputs across all transactions are balanced, resulting in no net change.
The GP comment was short, it asserted "Yes it [stock trading] is [zero sum] when you don't create wealth" and that was a follow up to an assertion that these funds were "taking wealth". Both of the original and the follow up used the concept 'wealth' to express as a proxy for 'value' in a series of transactions which are measured in 'currency'.
One could argue that on the basis of number of shares in existence, trading on the stock market is "zero sum." I would agree with that. I don't find that a particularly useful abstraction but recognize it would be one way to look at it. If on the other hand you are talking about wealth creation, the stock market is very much not a zero sum system. That is because the at one level the stock market is a reflection of the economic GDP of the companies that compose the market, and as economic GDP grows, so does the value of those companies. It is by that basis that an individual investor can buy stocks (equity) in a company, hold it for a long time, and "gain wealth" simply by having partial ownership of an asset which is growing in value. Nobody was made "less wealthy" by that growth and that person holding on to their stock. It was not a zero sum system.
That value is created by companies whose stock is being traded, not by companies doing the trading at millisecond intervals (the necessity of which we're discussing here).
Your definition is "A transaction is zero-sum if it doesn't change the amount of value." And I'm having trouble with that because I can't see the linkage between 'transaction' and 'value'. And then you state "The stock market is mostly zero-sum." which I don't understand at all, how can a system be fractionally zero sum by your definition?
This is the way I see it, a zero-sum system (note that I think of it as a system and not a single transaction) is one where the sum across the system of all events is zero. So for example if you have have a series of financial transactions across an expense account there are a list of expenses journaled as negative amounts and a list of re-imbursements journaled as positive amounts and when you add them all together the answer is zero. (And when it isn't zero then you either have unpaid expenses (negative) or have been over reimbursed (positive)). Another example might be in chemistry when you are balancing a chemical equation and all of the electrons and molar weights of different elements have to be the same before and after the reaction.
And that is the reasoning I use for my definition of a zero sum system. A system is zero-sum when all inputs and outputs across all transactions are balanced, resulting in no net change.
The GP comment was short, it asserted "Yes it [stock trading] is [zero sum] when you don't create wealth" and that was a follow up to an assertion that these funds were "taking wealth". Both of the original and the follow up used the concept 'wealth' to express as a proxy for 'value' in a series of transactions which are measured in 'currency'.
One could argue that on the basis of number of shares in existence, trading on the stock market is "zero sum." I would agree with that. I don't find that a particularly useful abstraction but recognize it would be one way to look at it. If on the other hand you are talking about wealth creation, the stock market is very much not a zero sum system. That is because the at one level the stock market is a reflection of the economic GDP of the companies that compose the market, and as economic GDP grows, so does the value of those companies. It is by that basis that an individual investor can buy stocks (equity) in a company, hold it for a long time, and "gain wealth" simply by having partial ownership of an asset which is growing in value. Nobody was made "less wealthy" by that growth and that person holding on to their stock. It was not a zero sum system.