Trading doesn't only provide liquidity, but it also provide the processes of finding price, valuation is the pain and joy of every trader.
The delivery man adds value by bringing the product to your house from the factory. The warehouseman adds value by storing things until the market desires them. A trader adds value to the market by buying from those who want to sell & selling to those who want to buy. He is a middleman like the other 2 examples.
The trader does not "add value" in the traditional sense of the word, which is to render a service. The trader deals in transfering risk from one party to another. His profits derive from changes in the perception of his counter parties. If you think that to be prosperous equates to render some service you're in the wrong line of business as a trader. Value is dependent on perception. We don't add value, we profit from changes in value.
ferd i would go as far as to say we are predatory ,in our quest to take advantage of the incongriuties of the market(couldn't think of a better word)
Pick a charity and donate a portion of your profits to it regularly. Personally that is the only way I can see justifying spending all my time sitting in front of a screen otherwise providing nothing of value to anyone but myself ('myself' includes family). I also continue to work in my former career in off-market hours so I don't feel like a total shlub.
Unless the average person could work less and still get a living wage, we are all going to be doomed to not adding real value. I mean, all we really need is food, shelter, water, and clothing. Perhaps a few higher goals to aim for, like exploring space. All the rest is useless fluff. Because we're all forced to work 40 hours or more a week just to get by, we've got *way* too much fluff. Even if you are designing the technology of tomorrow that will revolutionize something, how many people's jobs and lives will be detrimentally affected by your new technology? If it's a new kind of medical technology (which I would assume would actually benefit society), how many other people are working on the exact same thing in the name of capitalism and competition in a race to the market. Wouldn't cooperation be more efficient, isn't one of you by definition providing no real benefit since you're competing? The system's broken, I'm not sure how you fix it, since we're all afraid of each other and each country insists on gathering power. We're just spinning our wheels.
Maybe I don't totally understand what you're saying, but this seems like a pretty cynical point of view. Don't nurses, teachers, most doctors, etc., all provide real value to their fellow humans? Of course there's alot of "fluff", but that's what propels society forward. People losing jobs to technical innovation has always been a part of progress, hopefully to the benefit of greater society. And one could argue that all competitors contribute to a solution by pushing each other to do better.
"....just how many more "liquidity providers" does the world need." How many more useless, lazy workers does the world need. At my former place of employment, none of the slackers ever pondered their sense of value, nor did they feel guilty about receiving a paycheck and only really earning half of it. Did they add value to the company? Not when I had to do their work for them. Since most traders are unprofitable, do losing traders provide more value than those that win? If so, one should alleviate their useless guilt by becoming unprofitable. Does anyone think that a long term investor or employee of a company questions his value to the company? "I just want to help the company out." Right. The only thing an investor or employee cares about is how much money he's going to make. Hopefully I have found a way to survive, since I am a cripple with no other possible source of income. I never feel guilty or question my value to society. It's all about my survival.
Traders absolutely create value. Without traders, there is no market. Traders are needed so mom and pop get a "fair" price for their 100 shares of IBM. The more traders providing bids and offers, the tighter the spread, the more fair price mom and pop gets. Traders are in a sense the suppliers and investors are the end users. Now you could say some prop or retail trader doesn't give a shit about making a market for the benefit of mom and pop, but the thousands of traders collectively do just that without even realizing they are doing it.