I just realized that I had a wrong idea about how HFT works. Though I am still not sure about how the pros and cons add up, your comment convinced me that it is more complicated than I thought.
HFT is a disruptive technology that has been the target of lots of FUD from entrenched institutions and politicians looking for a "scary" issue to flog. Most of the practitioners are fairly small (relative to other investment firms) and technology-focused. Unlike complex, bespoke derivatives and products such as CDOs, this aspect of the markets is fairly well regulated, with a focus on bringing transparency to pricing for individual investors, which is in stark contrast to the regulatory environment in Europe and Asia.
