This is imprecise. OK, let's say that liquidity has gone up in the long run, thanks to automation (and to some extent, regulation). This reference http://www.tau.ac.il/~azibenr/Liquidity_BKW.pdf shows that more liquidity has not helped: "...the effect of each unit of liquidity on returns has declined over the years." So one cannot flatly assert that HFT has led to improved liquidity and that this benefits everyone. And still one cannot discount the effect of decreased volume: this indicates that retail investors have left.
Here's what that incontrovertible reference, the Wikipedia, states:
Another elegant definition of liquidity is the probability that the next trade is executed at a price equal to the last one.
The Wikipedia also "confuses" liquidity with volume: The liquidity of a product can be measured as how often it is bought and sold; this is known as volume. Source: http://en.wikipedia.org/wiki/Market_liquidity