I have two kids. And if that has taught me anything, it’s that words are useless. I can ask my young daughters to do something a thousand times, and it almost never takes. Modeling behavior, however, is magic. I’ve only ever asked my older girl to “say ‘thank you’” once or twice in her entire life — and yet she says it multiple times every day because I made a choice to model it for her. The 2-year old is now just as good about the phrase.
So that brings me to a question for Wall Street and Washington about GameStop and the Reddit-driven short squeeze: What did you expect?
We’re closing in on a year of living with a pandemic that has killed 400,000 Americans and more than 2 million worldwide. This has devastated the economy, with job losses that are four-times worse than the Great Recession. And the working class is bearing the brunt of this crushing economic impact as COVID-19 closes restaurants and hotels in the United States.
And what is the response to this? Well, in the early day, it was the refrain that “we’re all in this together.” The virus doesn’t play favorites, so we all need to hunker down as a singular entity.
That was a lie, and we know because of what happened next.
Congress sent out a single $1,200 check to individuals to get them through months of unemployment. Meanwhile, the economic elite — billionaires like Jeff Bezos and Elon Musk — saw their worth increase by $3.9 trillion.
As a group of people, this behavior models a specific message: Everyone is in this fight for survival on their own, and you cannot rely on anyone else around you.
So, what did you expect?
A monopoly on nihilism
When I first started tracking the GameStop story last week, it filled me with despair.
The trick of the short squeeze is to fully embrace that value isn’t real and you should use the market purely to improve your own position. If you see someone shorting a stock like GameStop, it doesn’t matter that the share price is probably overpriced relative to its foundational value. If you can get enough people to join together, you can force the short sellers to buy at higher and higher prices just because you know they have to buy.
In other contexts, this is something that would typically earn people’s scorn. We knew that people needed to buy toilet paper throughout the pandemic, but Target and Walmart didn’t raise prices to take advantage of our increasing demand.
But the people driving up GameStop’s share price are retail investors. On Reddit’s WallStreetbets forum, many of these people claim that they are “average Joes.” The target of their calculated price gouging, however, are billion-dollar hedge funds. On top of that, these hedge funds willingly put themselves into this exposed position (whereas toilet paper is a necessity), and they live by the creed that value isn’t real and exists solely to improve their positions.
So, how can you not cheer on the squeeze?
The government left people to fend for themselves in a deteriorating economy — but they’ve left us on our own for more than a generation now. At the urging of Wall Street, they’ve done nothing to encourage wage growth or to protect unions. Congress is finally going to raise the minimum wage, but it won’t go to $15 until 2025 — an insult.
The modeled behavior again sends a clear statement: The working class’s salvation can wait while the rich get richer.
And do these hedge funds have to wait? Absolutely not.
As the short squeezers pushed the price of GameStop and other stocks to record highs, the retail-trading platforms like Robinhood and Webull came to the rescue of the hedge funds by shutting down purchases of GME, AMC, and more.
Following what looks like a coordinated effort to force the price of GameStop and AMC lower, it’s obvious that the one monopoly that Wall Street will never relinquish is its monopoly on economic nihilism.
Because this game is only fun when you’re the only nihilist at the table.
No one will come for them
Spoilers for Fargo season 3 below:
The third season of the FX television show Fargo deals with the rot of capitalism. It’s about the villain V.M. Varga, who is an unstoppable personification of greed. And at the end of that season, we see sheriff’s deputy Gloria Burgle sitting across from Varga. Burgle has called in the higher authorities to come and witness, and eventually punish, Varga for his endless, all-consuming financial crimes.
The scene (and the season) ends with Varga questioning whether that punishment will ever come. The scene fades out, and we never see what happens.
And yet, we know what happens. After the 2008 financial crisis, no authority or regulator really came for the parasites that bled the world economy through toxic mortgaged-backed securities. Varga gets away, and we know that because we always let our Vargas get away.
The GameStop short squeeze has recontextualized that scene for me, though. Of course it’s terrible that Varga gets away, but we should instead focus on Burgle. She is a decent person, and it’s a small victory that Varga hasn’t infected her.
And it feels like that is what has happened here. The nihilism of Wall Street is reaching out into all of us. But what choice do we have? We’re on our own. What did they expect?
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