No one has heard the word “GameStop” this many times since the glory days of the Nintendo DS. The Reddit-induced craze surrounding GameStop stock ($GME) has dominated headlines and conversations for days, but the deeper catalyst for this war on Wall Street is centuries-old American populism.
It doesn’t take a Wall Street financier to understand that the wealth gap in America is increasing, and the middle and lower class majority is becoming increasingly frustrated. Economic inequality has only been exasperated by the COVID pandemic, with American billionaires’ collective wealth increasing by $1.1 trillion since mid-March, according to CNN. Rising student loan debt, unemployment, the uncertainty of social security and automation are all contributing to worsening wealth inequality.
The average American doesn’t know how to invest in equities, IRA’s and ETF’s. Hedge funds exponentially grew wealth for the rich with minimal capital gains taxes, while the “average American” gave away their hard-earned money through high-income taxes.
The widespread media coverage has also taught the public about the importance of finance. Creators on TikTok, Youtube and Reddit are teaching 18-year-olds the importance of Roth IRA’s and credit scores. Financial knowledge is becoming accessible through the Internet and is finally making the market work for the people.
While this may become old news by next week due to our rapid news cycle, the takeaways from the GameStop short squeeze must be remembered for years to come. Accessibility of wealth gain has never been more important, especially when the federal government has repeatedly failed to tend to the financial needs of Americans.
This week has been confusing and complicated, but it has also highlighted how average people can make big waves and change lives.
One Reddit user posted that they used their earnings from GME stock to pay off their $23,504.45 student loan debt, while another user posted that he used the $4000 he made to pay for his dog’s knee surgery.
Thousands of Americans have made more money in a few days than the federal government could give them in stimulus checks in months. There is a real argument to be made for market solutions to this recession instead of government intervention.
Part of the reason why this GameStop craze is so significant is that it unifies people on all ends of the political spectrum. It calls for a democratization of finance and an end to crony capitalism, which is a universal movement and does not belong to a political ideology.
After Robinhood banned trading on GameStop stock, both Democrats and Republicans, such as Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz, called for the Securities and Exchange Commission to scrutinize the investment platform. People on all ends of the political spectrum seem to be rooting for Reddit stock investors and the democratization of the stock market.
This divide is between the top and the bottom, not the left and the right. If this movement can effectively move monetary and intellectual wealth from Wall Street to Main Street and lessen wealth inequality, even slightly, we can prevent the dangerous side effects of financial depressions.
A lot of xenophobia and scapegoating, whether in the context of Anti-Semitism or “Build the Wall” rhetoric, can be attributed to economic disaster. When people cannot afford to feed their families and keep a roof over their heads, demagogue politicians with high promises and low morals take advantage of their vulnerability and rise the ranks.
This transfer of wealth from Wall Street to Main Street, ordinary Americans, can be compared to the Occupy Wall Street movement of 2011.
The year-long protest urged leaders to attend to the needs of the 99% of Americans, instead of the top 1%. It mobilized the public to take action in the financial sector, and force power out of Wall Street financiers.
Efforts to effectively democratize wealth by moving power out of Wall Street can also be seen in the rise of cryptocurrency, like Bitcoin. One of cryptocurrency’s biggest appeals is its removal of the financial “middleman.”
If Bitcoin can remove the service fees and costs associated with our current method of transactions, savings can be passed onto users, and retain more wealth for Americans.
There is hope in unifying people under this movement, especially after political turmoil stained our country over the last few months. If average people can work together to proliferate financial education, and fight big business and corporate greed, maybe “free-market capitalism” can finally become free for all.