There has been endless talk about r/wallstreetbets and Gamestop lately but nobody talks about the most interesting part of the story.
Stocks have been much discussed lately with the Gamestop hype being a focal point. In this week’s post I won't discuss Gamestop’s spectacular rise and subsequent fall, instead I'll focus on how a particular political narrative has wound up in the most unlikely place: a reddit community for risk-taking stock traders. Memes have proven themselves to be the most effective communication tool of the 21st century and it was probably inevitable for memes to be used in finance. What’s really unique about the Gamestop saga in my view is how it morphed from an investment, a way to make money to an epic struggle between the everyman and the hedge funds. If you’ve spent any time on r/wallstreetbets during the last week you’ve seen the way Gamestop has become the centrepiece of a new community.
Political narratives seem to repeat and show up in new contexts, for example the narrative in vouge at the moment is the classic populist view of society as being made up of two groups: the ‘elite’ and the ‘people’ where the elite always and everywhere strive to take advantage of the people. As much as economists try not to acknowledge it, politics and economics are interlinked as economics is almost always political and politics often affect the economy. I’ve seen countless posts on r/wallstreetbets where the poster defiantly states that holding Gamestop shares isn’t about making a profit, it’s about sending a message to the fat cat hedge funds about how they can’t screw over the small private investors. This strikes me as plainly untrue; after all the reason why the Gamestop bubble got so big was how media reported how the share prices soared minting new millionaires and enabling 22-year-olds to pay off their student loans and buy homes. I’m not saying that all those who saw buying Gamestop shares as an ideological stand rather than a get rich quick scheme were insincere, only that the populist ‘elite vs people’ narrative was a poor fit for what was going on at r/wallstreetbets and the stock markets – which is what makes it so interesting.
The ‘elite vs people’ framing has been very successful in many places across the rich world the last decade or so. Trump, Brexit, and Orban have all used the populist narrative to much success and have often been criticised by political commentators for being light on policy and specifics. I’ve heard time and again that populism isn’t an ideology as it has no rooting in any unique political philosophy; it’s more of a motif. I wonder though, when people use populist framing in contexts where it doesn’t fit (after all are reddit using day traders really the ‘people’?) does that mean it’s a genuine conviction about how society works? If it is then populism might be more of an ideology than many thought.
I focused on the politics of the Gamestop mania because I didn’t have anything to add about the economics of it. Bubbles have been around almost as long as stock markets have and this one wasn’t unique in any meaningful way economically. I could have written about how the current monetary policy has led to a bull market so long that new investors think that stocks only go up if you can wait long enough for central banks to announce new monetary stimulus, but while I believe that to be the case I’ve made those arguments before. This isn’t the first bubble and will definitely not be the last but it is the first time I’ve seen populists narratives being used in a stock market context, it remains to be seen if it’s the last.
If you liked this post you can read last week's post about pandemic politics here, or the rest of my writings on politics here. It'd mean a lot to me if you recommended the blog to a friend or coworker. Check back next Monday for a new post!
Written by Karl Johansson
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