Cliff’s Take: Rage Against The Machine?

2020 was all about political division, social unrest, a once in a life-pandemic, and a post-election aftermath never to forget.   Now, America turns its attention to the things that really matter – Reddit-hyped meme stocks.  

All jokes aside, manias and crazes often have something instructive to tell us about what is going on beneath the surface of society. So, what does GameStop reveal about us? Is this a David versus Goliath cage-match but in virtual form? Or does it speak to something more profound?

The economic recovery has been K-shaped thus far. Job losses continue at astounding rates – 847,000 first time unemployment claims filed last week alone. And the resulting economic pain is not equally distributed. Inequality, well, has only gotten more unequal.

So, what’s really driving the GameStop mania?  Is it an emergent crowd-sourced way to “stick it to the powerful?”  A counterbalance to the increased concentration of power and wealth in the hands of a few?   Not sure. But it is worth pondering.

Here are some of the most relevant data points of the week.

• Divergent Americas. At first, the pandemic was the great leveler. It didn’t matter whether you were low or high income, consumer confidence fell. But that quickly changed.  Look at the data.  Divergent America; divergent confidence.  COVID both exacerbates and reinforces our economic differences. 

• Distressed debt. According to the Federal Reserve, unemployment likely sits at more than 20% among the lowest-wage workers – and 5% in the top quarter. At the same time, Americans most likely to take on debt during the pandemic were those earning the least and the unemployed. Double trouble—debt and economic uncertainty.  Remember—it takes money—earned or debt financed—to make ends meet.

• A rigged America. Americans think the system is rigged. This discontent fuels today’s grievance politics.  Disenchantment, though, is not equally distributed.  If you are a “have,” you see the system in a rosier light. Makes sense, right? If you are a “have not,” well, the system is stacked against you.

• Nostalgia. We miss our pre-COVID world of shared, collective experiences. The Reddit-approved companies in the news are all almost universally relics of past decades – when malls were still flourishing; when movie theaters were the arbiters of what we watched. Both rich and poor are missing these same experiences.

• Wall Street is not Main Street. A big part of the glee on social media comes from watching the tables turn on a handful of risk-taking hedge funds. But this depends. Inequality in condition, inequality in perception. Look at the data.

In these polarized times, who would have thought that opposing figures on the right and the left would agree on anything, let alone GameStop. What cognitive dissonance!  So, can there be unity in raging against inequality? Perhaps.

Clearly, GameStop struck a chord.  We’ll see where it takes us.

In the meantime, be safe, be sane.