Pub. 17 2020 Issue 4

Issue 4 • 2020 15 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S those industries immediately con- demned the day traders’ actions. Hedge fund manager Leon Cooperman called the beleaguered stock buying spree “An attack on the wealthy by people using the money from their stimulus checks.” This was the overarching sentiment if you turned on any financial news report in the days following the initial story. Cooperman’s opinion is wildly ridiculous because the day traders were playing by the same rules that hedge funds play by all the time, but he and others like him don’t like average people playing in their sandbox. In the days following the initial buy- ing spree, Robinhood made the contro - versial decision to prevent users from purchasing Gamestop stock and the stock of other downtrodden companies like Nokia, AMC Theaters, etc. Not only did Robinhood take this step, they also froze users out of being able to access the restricted stocks they had previously purchased. It wouldn’t take a ton of de- tective work to conclude that some influ - ential, powerful hedge funds had a talk with the higher-ups at Robinhood and had them shut it all down. Now, Robin - hood is facing tremendous backlash and possible legal ramifications. In short, once the little guy started figuring out the system and beating the big guys at their own game, the big guys immediate- ly changed the rules of the game. In the weeks since the initial purchasing spree, the stocks have, of course, plunged back to earth, but many day traders were able to make quite a bit of money, which can be considered a victory. The Gamestop story also proved to be an instance where most people, no matter where they fall on the political spectrum, managed to agree that hedge funds and private equity firms have essentially gutted the American econo- my and left it a hollow shell of its former self. This country’s real dividing line is between people with vast, dynastic sums of wealth and everyone else. The Gamestop story showed this in the clearest terms in recent memory, as did a recent CNBC story highlighting the American worker’s plight. According to a recent study by the human resources firm Zenefits, the U.S. is dead last in the developed world in worker benefits (29 of 29). This means the U.S. places last among its counterparts relative to health care, unemployment, retirement, paren- tal leave, paid vacation and sick days. So, on the one hand, you have the U.S. placing dead last in how it treats average workers, but, at the same time, you have the financial markets revealing themselves to be manipulated by the mega-wealthy with total impunity. Given that, it’s becoming clearer every day that the U.S. is a brutal place for average workers. As Dayen notes in his writeup, “We’ve created a massively over-finan - cialized economy where secondary market trading is a more reasonable ticket to wealth in America than finding a high-paying job. You can see it as the inevitable byproduct of a system built on massive inequality. The little guys figured out how to band together and stick it to the big guys. In so doing, they protected retail companies with lots of workers who now get a reprieve, however brief. They revealed the rot in our system, essentially took over Wall Street, and made a lot of rich and amoral people cry.” It’s undeniable that many people now consider a lottery ticket, whether literal or figurative, a more realistic possibility than attaining genuine upward mobility in the American economy. There are just too many obstacles placed in front of the vast majority of people. The Gamestop story shows that, in the 21st century, the American economy has turned into something far beyond laissez-faire capitalism. In a laissez-faire capitalist system, the hedge fund that left itself vulnerable due to sloppy decisions would face the consequences of being beaten by amateur day traders. However, we have a system where the hedge fund is bailed out by other hedge funds, thus effectively creating an unlimited safety net for massive wealth, functioning as corporate socialism. On the other hand, we provide a paltry safety net for our most vulnerable citizens, as the study cited above illustrates. When a coun- try leaves its most vulnerable citizens without a sufficient safety net, it leads to various externalities (homelessness, poverty, disease, crime, etc.). If we don’t completely reevaluate our priorities as a country, then these factors will continue to rise. n The Gamestop story also proved to be an instance where most people, no matter where they fall on the political spectrum, managed to agree that hedge funds and private equity firms have essentially gutted the American economy and left it a hollow shell of its former self.