Revolt of the Public

Ideas and Issues

January 31, 2021

            Pearl River     GameStop, Robinhood, Tanger Outlets, AMC and some movie companies are all still in the news aftermath from the Reddit internet raid on the Wall Street short sellers. There are stories in the papers about 10-year old kids getting a gift of GameStop stock and selling out for 5000% profits. There are reminders that small-time investor profiteers on this escapade will have to pay capital gains taxes.

Funny, you never see a separate piece in the news of the day about tax payments when some Wall Streeter makes a billion on some piece of fast dealing.       Perhaps that because the reporters and the readers all know, deep down, that the billionaire will figure out a way to not pay. Take Apollo, the giant hedge fund and its gazillionaire leader, Leon Black, and his shameless explanation for paying sex offender Jeffrey Epstein $158 million dollars over several years. Hey, he saved Black between one or two billion dollars in taxes with various trust schemes. Black had his dealings vetted by his lawyers at Apollo, who all seem to have opined that Black got a good deal. They fell out because Epstein thought he was underpaid for some of what he saved Black. Black says he’s sorry he ever got involved with Epstein, which is a bunch of baloney, because there’s no report that he’s decided to pay the government what it was owed in taxes that Epstein saved his family.

New York Times’ columnist Kevin Roose, has an interesting take on the GameStop affair, writing,

If you can get past the all-caps lunacy and strange inside jargon, the Redditors make some good points. Big banks and hedge funds really do play by different rules than retail investors. Wall Street banks really did get bailed out after the 2008 financial crisis while Main Street homeowners suffered. M.B.A.s in fancy suits are probably no more likely to give you good investing advice than guys on YouTube with names like “RoaringKitty.”

While watching the GameStop drama, I’ve been reflecting on what the author Martin Gurri calls “the revolt of the public.” Mr. Gurri writes that the internet has empowered ordinary citizens by giving them new information and tools, which they then use to discover the flaws in the systems and institutions that govern their lives. Once they’ve discovered these shortcomings, he writes, these citizens often rebel, tearing down elites and dominant institutions out of anger at having been lied to and withheld from.

Roose says that Gurri would see this all as “vengeful nihilism,” while from where I sit, it looks like a fight for justice. The nihilism argument is contrived from the lack of a ten-point plan for what should replace Wall Street greed, inequity, manipulation, and speculation. There everyday business plan is a “war against the public.” You could replace it with just about anything that benefited more than the million and billionaires, and it would be a better system by my lights.

Seems to me the message is: fix all of this now or there will be permanent war by the public, and there may be emerging weapons to finally make this a fairer fight.