Meme stocks and Bitcoin will not redistribute wealth
Financio-populism is built on dreams and smoke.
“The percentage you're paying is too high priced/ While you're living beyond all your means/ And the man in the suit has just bought a new car/ From the profit he's made on your dreams” — Traffic
I’m trying to resist the urge to keep blogging obsessively about the Ukraine war. So instead today I thought I’d talk about something that’s been nagging at me for a while — the rise of what I call “financio-populism”.
A few years ago, during the ICO mania of 2017, a friend told me about why he’d gotten into Bitcoin. “I never much cared about money,” he said. “But maybe it was because I was getting paid in fiat.” Of course, that shouldn’t really matter — if you get paid in dollars, you can always just turn right around and use them to buy Bitcoin. Instead, I interpreted his statement to mean that for the first time in his life, he was excited about the possibility of building wealth quickly. That’s a very reasonable and common desire, of course, but along with it came a certain rebellious energy. The more I talked to my friend about Bitcoin, the more I realized that he felt like the cryptocurrency offered the common man (or woman) the opportunity to pull ahead of the people who had always had wealth before — the children of privilege, the corporate grinds, the well-connected finance bros. There was a populist energy behind the idea of upending the distribution of wealth.
This populism was even more apparent in the GameStop mania of early 2021. People were tweeting stuff like this:
Many people believed that by uniting to defeat the (wealthy, well-connected) traders who had been shorting GameStop, the brave rebels of r/WallStreetBets had finally won one for the little guy. Eric Levitz described the mythos thus:
Last week, a motley mass of shitposters, gambling enthusiasts, and disaffected Zoomers — united by hate for Wall Street and love of chicken tenders — beat a multibillion-dollar hedge fund at its own game. Through their collective intelligence and audacity, users of the Reddit forum WallStreetBets executed a sophisticated “short squeeze” that took money away from some billionaire speculators, gave it to some badly indebted workers, and made a mockery of neoliberal capitalism’s legitimizing myths.
Matt Taibbi summed up the attitude in a post called “Suck It, Wall Street”, in which he claimed that the GameStop mania was “an updated and superior version of Occupy Wall Street”.
Even the name of the platform people used to trade GameStop, Robinhood, evokes redistribution from the rich to the poor. When Robinhood suspended the trading of GameStop shares, even AOC got mad.
The mania didn’t end there. “Meme stocks” are now an asset class unto themselves. Bitcoin is more than twice as expensive as its 2017 peak, and GameStop is still far pricier than in its pre-Reddit existence.
Financio-populism may not excite quite the passion it did last year, but it’s still definitely an undercurrent in modern society. Most recently, it seems to be manifesting in the form of NFT mania.
And I deeply understand the financio-populist impulse. Wealth inequality is at record levels. That wouldn’t be so bad if fortunes rose and fell, and everyone got to spend a little time at the top. But you hardly hear about anyone going from richest to rags these days. There’s always the nagging sensation that the system is rigged — that to get rich you have to have gone to the right East Coast prep school or met the right angel investors at the right parties. In that kind of world, anything that mixes up the set of who’s rich and who’s not can feel like justice.
There’s just one problem — financio-populism is not really going to do this. Yes, we all know that one guy who worked at Starbucks before he got rich on Bitcoin or GameStop, and now drives a Lamborghini. Financial markets are random enough where there will always be that guy. But overall, trading meme stocks and crypto is likely to leave the average person poorer than before. Their dreams will end up lining the pockets of the rich, knowledgeable, and well-connected.