Wallstreetbets and resurgence of communal action

In the past few years, we’ve seen a lot of big news headlines. Many of them have been the byproduct of communal action.

Caroline Gans, Associate Editor

It’s a tale as old as time: the beleaguered masses join forces to take down the injustices that they see in the world. It happened in the French Revolution, it happened with the BLM protests last year, and it happened again in 2021 when r/wallstreetbets took on the titans of Wall Street.

In fact, many of the most remarkable events of recent times have been the result of people coming together to produce change. Take the riots at the Capitol. For better or for worse, that was essentially a group of people who felt they needed to take action to correct what they perceived as a problem. In a time of turmoil like that facing society today, the power of communal action is more pronounced than ever.

To understand the significance of the Reddit takedown of the “Wolves of Wall Street,” we must collectively examine what happened, why it happened, and how it was possible for the underdogs to rise to the top. So let’s dive in.

To make money in the stock market, you’ve got to buy your shares low and sell them high. Easy, right? Except, no one actually knows how a company will perform, or what price per share is too high. Choosing a stock with room to rise in value requires either a crystal ball or careful research and some luck.

We’ve all seen the graphics showing the huge current value of a few dollars invested long ago in the stock market. We know, in general, that investing is a good idea. But it’s also true that millions fewer Americans own stock now than did in the early 2000s. And working people may notice, as U.S. Representative Alexandria Ocasio-Cortez pointed out, “the Dow soars, [but] wages don’t. Inequality in a nutshell.”

There’s a sense that the stock market is far removed from ordinary people, and nothing but a way for the already wealthy to make more money. This belief is supported by the fact that large corporate players have easy access to the information that guides good trades, and even favored access to the markets themselves. Ordinary people in the stock market are called “retail investors,” which already sounds like they’ve paid too much.

This isn’t new. America, arguably, is a country by the rich for the rich. Think about it. Nearly every elected official in a position of political power in this country got that position by spending money. Sometimes a great deal of it.

According to CNBC, 14 billion dollars were spent on presidential and congressional campaigns in the 2020 election. To spend that kind of money, politicians have to have vast sums of it, whether it comes from their own pockets or those of wealthy donors. For better or worse, money is the grease that allows the political machine of America to run.

And when these politicians come into power, they’re all but obligated to please the wealthy donors who got them there. Thereby, American politics has come to favor the wealthy and regulate them less.

When the housing bubble burst in 2008, economic pain spread so quickly that people struggled to make their mortgage payments. Hundreds of thousands of Americans lost their homes. Wall Street firms and banks that had made risky, unregulated investments in real estate were also devastated. But calling themselves “too big to fail,” these corporations sought and received from the U.S. Congress a $700 billion bailout. Individuals got little to no help at all.

So it’s easy to see how the titans of Wall Street come to be: the system is set up to protect them. And when, according to CNBC, 63% of American households are living paycheck to paycheck, the divide between rich and poor has become extreme. But, as previously discussed, a government which favors the rich won’t tend to be overly helpful for these people. If they want to see any real change, they have to take matters into their own hands.

That’s why recent times have been so interesting. Last summer, the BLM protests showcased the power of communal action. People saw an injustice, and did all they could to produce a change for the better. Because the deck was so stacked against people of color, they had to band together to most effectively succeed.

The same philosophy triggered the reddit stock market takeover. Coordinating their strategies online, suddenly lone investors had a team thousands strong. This is the power of organized communication. It’s the same force that led individuals out to protest last summer, and they became a force that couldn’t be ignored.

Redditors noticed that hedge funds had bet on GameStop to fall in value. Check out this article for a better explanation of what exactly happened, but in essence, big investors had borrowed shares in the company and then sold them, pocketing the cash. When the loans came due, they expected to use just a little of the cash to buy the now cheaper shares, and repay their loans. R/wallstreetbets had other plans.

Members of this subreddit mass-bought shares of GameStop, and because there were so many of them, the law of supply and demand made the price start climbing. By the time the hedge fund managers had to repay the shares they’d borrowed, GameStop cost a whole lot more to buy. Some of the big players lost tens of millions of dollars. And on the other side, some of the Redditors made fortunes.

If that doesn’t make sense, that’s okay. Exactly what these Redditors did is of less importance than what it says about our times.

Individuals can never be “too big to fail.” Individuals working together, though, just might achieve something huge. When the rich and powerful become so far removed from everyone else, it can be hard for any individual to make a change. Especially during a global pandemic, these divides are only exacerbated. The average person can feel unimportant and beleaguered. However, when thousands of these average people realize that if they join forces they can get things done, the divide just might start to shrink.

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