On February 2, GameStop closed at $90, less than 20 percent of its all-time high, which it had reached just a few days earlier. Like many internet stories, the narrative may start with the “little guy” winning—David against Goliath—but they rarely end that way. The little guy loses, not because he is irrational and too emotional, but because of his relative power in society.
Similarly, Facebook was first celebrated for empowering dissidents during the Arab Spring, but just a few years later it was a key tool in helping Donald Trump win the presidency—and then, later, in clipping his wings, when it joined with other major social-media companies to deplatform him following the insurrection at the Capitol. The reality is that Facebook and Twitter and YouTube are not for or against the little guy: They make money with a business model that requires optimizing for engagement through surveillance. That explains a lot more than the “for or against” narrative. As historian Melvin Kranzberg’s famous aphorism goes: “Technology is neither good nor bad; nor is it neutral.”
It’s also important to remember that platforms are never all there is to these stories. For example, the United Nations has taken Facebook to task for amplifying hate speech that fueled the ethnic cleansing of the Rohingya in Myanmar, but Myanmar’s government had already been fueling ethnic divisions. Similarly, decades of U.S. institutions slowly but surely failing, becoming less responsive and less accountable toward the interests of ordinary people, allowed someone like Trump to win the presidency.
In 2021, one must be quite oblivious to argue that unyielding adherence to “fundamentals” is what allows certain companies to do spectacularly well on Wall Street, and that people attempting to engineer a short squeeze are merely irrational or dominated by feelings. Recent history has made a mockery of Wall Street’s pretensions to superior rationality. In the lead-up to the 2008 crash, under-regulated, cash-rich Wall Street pros made enormous bets using complex and indefensible formulas and clever tricks, making themselves richer while doing so. Those bets and formulas were not rational, but they were convenient as long as one could pretend they made sense. When it all finally came tumbling down, after a large investment bank went bankrupt, the whole financial sector was bailed out with taxpayer money, because the intertwined nature of the industry and the size of their massive bets meant they could drag the whole global economy down with them.
What was the consequence for these reckless, greedy, and irresponsible actions that could in no way be defended as rational investments based on “fundamentals”? A few people may have lost their massive bonuses for a short time, but no Wall Street executive went to jail. Just one year after being bailed out, they were back in business, handing out $20 billion in bonuses, as unemployment was soaring. However, for the millions of families without extensive wealth buffers, the effects of that crash have been terrible—not just a year of small or no bonuses—and will likely linger their whole lives. What one side has is not superior rationality, but superior power.
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