A Fine Example of a Fake Issue
The current uproar
over the stopping of trading in the stock of the company Gamestop is a
beautiful example of a fake issue in American politics. A fake issue is an
issue that gives politicians an opportunity to express intense moral outrage
without having to do anything to improve the lives of Americans. This is a good
example of a fake issue. Speeches will be made; outrage is being expressed on
Facebook; hearings will be held; maybe, a new regulation will be enacted; but
the lives of most Americans will be unaffected, and the regulation, being badly
thought out, will turn out to be a source of trouble.
Members of both parties are now bloviating that the stopping
of trading the stock of Gamestop is yet another a case of the big guys on Wall
Street stepping on the little guys. That much may well be true, but this relatively
minor action is being compared to the decision in 2009 to rescue the big banks
but not the homeowners who lost their homes. The day traders who conspired to
drive up the price of Gamestop are said to have been motivated not merely by
greed but by populist anger at a system that is rigged against them. Their
anger at being denied a chance to make more money is now alleged to be like the
Tea Party and the Occupy Wall Street movement. Members of both parties in
Congress – including Ted Cruz and Alexandria Ocasio-Cortez – have jumped on the
issue and are calling for hearings. The attorney general of Texas is calling
for an investigation into Robinhood, the on-line app that halted the trading.
Take a Deep Breath
Take a deep breath. There cannot have been more than a few hundred
day-traders trying to buy shares of Gamestop when the trading was halted. This
is not a mass movement. In any case, brokers frequently halt trading in a stock
if it seems to be running away with the market. The issue will not affect most
of us in any way. Only
55% of Americans own any stocks, and among
those who do, the majority own them in mutual funds in retirement accounts.
Very few people are day-traders, and trading or investing in stocks is not an
altruistic activity. This is a fake issue.
We have plenty of real issues to occupy our attention:
national health care, free post-secondary education, affordable child care, global
warming and of course, the pandemic. We could worry about saving Social
Security or about fixing our immigration system. Most politicians try to avoid discussing
these issues because they come with risks for political risks. Taking a
position on any of these issues can end up committing a politician to action
that alienates some voters. Fake issues
are much safer, and politicians love them.
So, enjoy the political spectacle, but don’t allow moral
outrage to rob you of sleep.