A Fake Issue

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.