While I agree with Ryan Cooper’s analysis at The Week of the GameStop mania and have sympathy with his argument that it highlights the need for serious financial reform, I have grave reservations about the sort of reform he advocates:

If we strictly regulated Wall Street with large capital requirements, a financial transactions tax, simply banning most of the complicated derivatives and options used today, and so on — aimed not at the retail investor but mainly at the big financial firms — the American economy would be a lot healthier. If we scooped most stocks into a social wealth fund owned equally by every American, normal people could benefit from the market without having to take crazy risks. There are better ways to beat the rich than pump-and-dump schemes.

Perhaps my objectives are quite different from his or my expectations of people’s behavior and perhaps what I would like to achieve is just impossible. I think that the reform that we need would stop empowering the powerful and start empowering ordinary people. I don’t have opposition to financial transactions taxes but the rest of his proposals strike me as doing the exact opposite.

And above all I think that the only way for the federal government to bail out any private company is by nationalizing it. That would apply to banks, other financial institutions, manufacturing companies—the lot.

In a piece at RealClearPolitics Chicago Tribune columnist John Kass holds up to scorn any claims of “equity” on the part of Democratic politicians:

Democrats once talked about “equal opportunity” and quoted the late Rev. Martin Luther King Jr. But now they’ve hitched their wagons to “equity,” which has nothing to do with opportunity but is all about using government to dictate outcomes based on race and gender.

Yet Democrats and progressives see “equity” as the only real answer to redress the nation’s past sins.

And they’re in the business of deciding who will pay for the sins of the fathers, even if that father was born in some land far away, across the ocean.

The Democratic Party’s “equity” argument runs into trouble when confronted with school choice. They don’t engage. They avoid.

I called Nathan Hoffman, a policy researcher at the nonprofit education group Empower Illinois, which supports the opportunity scholarships program.

Hoffman, who is Black, supports school choice.

“We cannot have an ‘equity’ conversation without talking about the most inequitable thing we do with respect to education, which is to force students into schools based solely on the ZIP code they reside in, whether the only way out is to either buy a home in a better neighborhood or buy a seat in a private school,” said Hoffman.

“Those who would say the way we achieve ‘equity’ is by doubling down on the same schools that have failed to teach generations of students to read, write and do math — while they themselves send their children to different (and better) schools are not interested in true ‘equity.’ Rather, it’s an interest in convenient ‘equity,'” Hoffman said.

If President Joe Biden were truly serious about treating Americans fairly, “no matter their ZIP code, race or religion …” there is one thing he could do:

He’d push for school choice.

The reality is that there are relative priorities, the highest priority is being re-elected, and Democratic politicians can’t do that without the support of the public employees’ unions. In the pursuit of that highest priority everything else takes a seat at the back of the bus.

If you want the ultimate in centralization (not to mention free riding), you could do worse than considering the European Union. The editors of the Wall Street Journal go to the videotape (as Warner Wolf used to say):

As the European Union fumbles its vaccine rollout, officials in Brussels are looking for villains. They think they’ve found one in vaccine-maker AstraZeneca.

Rather than letting countries negotiate their own vaccine contracts, the European Commission handled procurement for the entire bloc in the name of solidarity. Brussels botched the process, and now the union’s members are lagging together.

Europe, the U.S. and U.K. have orders or options for roughly the same number of doses per capita. But the U.S. and U.K. moved faster to secure contracts, which made it easier for pharmaceutical companies to prepare. Washington and London also spent about seven times as much on development, production and procurement per person, according to the British analytics firm Airfinity. Some U.S. states face distribution challenges like many European countries, but American and British regulators approved vaccines faster than their EU counterparts.

The results are already clear. By our deadline Thursday, the U.K. had administered doses to more than 11% of residents, while the U.S. was approaching 8%. Denmark was a European success story at 3.7%, while France and Sweden languished around 2%.

Consider this story in relation to my earlier post. How, precisely, can we vaccinate the entire world? The World Health Organization’s initiative against smallpox began in 1959 and finally succeeded 28 years later. With SARS-CoV-2’s rate of mutation and how easy it is to contract, we don’t have 28 years. The lesson here is that bureaucracies can be successful but it is very difficult for them to be successful fast.

There’s been tremendous variance here in the United States among the various states in the percentages of their populations that have been vaccinated along with complaints about how long it is taking. Can you imagine what would have happened if we had insisted on solidarity, perfect equality, and, as they are calling it now, “equity”? Now expand that to 170 countries.

Sure enough, in his most recent Washington Post column Fareed Zakaria latches onto the point I made yesterday—we can’t end the pandemic here without controlling our borders and isolating the United States from foreign contact or inoculating the entire world:

We can all see the outlines of a post-pandemic world. With vaccinations ramping up in the United States and Britain, and with Israel and the United Arab Emirates racing toward herd immunity, it is easy to imagine that a return to normalcy is on the horizon. The only question seems to be: How long will it take?

But we might be seeing a false dawn. Despite the amazing progress we’ve made with vaccines, the truth is that our current trajectory virtually guarantees that we will never really defeat the coronavirus. It will stay alive and keep mutating and surging across the globe. Years from now, countries could be facing new outbreaks that will force hard choices between new lockdowns or new waves of disease and death.

The basic problem is in how the vaccine is being distributed around the world — not based on where there is the most need, but the most money. The richest countries have paid for hundreds of millions of doses, often far in excess of what they need. Canada, for example, has preordered enough to cover its 38 million residents five times over.

Meanwhile, Nigeria’s 200 million people have not received a single dose of the vaccine.

and, as we are learning, it won’t be enough to inoculate the entire world. We must inoculate again and again and again.

I believe there is a long-term/short-term factor that Mr. Zakaria is ignoring. Frankly, I don’t believe it’s possible to inoculate the entire world multiple times per year every year forever. There will be bottlenecks that we haven’t even imagined yet in doing that. In the short term we can inoculate the population of the U. S. Without controlling travel between the U. S. and other countries in the long term that will prove to be a futile gesture.

I also believe that in the truly long term we will need to live with a heightened level of risk than we thought we did in 2019. Because this is only the first of many pandemics and what is presently being characterized as a “once-in-a-century” event will become an annual one or a multiple times annual one. That is the implication of more people, faster, cheaper travel, and easily traversed borders.

The Germans have a word for it: zeitgeist, literally “time spirit”, the spirit of the times. The GameStop speculation saga really captures today’s zeitgeist in many ways and Matt Taibbi has a good handle on it:

In the fall of 2008, America’s wealthiest companies were in a pickle. Short-selling hedge funds, smelling blood as the global economy cratered, loaded up with bets against finance stocks, pouring downward pressure on teetering, hyper-leveraged firms like Morgan Stanley and Citigroup. The free-market purists at the banks begged the government to stop the music, and when the S.E.C. complied with a ban on financial short sales, conventional wisdom let out a cheer.

“This will absolutely make a difference,” economist Peter Cardillo told CNN. “Now, if there is any good news, shorts will have to cover.”

At the time, poor beleaguered banks were victims, while hedge funds betting them down as the economy circled the drain were seen as antisocial monsters. “They are like looters after a hurricane,” seethed Andrew Cuomo, then-Attorney General of New York State, who “promised to intensify investigations into short selling abuses.” Senator John McCain, in the home stretch of his eventual landslide loss to Barack Obama, added that S.E.C. chairman Christopher Cox had “betrayed the public’s trust” by allowing “speculators and hedge funds” to “turn our markets into a casino.”

Fast forward thirteen years. The day-trading followers of a two-million-subscriber Reddit forum called “wallstreetbets” somewhat randomly decide to keep short-sellers from laying waste to a brick-and-mortar retail video game company called GameStop, betting it up in defiance of the Street. Worth just $6 four months ago, the stock went from $18.36 on the afternoon of the Capitol riot, to $43.03 on the 21st two weeks later, to $147.98 this past Tuesday the 26th, to an incredible $347.51 at the close of the next day, January 27th.

The rally sent crushing losses at short-selling hedge funds like Melvin Capital, which was forced to close out its position at a cost of nearly $3 billion. Just like 2008, down-bettors got smashed, only this time, there were no quotes from economists celebrating the “good news” that shorts had to cover. Instead, polite society was united in its horror at the spectacle of amateur gamblers doing to hotshot finance professionals what those market pros routinely do to everyone else. If you’ve ever seen Animal House, you understand the sentiment…

He adds several bons mots:

Meaning: just like 2008, trading was shut down to save the hides of erstwhile high priests of “creative destruction.” Also just like 2008, there are calls for the government to investigate the people deemed responsible for unapproved market losses.

and

The only thing “dangerous” about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a “pump and dump scheme” to push prices away from their “fundamental value” is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?

America’s banks just had maybe their best year ever, raking in $125 billion in underwriting fees at a time when the rest of the country is dealing with record unemployment, thanks entirely to massive Federal Reserve intervention that turned a crash into a boom. Who thinks the “fundamental value” of most stocks would be this high, absent the Fed’s Atlas-like support in the last year?

and

In other words, it was all well and good for investment banks and executives of phoney-baloney companies to gorge themselves on funhouse profits on a funhouse economy, but when amateurs decided to funnel just a bit of this clown show into their own pockets, finance pros wailed like the grave of Adam Smith had been danced upon.

He concludes:

They’ve seen first that our markets are basically fake, set up to artificially accelerate the wealth divide, and not in their favor. Secondly they see that the stock market, like the ballot box, remains one of the only places where sheer numbers still matter more than capital or connections. And they’re piling on, and it’s delicious, not so much because they’re right, but because the people running for cover are so wrong, and still can’t admit it.

Buy the ticket, take the ride, nitwits. If you earned anything, it’s this.

I don’t see how you can coherently defend markets and call out for intervention into the markets on behalf of the wealthiest people in our society unless what you’re really defending is not markets but the continued rule of the established oligarchy. At best it’s cognitive dissonance. At worst it’s simply lying to the rubes to maintain your hold on wealth and power at the expense of everybody else.

What we’re seeing in this incident, in the breaching of the Capitol, and in the mass demonstrations over the summer is enormous dissatisfaction but it’s not just dissatisfaction. What we’re seeing, too, is the challenge that the Internet, broadly, and social media in particular pose to power structures throughout our entire society. Not just government but journalism, media, financial, and banking. In due course it will invade every area.

How we respond to this challenge will set the course of events for the foreseeable future.

Update

The editors of the Wall Street Journal summarize the matter succinctly:

This may be a new example of the power of social media, but it isn’t a crisis of capitalism or the stock market.

which you may notice echoes what I observed above. But they then go off the rails in their conclusion:

How about reminding people that investments carry risk, that stocks fall and rise, and that the GameStop losers won’t be bailed out?

The hedge funds have already been bailed out—by bigger “investors” and, ultimately, they’re being backstopped by the biggest “investor” of them all, the Federal Reserve. What recourse do we have to stop this picking of winners and losers?

The editors of the Wall Street Journal consider our present two track jobs recovery:

Liberals say there is a K-shaped recovery with the wealthy doing well and low-income earners struggling. The more important economic disparity is between states governed by progressives and pragmatic conservatives, with the latter doing much better for average workers.

Some points should be made here. Nearly 35% of Mississippi’s population is black; 26% of Alabama’s is. For comparison 7% of California’s population and 13% of New Jersey’s population is black. A decrease of 8 percentage points translates to a lot of black people thrown out of work. The comparative statistics on prevalence and virulence of COVID-19 for the lockdown states compared to the others do not support the policy, either.

I think there is a “K-shaped recovery” going on but it’s only partially “the wealthy doing well and low-income earners struggling. Where you are, who you are, and what the government policies have been where you are are important, too.

In an interview at Bloomberg John Kerry, recently appointed the Biden Administration’s point man on climate change, telegraphs what the administration’s plans are:

We need government incentives, maybe in the form of tax credits. But the private sector also needs to begin making these practices profitable and demonstrating the productivity advantages. All food needs to be climate-smart. Keep in mind, though, that agriculture is about 10% of total GHG [greenhouse gas] emissions versus 27% for transportation, 27% for power production. Big difference

He left out something. Construction presently accounts for about 11% of GHG emissions. If anything resembling the Green New Deal is enacted into law, that will increase substantially to the point where it rivals transportation and energy production. I’ve already expressed my skepticism about the likelihood of increasing emissions as a strategy for decreasing emissions.

Speaking of skepticism this remark of Mr. Kerry’s caused me to raise an eyebrow:

If we do it properly, I don’t believe there has to be pain. I don’t accept that. I think this could be a very smooth, normal economic transition and we can ease any negativity for people by making sure that we’re there to help them transition. Larry Fink of BlackRock was right when he said [to private sector leaders] we can’t just be corporate entities in a nation that cares about shareholders. We have to shift our focus to stakeholders.

or, said another way, ignore the costs and focus on the benefits. You can justify any boneheaded policy that way.

That immediately impelled me to research the frequently encountered claims about “green jobs”. It’s extremely difficult to find non-partisan, non-ideological sources for that information. The best I could find was a couple of pieces at the National Bureau of Economic Research which basically complained about the low level of the scholarship on this issue. The honest truth is that no one knows whether the path down which the Biden Administration seems to be determined to forge will increase the total number of jobs, decrease the total number of jobs, eliminate jobs for some while creating jobs for others (my bet), or something else. Nobody knows and once we’ve started down that road it will be quite hard to reverse course.If we do it properly, I don’t believe there has to be pain. I don’t accept that. I think this could be a very smooth, normal economic transition and we can ease any negativity for people by making sure that we’re there to help them transition. Larry Fink of BlackRock was right when he said [to private sector leaders] we can’t just be corporate entities in a nation that cares about shareholders. We have to shift our focus to stakeholders.

One last point. There is no such thing as completely carbon-free energy. Every power plant requires backup power generation and that is inevitably based on gas or coal. Repeat: wind and solar need reliable standby power. I’m sitting in the place where power is the most carbon-free in the country—most of our electrical power around here is generated by several nuclear power plants built long ago. Our carbon emissions are actually increasing as those old nukes are decommissioned.

At Bloomberg its owner, Michael Bloomberg, urges President Biden to take steps to reopen public schools:

To help more districts reopen, President Joe Biden should reassure union leaders that he takes teacher safety seriously. But he also needs to apply some pressure to states and cities. Funding from previous relief bills — more than $67 billion, all told — has helped schools to pay for testing, protective gear, improved ventilation, added staff and more. Biden is offering an additional $130 billion, and has rightly pledged sweeping federal support for schools that need it. But he should be clear that this is a two-way street. The government will do everything it can to ensure classrooms are safe; in return, school districts must prioritize getting kids back at their desks.

concluding:

The pandemic has demanded sacrifices from everyone. Hospital employees and first responders, who work in environments that are far more dangerous than classrooms (and who are also often represented by unions), as well as transportation workers and other public employees, have steadfastly done their jobs throughout this crisis, honoring their responsibility to their communities — and making the nation proud. Children — and all of America — need teachers to join them.

I don’t believe that the impediments are what he believes they are. Here’s what some Chicago teachers are doing with the time they aren’t using to teach:

They clearly have a lot of time on their hands.

If the federal government steps into bail out the hedge funds not to mention those backing them up that have held short positions on GameStop, there will be serious repercussions.

Here’s how it could happen. What if CALPERS, for example, has substantial money invested in one or more of those hedge funds?