Rhys' Newsletter #42

GameStop, duh

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Hello fellow citizen of the internet,

Last week, I received multiple requests to analyze Game Stop. Let’s get into it.

GameStop is Another Step in the Borg Waking Up

Our increasingly networked humanity is turning into a hivemind Borg. GameStop is a symptom of the underlying shift towards a networked human organism. Four main points:

1a) GameStop is the result of a post-Trump attention vacuum.

Trump has dominated internet attention for four years. Now he’s gone from office and has been removed from social media. We’re free of Trump as a mind virus, but as this SNL skit asks, “What the hell besides Trump are we going to talk about?”

We’ve only had a month to find new memes. There have been two thus far. The first meme that won was Bernie’s Mittens. The second was GameStop ($GME).

We went from 100 Attention Points on Trump to 0. For the first week, 100 Attention Points went to Bernie. Now 100 Attention Points have been captured by $GME. But how did $GME win?

1b) Which memes are selected for?

The only memes that succeed have a powerful viral loop beneath them. If a meme doesn’t have virality, we simply don’t see it. It’s like a gene in a species that doesn’t successfully reproduce. Homo erectus ain’t around.

This virality is similar to COVID. You need r > 1 for exponential growth. Every person who is infected (with $GME or COVID) needs to spread it to more than one person.

Imagine all four billion smartphone owners in a room. I start a chain by saying “GameStop”. Two of the my neighbors repeat it, then four of theirs, and so on until the crowd is all yelling it.

All memes spread like this. #MeToo spread through each woman hearing “Me too” and then speaking it to her neighbors. Bitcoin spreads like this. #BLM and #StopTheSteal too.

What determines the fitness of a meme? It needs to meet human needs—our Now Me basic needs, our Now Us need for connection, and our Future Me need for meaning.

$GME meets basic needs through money. It helped r/wallstreetbets traders pay off student loans. $GME meets our need for connection through community. r/wallstreetbets became a thriving space with its own language—boomers, autists, tendies, and paper-hands. $GME meets our need for meaning through narrative. It created a David and Goliath story—poor redditors vs. rich bankers.

This is meme LARPing. In #39, I noted how the #StopTheSteal insurrectionists were meeting their need for meaning through a similar David vs. Goliath story.

In addition to meeting human needs, a meme needs to compel its host to share the meme. Bitcoin spreads because users are financially incentivized to share it.

Hashtag-based memes aren’t the first example of compelled sharing. During the Industrial Age, chain letters encouraged their recipients to share a letter for good luck and future income. As an example, the “Send-a-Dime” letter below was sent hundreds of millions of times to overwhelmed post offices around the world.

As we can see from this example, the most powerful memes bridge the info-money barrier with a financial value component. This is also how moralizing gods spread. You could bequest land to the church to go to heaven. (By 900 CE, the Church owned about a third of the cultivated land in western Europe.) This is why $GME and Bitcoin are so powerful. They turn attention into money and back into attention.

Another powerful meme property is to encourage in-person phenomena. #MeToo canceled many celebrities, #BLM encouraged epic protests, and #StopTheSteal manifested as storming the US Capitol. These IRL impacts get posted online, which spreads the meme more, leading to more IRL impacts.

1c) Memes and the Enthnosphere

We’re still at the start of understanding the evolutionary mechanisms for memes and how they affect our global set of narratives—the enthnosphere.

We have a tree of life and an explanatory model for our biosphere, evolution. In the next decade we’ll have a tree of ideas and an explanatory model for our ethnosphere, memetic evolution.

Dawkin’s Selfish Gene helped us see the world from the gene’s perspective. We need to understand the world from the meme’s perspective. What does $GME want? We know it outcompeted less viral memes, so it has strong virality. It wants to meet the needs of its hosts and compel them to share it. This is why it mutated to gain the “David vs. Goliath” property.

Instead of being surprised by an emergent meme like $GME, how can we intentionally design memes that exploit memetic properties for good?

How can we turn social networks from a collective amygdala into a collective cerebral cortex?

Was $GME a mob or a movement? How can we stop mobs and enable movements?

1d) Assorted Other Commentary

The internet enables info to move in a permissionlessness way. This lowers friction and leads to all other phenomena:

  • Lower friction leads to a “Big Winner-Long Tail” bimodal distribution. There’s a long tail of YOLO graves on r/wallstreetbets and a Big Winner of $GME and AMC. Elon, Chamath, and AOC are Big Winners of Twitter and had an outsized impact on the spread of $GME.

  • Lower friction means things can go off the rails more easily (3-sigma black swan events). We need to add friction back in by adding humans-in-the-loop (not just code).

  • Lower friction makes abundance. Democratized blogging made lots of bloggers. Democratized investing makes lots of traders. But an abundance in quantity leads to a variation in quality. There will both be more good trading and more bad trading. There’s just more.

Regulation:

  • Robinhood is another case of “you are the product”, like Facebook. You get free trades but Robinhood sells your trade data to hedge funds. This is called “payment for order flow”. The hedge funds can then front-run your trades for profit. The hedge fund Citadel is responsible for 47% of Robinhood’s income here. They paid Robinhood $100M in Q3. Hidden business models are likely to have incentive problems.

  • The SEC is in a tough situation here. (Good luck to my old MIT colleague, Gary Gensler!) One difficulty is that SEC wants to protect consumers from risk, but risk actually provides meaning to r/wallstreetbets traders. (They use it as a signal for YOLOing.)

  • For regulation, I mostly agree with Chamath and think that the government should: 1) Put leverage limits on hedge funds. 2) Require weekly hedge fund disclosure. 3) Implement a short-term trading tax. A 0.01% tax on each trade would make $160B annually, the same as the capital gains tax.

To you, dear reader: Did you have any other thoughts on Gamestop and the new power of networked communities?

LINKS

Lots on Coherent Pluralism this week:

1) I love the term “midinformation” to describe info that exists in a liminal true-false space:

Somewhere between information nihilism and a blanket trust in unverified facts comes the harsh reality: we as a society have to accept and live with ambiguity for a significant amount of time.

We discussed midinformation in #33 as Anne Applebaum’s “medium-sized lies”. Conspiracy theories like #StopTheSteal are medium-sized lies. Yes, there was a small amount of miscounted votes. But not nearly enough to change the result. #StopTheSteal has a bit of truth and a bit (a lot) of falsehood. It’s midinformation.

Similarly, the anti-science folks in the Merchants of Doubt use midinformation to “continue the controversy”. They’d say “climate change probably happening, but we don’t know how fast or how much is caused by humans. There’s still doubt. We need more research.” This is all kind of true. But really this doubt is a form of midinformation.

2) David Chapman has a great overview of the Glen Weyl vs. Scott Alexander debate.

First, a yes-and:

Systematic social institutions are absolutely necessary for large-scale civilizations that can be improved via rational reason

AND

They are blind to factors their models overlook, depend on unmodeled human judgement to function, and are brittle to context changes

Then David notes how “the disagreement is a matter of emphasis”:

Is it more important to say “rationality is SO GOOD” (which it is) or to say “but it is limited and can fail catastrophically” (which it is and does)?

And audience:

If someone is not yet rational, YAY RATIONALITY is the right message.
If someone is firmly ensconced in rationalism, RATIONALISM IS FALSE AND HARMFUL is the right message.

Indeed, frames rule everything around me.

3) The Onion: Increasingly Bold Israel Begins Building Settlements In Downtown Albuquerque

4) Babylon Bee: BLM Nominated For New Nobel 'Mostly Peaceful' Prize

JOBS AND OPPORTUNITIES

EVENTS

MUSIC

Pete Seeger-style ballad about the Gamestop saga. Praise be the internet.


Hope you have a good week! Warmth, Rhys

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