It seems like people who think that a short squeeze is a magical way to take money from rich people aren't thinking things through all the way.

It's true that if you bid up the price of a heavily shorted stock, then some of the shorts will be forced to buy the stock at inflated prices. In a sense that's a transfer of wealth from shorts to longs. But that's not the end of the story.

The gains of people holding $300 GME stock are paper profits. They don't matter unless people can cash out. And if everyone starts trying to cash out the price will go back down to $30 or something. A lot of people won't actually get $300.

Meanwhile people who shorted the stock at the top are going to make a lot of money on the way down. By the time the stock reaches "normal" level, the shorts' gains from the falling price will roughly cancel out the shorts' losses from the rising price.

Meanwhile, there will be big wealth transfers among longs (and among shorts). People who bought at $30 and sold at $300 will get rich. People who bought at $300 and sold at $30 will lose a lot of money. These transfers are likely to dwarf any wealth shift from shorts to longs.

So fundamentally it's a pump and dump operation. People who got into GME early are going to profit from the gullibility of people who get in late. The narrative about short squeezes and sticking it to hedge funds is mostly a way of distracting people from that reality.