Watching this year’s Oscar winner for Best Documentary “Inside Job“, just a few days after finishing Naomi Klein’s “The Shock Doctrine- The Rise of Disaster Capitalism”, was both a good idea and a bad one:
- On the bright side- they go very well together. My knowledge of behind the scenes/secret economics (aka- ‘capitalism’/aka- how the rich and powerful become even more rich and powerful) is pretty much maxed out.
- On the dark side- my faith in any any major financial institution or financial decision maker has perished.
Inside Job, directed by Charles Ferguson and narrated by Matt Damon, deals with the causes of the recent global financial meltdown. The movie is well made, though, for economic amateurs such as myself, a bit hard to keep up with at times. It includes interviews with people ranging from government officials to chinese laborers to the President of Singapore, and does a god job presenting both the big picture and the small one.
However, there is one assumption underlying the movie that is never pointed out (I’m assuming that’s because to its makers it’s obvious). This assumption is that there is something inherently wrong with people making $485 MILLION dollar salaries, and striving to increase their profits even more. Though I also find this the highest level of moral corruption that doesn’t need to be said, a large sector of people- mainly people with outrageous sums of money- apparently don’t. Thousands of CEO’s across the globe run their conglomerates with one goal and one goal only- to increase profits. If that requires them to lay off thousands in order for their own salaries to increase by millions more, then so be it. If that requires them to help launder drug money, then so be it. If that requires them to abuse the rights of their “low level” employees in the name of “competition”, then so be it.
Some of you may ask- so what? so they don’t see any moral problem with their financial decisions. But I find that a huge problem. The fact that all us little souls are watching this movie and shaking our heads angrily when we see Merryl Lynch and AIG executives say and do outrageous things, isn’t the kind of “lesson learning” I would hope to see develop as a result of this well researched movie. I want to see these people brought up on criminal charges. I want the President of the United States to explain his insane appointments.
These all-powerful people, are not a target audience. They won’t be sitting in their billion dollar penthouse, with a golden bowl of popcorn, watching this movie and feeling guilty.
This movie turns out being something that outrages most of us, and while we’re busy being angry about the last 4 decades of economic corruption, they’re all coming back from their stimulus-package-bonus-money-funded-vacation, ready to do this all over again. Because they are all still holding their positions. And they all have one goal- to increase profits. And they already know how to do it.
So, after that introduction, here are some random thoughts I scribbled down while watching it:
- The Bush administration privatized every govt. job that could possibly be privatized-including financial regulation. The firms that then became in charge of regulation, decided there was no need for it, but were being paid by the govt. to do it. So, the govt. absolves itself of responsibility and these firms are receiving our tax money to enable these banks’ profits to grow from, for example, $30 million to $600 million.
- The whole issue of whether its moral for someone to be making 480 million dollars is a moral issue, not even a financial one (because obviously, financially, it works out pretty well). And this also relates to the whole business of companies outsourcing to the under-developed world: yes, maybe they can triple their profits if they move to Taiwan, but do their profits need to be tripled in the first place? These companies dont hire more people with the profits that they make, opposite! They fire people and take more into their private pockets. Not to mention they prevent 3rd world countries from ever developing a free-market of their own that is not (at least in it’s baby steps) completely dependent on foreign companies’ whims for increasing profits every other day. And worst of all, they assume the position of God, showing us that they are ever so kind as to donate 10% of their billion dollars, to helping those same communities off of which they are making these insane profits.
- You’ll notice that there are NO women at any decision-making positions in any of these firms. The reasons are (a) women take less risks so it isn’t profitable for the companies to promote them (b) whenever there are layoffs women are most likely first to go because they don’t bring in as many profits- both because the job demands coincide with their family/social responsibility (notions created and promoted by the very same people running these companies) and also because the only contact the men that run these companies chose to have with women is with prostitutes.
- Initially, even when everyone knew what was going to happen, no one from govt. (and even the federal reserve) intervened- therefore abiding to the capitalist commandment. There was no bailout. And I for one, don’t agree with the thinking that the reason those banks acted that way was because they knew they would be bailed out. The reason they behaved that way was because a small amount of powerful ppl were making all the decisions and had all the information, and they knew that regardless of what happened, even if the company went bankrupt, it wouldn’t affect them personally. They were making hundreds of millions of dollars. If the company goes under? they get appointed to govt. by Obama.
- The constant excusing of everything by saying “but in the long run its good for the masses”- yet another capitalist commandment- relies on one basic principle: that the people at the top making the decisions, care about the masses. The other issue is why any economist thinks he can sell us commoners this ridiculous notion. You don’t have to be a wizard to think to yourself: wait a minute, why would anyone devise a long-term profit system if he’s the chairman/president of something right now? why would that be in his interest? But then again, what’s considered “long term”? A decade? A century? The only long term model I currently recognize in economics is the ‘deregulated out-of-control’ model. This long term bullshit is an assumption proven time and time again to be wrong, and quite frankly is a ridiculous excuse.
- Now then, here we have powerful people that don’t “believe” in regulation and who have been fighting it for decades. Remember, Economics is as much a religion as is Christianity. The difference being that I can’t prove whether or not Jesus walked on water, I can however show that deregulation causes chaos, at the expense of the little ppl, hence making it difficult for those all-powerful CEO’s to convince anyone but themselves that deregulation is a good thing. But wait! Suddenly they’re knocking on the White House door asking to be regulated and for it to be done by giving them 700 billion dollars. Actually, they ddn’t ask so much as they extorted by threats. The beauty of the whole thing being, that the ppl in govt. that were in charge of stepping in to “regulate” this, were mostly former CEO’s of these companies, which means that (a) of course they’ll approve the bailout (b) they’ll make sure that even this money isn’t regulated– so it can be used to give million dollar bonuses instead of paying off company debt.
- And you know, the worse part is that people watch this film and start naming the bad guys, saying they’re corrupt, they’re criminals. But they are incredibly naive. The system enables it because capitalism relies on exactly this type of behavior to promote itself- Greed. Almost anyone that can make it into such positions would act that way. It isn’t just one man’s or 100 men’s crime, it’s a textbook-taught-crime.
- Finally, at the end of all this, the best point made in the movie, in my humble opinion, which I didn’t actually find to be surprising only once again-disappointing, is what comes in minute 82. If anyone for one second allowed him or her-self to think that these CEO’s and their conglomerates consider themselves subjects to the same rules, laws and logic that we all are subjected to- this point pretty much canceled out that naive assumption: a top ranking economist at Harvard is asked whether he doesn’t see a conflict of interest when economic professors that are educating generations of economists aren’t disclosing their finances, while many of them are on the payrolls of large firms and investment banks, that have a direct influence on the ideology being taught at economic faculties. He decisively answers that he sees no conflict of interest here. However, later on, when asked the same question about the medical industry- he could not agree sooner that of course there should be financial disclosure, otherwise it would be immoral.