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This is not a blog which expresses instant opinions on current events. It rather uses incidents, books (old and new), links and papers as jumping-off points for some reflections about our social endeavours.
So old posts are as good as new! And lots of useful links!

Sunday, February 3, 2013

The Crisis on screen

It’s not easy to transfer ideas and argument about financial and economic crises onto the big screen. Sure we had Rollover with Jane Fonda and Kris Kristofferson – an amazingly prescient film in 1981 about financial speculation which I only recently came across in a pile of remaindered DVDs.
In 1987 Michael Douglas played Gordon Gekko (“Greed is good”) in Wall St - Money Never Sleeps
In 2010 Michael Moore gave us Capitalism – a Love Story
And, in 2011, Matt Damon starred in Inside Job 

But, for various reasons, the big money which decides which films sound to be box-office winners doesn’t readily support a pitch for a film which sounds to be a glorified lecture. And agit-prop stuff rarely translates into good cinema. But Robert Reich now looks set to become the first American academic to take economics successfully into the movie halls
Reich has been rated as one of the top 10 business thinkers in America. You don’t forget him easily – he is less than 5 feet; was Secretary of State for Labour in Clinton’s first administration; coined the phrase "symbolic analysts" in his 1992 book Work of Nations; has been one of the few self-avowed American “liberals” (which is now a term of abuse in America) consistently to take on the neo-Cons there; wrote in 2010 an aggressive book about the global crisis - Aftershock; and was, again, one of the few American academics to have strongly and visibly supported the Occupy Now movement.
Today’s Guardian has an excellent story on the success at Sundance film festival of the film Inequality for All - based on his Aftershock book
Reich charts the three decades of increasing median income after the second world war, a period he calls "the great prosperity" and then examines what happened in the late 1970s to put an end to it. The economy didn't falter. It kept on growing. But wages didn't.
The figures that Reich supplies are simply gobsmacking. In 1978, the typical male US worker was making $48,000 a year (adjusted for inflation). Meanwhile the average person in the top 1% was making $390, 000. By 2010, the median wage had plummeted to $33,000, but at the top it had nearly trebled, to $1,100,000.
"Something happened in the late 1970s," we hear him tell his Berkeley class. And much of the rest of the film is working out what happened.
Some inequality is inevitable, he says. Even desirable. It's what makes capitalism tick. But at what point does it become a problem? When the middle classes (in its American sense of the 25% above and below the median wage) have so little of the economic pie that it affects not just their lives but the economy as a whole.
Reich's thesis is that since the 1970s a combination of anti-union legislation and deregulation of the markets contrived to create a situation in which the economy boomed but less of the wealth trickled down. Though for a while, nobody noticed. There were "coping mechanisms". More women entered the workforce, creating dual-income families. Working hours rose. And increasing house prices enabled people to borrow.
And then, in 2007, this all came crashing to a halt. "We have exhausted all the options," he says. There's nowhere else left to go. It's crunch time
 In the film, he tells how he made strategic alliances with older boys who could protect him from the bullying he suffered by virtue of his small size (He is less than 5 ft) . And years later, he discovered that one of them had travelled down to Mississippi to register voters and had been tortured and then murdered. "That changed my life," he says.
"He has never cashed in," says Kornbluth, the film's Director. "He's an incredibly smart guy and he could have found a way to correlate that into money as so many people do. But he never has. He has absolute integrity. It's almost shocking now for someone not to do that. I mean one of the film-makers I admire is Mike Leigh. And he does McDonald's commercials and I was like 'Whoa!' when I found out but I can't hold it against him. You can't hold it against anybody who's trying to make a living. But it makes Rob all the more amazing. He doesn't sit on boards. Or on think tanks. He draws a modest salary. He has this absolute moral compass. And he's still trying to change the world."
In the 60s and 70s, this wasn't such a surprising thing. Reich recounts how he grew up "in a time of giants". His first job was working for Bobby Kennedy. Changing the world was what everyone wanted to do.
The world has changed. Just not in the way many thought it would. We fell victim to what Reich calls "the huge lie". That the free market is good. And government is bad. Government makes the rules, Reich keeps on reminding us, over and over. And it decides who benefits from those rules, and who is harmed. And increasingly, that boils down to the rich and the poor.
Perhaps the most surprising voice in the film is Nick Hanauer's. He's just your ordinary, everyday billionaire. One of the 1%. Except that he believes – like Warren Buffett – that he doesn't pay enough tax. And that hammering the middle class, the ones who buy actual stuff, who create demand, which in turn creates jobs and more taxes, is simply bad for the economy. "I mean, I drive the fanciest Audi around, but it's still only one of them… Three pairs of jeans a year, that will just about do me."
The system simply isn't working, he says. It's put the millionaires and the billionaires, the Nick Hanauers and the Mitt Romneys – the people that Republican rhetoric describes as job creators – at the centre of the economic universe, rather than what Hanauer calls the true job creators – the middle classes.
The problem is, he says, is that they've been attacked from every side. He was one of the initial investors in Amazon, a business of which he's "incredibly proud", but he points out that on revenues in the last three months of 2012 of $21bn (£13bn), Amazon employs just 65,600 people. "If it was a mom and pop retailer, it would be 600,000 people, or 800,000 or a million."
Globalisation and technology have played their role. But so has the government. For decades, under both Republicans and Democrats the highest rate of tax didn't dip below 70%. Now, Hanauer says he pays 11% on a six-figure income. Hanauer believes that if he was taxed more, he would be better off, because his company – he's a venture capitalist and his family own a pillow factory – would sell more products, and he would, therefore, make more money.
The caricature is by a Romanian painter of the inter-war period - Joseph Iser

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