Saturday, October 10, 2009

In Review- Capitalism: A Love Story

Michael Moore's new documentary hit theatres October 2, so we decided that the College Democrats should get together to go see it in South Bend. This Friday, eight of us went to ShowPlace 16 and watched it. Because I like to talk about Notre Dame/College Democrats activities and issues, keeping it local, I decided it would be a good idea to give a review of the film. So here it is...

Presentation: B+

Evidence: A-

Fairness: B+

Relevance: A


In general, Moore does an excellent job nailing a timely problem in a way that is effective and persuasive. It was hard not to be teary-eyed during the FDR speech during this film. When you realize that you're watching a movie about things so recent and so painfully real, this movie really hits you. The movie probably only loses a few point by being overly abstract and preachy in the beginning. After about 30 minutes, though, it starts to get very real. I really love the parts of the film that try to emphasize that capitalism is inherently anti-Christian and anti-Catholic. It's time to realize that you must pick one or the other. Money or The Lord? Who is your God? Some of the other Lefty's writers and I thought it would awesome if we could get some conservatives to go watch this film. If anyone has any brilliant ideas on how to do this (pay for their tickets?) let us know. I would love to see this happen.

 Finally, about the message of the film:

I'm going to make an assumption and give our readers credit for being an intelligent bunch. Many of you are college-educated or successful professionals. In this same light, I hope that you will be fair and realize that what I am about to say is actually NOT elitist, as much as it may seem so at first. 

The reality, that Moore shows us, is that capitalism has erased that which democracy had achieved. Before democracy, there was aristocracy/monarchy/plutocracy. Only the smartest and most privileged ruled. Democracy meant "1 man, 1 vote" and tried to defy this inequality. Capitalism, on the other hand, disproportionally rewards those who are smart and privileged, far beyond what is deserved for being smart and privileged. So for people like ourselves, in the most basic self-interested sort of way, capitalism is excellent. Most of you will probably do well. There is no guarantee, of course. The problem is, that for the other 95% of people, capitalism is mostly shitty.

Think about it like this. We all love to play a game that we know we can win. Even if the rules aren't the most fair, we will find enjoyment in competition and victory. Fairness only becomes a serious issue when we are less sure we can win or when we know we will lose. No one wants to play a game that seems rigged against them.

And this is the problem. Intelligent people try (successfully) to export their enthusiasm for this whole "capitalism" idea to the rest of the bunch- the 95% that probably won't win. They're so smart in fact that they actually persuade all those people that the game is fair after all. "You can win, too." Our enthusiasm is contingent on the high that we get from winning. This is fine and dandy, then. We can keep playing this game and keep winning. I mean, if it makes us feel good, and we're winning, who really cares, right?

We should care. We should realize that the people who already hate capitalism can't afford to watch Michael Moore's film, don't have the power to ever really do anything about it (this is debatable), and really don't have as much to gain from seeing it. THIS MOVIE IS FOR PEOPLE LIKE US. It is a wake-up call for those who are winning at this game called capitalism that maybe winning isn't everything. Maybe there are other virtues that matter- like equality/shared prosperity (everyone having some fun playing), fairness, democracy, accountability, and for God's sake, maybe some humility. Let's think about who we serve sometimes. Maybe if we weren't always feeling the high from winning we would realize that it is money who we serve. Let's get sober, Lefties.


Andrea Watts said...

Great review. We should do this on Lefty's more...

blakey said...

i saw it the week it came out. I thought it was well made movie. But my problem was that i think he messed up the final message a bit. The whole time he rails against Capitalism, and then in the end concludes that we need...Democracy? Why was he afraid to say Socialism? Democracy is a political system, Capitalism is a economic one. He could have said Democratic Socialism. I also think he let Obama off the hook a bit, (surprise, surprise...), he rails against the bailout but fails to mention Obama was supportive of it, he rips Timmy and Summers but fails to mention that they head Obama's economic team. He doesnt paint Obama as a messiah but if Michael Moore doesnt have the guts to say these things, who does? Overall, i think it was one of his less partisan movies and your everyday conservative probably would find something they like about it. Go see it.

LeftCoastLefty said...

I think everyone who knows who Geitner & Summers are knows that they're in the Obama administration, and he did point out that the financial industry started to substantially donate to his campaign when the economy tanked.

Also, I think is point about Democracy at the end was fine, but I see where you're going with that. He was urging people to take advantage of their democratic rights so that we can make the changes to a more equitable system for all.

Anonymous said...

I haven't seen the movie, but I'd like to respond to what Henry says, that capitalism is mostly shitty for 95% of people. I don't know whether you mean 95% of Americans or 95% of people in the world, but either way, you are incorrect.

Yes, capitalism brings with it revolutionary change, which can be unsettling. But it is indubitable that market capitalism has led to enormous improvements in the standards of living of the vast majority of people in those countries that have adopted it. Th correlation is astounding: there has never been a wealthy non-capitalistic nation. There has never been a capitalistic nation (with the rule of law, property rights, etc.) whose economy remained stagnant for long.

Someone who is against capitalism is against the only economic system that has any chance of leading the poor countries of the world to prosperity. This is not an argument for laissez-faire or an argument that capitalism has no flaws. But it is by far the best economic system ever developed. And you may point to Scandinavia as the great exception: prosperous non-capitalistic economies. False. Those are capitalistic economies.


blakey said...

God you're dumb, gbarr.

Hmm there has never been a wealthy non-capitalist nation huh? What about...say most scandinavian countries, or say france. What those are capitalist you say? In most of those countries the Government spending accounts for at more than 50% of the GDP. In America for instance it is something like 30%. That is the best way i know how do decifer between "socialist" or "capitalist" economies. Most economies are mixed though.

The exorbitant growth you fetishize is more due to cheap oil than anything else, and that is just now coming to and end. And watch America, is about to get more stagnant than you ever imagined.

P.S. reading Mankiw is bad for your brain...

Henry Vasquez said...

Blakey's flamethrower aside, Gbarr missed the point of my argument. I never said that capitalism isn't the most efficient or most prosperous way, only that it is a return to a sort of aristocracy. Saying that it produces the best overall result for the masses is an inherently aristocratic assertion. Perhaps plutocratic is a better term. One could argue that capitalism provides the most overall prosperity. That's fine. My argument is a moralistic argument about how capitalism unduly rewards those who are smarter and born privileged. Intelligence can and should be rewarded (to some degree) but the circumstances of birth are such a random and unfair quality that holds too much weight in a capitalist society.

Anonymous said...

I think you're talking about human nature, not capitalism. Where's the society where the circumstances of birth do not matter? Where there's no elite? Even the Soviet Union was run by the party's elite.

Blakey: So, gov't spending at 30% of gdp=capitalism. When it's 50% it's socialism. I'll have to remember that. Is 50% the cut-off? We got darn close in 2009.


Bill said...

I haven't seen the film either.

Gbarr, the current lack of a better economic system doesn't make criticism of modern capitalism entirely illegitimate. And since American capitalism is one that has rules and regulations set by the government that, ideally, make the system more fair, efficient, and competitive, why not use those rules and regulations to offset some of the inherent unfairness of random bad luck and the circumstances of birth to make the system that much more fair. I would assume that would be the reasoning behind such liberal proposals as universal health care, Children's Health Insurance Program, and the estate tax.

Anonymous said...

Of course criticisms are legitimate. And I'm not against regulation in principle. I am merely refuting the claim that capitalism is bad for 95% of the population. Indeed, I would say that the most impoverished populations are those people outside of capitalist economies.

So why not even more government intervention? That's a hard question to answer in so short a space. That's kind of the big political question of the last, what, 100 years? One argument is that sometimes there can be a trade-off between equality and efficiency. The king of contemporary liberalism himself, John Rawls, recognized this trade-off when he said that inequality was justified so long as the inequality would benefit the poorest. So, the economies that have less of a welfare state and less redistribution of wealth can also be the ones that reward innovation and entreneurship the most.

There are numerous examples of "progressive" aspects of an economy that can actually hurt the economy, including the poor. E.g. higher unionization can be good for the people lucky enough to be in unions, but other people may find themselves unemployed, since businesses are often not able to hire as many people at the higher union wage. Similarly, look at the minimum wage laws and the incredibly high unemployment rates of the last several decades for many young, uneducated populations. Some of these and other factors actually helped prevent wages from falling to their equilibrium level ("natural" market level) in the 30s, contributing to the high unemployment. Even in recent decades, look at the double digit unemployment in parts of Western Europe. Some of this has to do with their welfare systems.

You can also find all sorts of likely bad consequences that a government health insurance system could cause. For example, if it's generous you get either high taxes or high deficits. If it's not generous, you get less well paid doctors and likely less medical innovation (look at Europe for these latter two phenomena.)

We mortals face trade-offs. Sometimes more government is worth the trade-off, other times not. When cutting the pie up into more equal slices will mean smaller portions for everyone in the long run, is it worth it? Does Michael Moore recongize these trade-offs in his movie?

There's also the problem that even though in theory the market can fail in various circumstances, thus justifyinf government intervention. There's also the question of government failure. How often do government programs actually work as intended? Is our system of agricultural subsidies and interventions actually alleviating poverty or exacerbating it? If you look at the third world, you might conclude that it's being exacerbated by such policies.


blakey said...

wait here is my favorite review...

blakey said...

im going to respond to you gbarr on the front page

Bill said...

I think eliminating the 45,000 annual deaths caused by lack of access to health insurance in exchange for less well paid doctors is a worthy trade-off.

As far as medical innovation, I would assume you're talking about innovation in the creation of new drugs (I certainly wouldn't want to encourage my doctors to start getting "innovative" when working with me). The proposed health care reform would make sure more Americans are insured, but as far as I'm aware, there's no initiative to keep the cost of our drugs under control, meaning the financial incentive to create new and better drugs will still exist.

Bill said...

Also, it appears that currently the pie is getting smaller while the slices are becoming more and more unequal

so I would even suggest that the traditional smaller pie/equal slices vs. bigger pie/unequal slices dilemma is a false dichotomy

Bill said...

Joseph Childers had an interesting quote about Capitalism: A Love Story
"Moore squanders a teaching moment about modern economics. He rails against capitalism without really defining it or any alternatives, in the process giving credence to the misconception that everyone that cares about inequality is an economic illiterate."

I feel like that's kind of the problem we're having with Henry's post. It's more of an emotive declaration or rallying cry than an intellectual inquiry and as such it serves as a poor foundation upon which people of differing viewpoints can debate.

Henry Vasquez said...

People are still missing the point. My argument is about means, not ends. Get this whole "capitalism leads to prosperity" garbage out of this discussion. This isn't about ends. The means of (current) capitalism are aristocratic and unfair. Examples: things like under-taxed inheritance, ridiculous barriers to entry, anti-union policies, oligopolies colluding, monopolies existing, the treatment of labor as a commodity. Would you argue that a democratic China that is less prosperous is worse than a autocratic China that has modernized and grown? I would hope not. Methodology matters. That is the point I'm trying to drill through with my game metaphor.

Anonymous said...

To Bill: Without getting too deep into the health care policy weeds, I was just pointing out various potential flaws of some of the possible "progressive" health care systems one could adopt. The low paid (and likely lower quality in the long run) doctors and lack of innovation was more of a knock against Europe. These flaws could quite possibly mean 45,000 more deaths a year, though who can say for sure? Exactly which flaws our system will end up having, I don't know. And anyway, this is largely moot, since a) Health care reform does not imply that a country is not capitalistic and b) I'm not against all forms of health care reform. Here's a pretty reasonable approach from a former McCain adviser (you may recognize it as somewhat similar to McCain's plan):

As for equality/efficiency: Yeah there might be instances where we see both greater inequality and greater inefficiency. But I do think the trade-off does often exist.

To Henry: I actually don't agree that capitalism is a particularly aristocratic system. I think in many cases a market system would go against aristocracy. E.g. Idle rich vs. entrepreneurs. Old money vs. new money. It's an old story. I think you could actually find quite a few British aristocrats over the years who opposed free markets. Did you know that back in the 1800s, it was the Liberals who were more pro-free market, not the more traditionalist, aristocratic Tories? I think capitalism tends to reward risk-takers, the educated, the industrious, the lucky, etc. Yes, you find riches to riches stories. But there are also rags to riches stories. Where would you find that in a non-capitalist system?

Let's look at a few of your specific examples.

Inheritance tax: I don't think it's so obviously unfair to allow people to pass on wealth to their children without paying crushing taxes. I'd love to inherit some money someday. If this is what passes for aristocracy, then maybe aristocracy is not as evil as you think.

Oligopolies/monopolies: These are actually often treated as market failures. As you know, we have anti-trust laws, which have, generally speaking, been supported in one form or another by free-marketers. I'm not entirely sure what you're getting at. What you may not know is that FDR, Moore's hero, was far more pro-cartel/oligopoly than just about any free-marketer you'll ever find. (Ever heard of the NIRA?)

Unions: Kind of weird example. Unions are in fact very much like a monopoly of sorts: a labor monopoly/cartel. A union and a monopoly harm consumers in analogous ways.

I'd like to know a little more about this pure as the driven snow democracy, where aristocracy and privilege were banished from the public sphere. Am I to take it that FDR and JFK were not aristocrats? In what system do the smart, educated, well-connected people not rule? I think the question is not whether there will be an elite, but what kind of elite will it be.

Along these lines, I recommend Ross Douthat's book "Privilege: Harvard and the Education of the Ruling Class." It's a pretty unflattering take on our current elite, which might appeal to some of your populist instincts.


Anonymous said...

Btw, I think there are legitimate criticisms that one could make against capitalism. But I largely disagree with the ones Henry has put forward. I think Douthat's criticisms of capitalism and the ruling class are far more persuasive.


Bill said...

I don't believe the aristocracy that Henry talks about is the aristocracy that preceded the rise of capitalism. What he's talking about is probably more akin to what Alexis de Tocqueville described in Democracy in America.

And while I certainly would like to inherit some money some day, like most Americans I'm not counting it. If by some miracle I was able to inherit some money in my lifetime I would recognize that I was taking money that I did not work for or deserve. I think Andrew Carnegie had the right idea. After living the quintessentially American rags-to-riches story he spent his wealth on philanthropic efforts rather than spoiling his children with riches they hadn't earned.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community."

"I would as soon leave my son a curse as the almighty dollar."

He was also a staunch supporter of inheritance taxes

It appears to me that the inheritance tax is the only way to ensure that the intelligent and hard-working, and only the intelligent and hard-working become rich

Bill said...

I also don't know what the whole deal is with "democracy" as a solution to capitalism. While having not yet seen the movie, I can only assume that Moore is hesitant to use the word "socialism" and instead opted for this nebulous democracy as a more socially acceptable alternative.

Thanks for the book recommendation. I've read a few of Douthat's columns, and I like what I've read so far. I'll be sure to check out the book soon.

blakey said...

This is a bit scattered but…gbarr…

Lowering the salaries of Doctors could result in 45,000 deaths per year? FUCK OFF. Feldstein’s rube goldberg solution from the article is not going to cut it, (lets give everyone more credit cards!). And this was the same guy who fought to privatize social security with GWB, so we know he has the people's interest at heart.

The poor will always end up getting screwed in societies with high Inequality. Because unequal societies necessarily mean that there is a coterie of wealthy people who have the most power. They will act in their self-interest and use their power to make the poor even more poor and themselves even wealthier. This is one of the failings of Neo-liberalism. They don’t think inequality or debt matters.

Single payer is the cheapest solution, and the extra taxes to support it would mostly come from the wealthy, take a look at HR676, the single payer bill in the House. And again where is your proof that there is no medical innovation in Europe, this is getting tiresome. Beyond that where is your evidence that having a generous welfare state hurts innovation, or that the Government can’t innovate? The GI Bill after WWII that sent so many to college likely resulted in much innovation ad entrepreneurship. What about the Manhattan or Apollo project, the Internet for god sakes was mostly developed in defense department.

Labor Unions and Monopolistic Corporation harm consumers in similar ways? Really? What world do you fucking live in? Unions did more to raise the living standard of people in this country than anything else. Remember the 1950's? Highest rate of unionization ever in America, and the economy was booming. Now there are not any more unions, and wages have stagnated for 30 years for working class people, while the rich continue to plunder the country. You can thank the unions that, children don’t work in coalmines anymore, or that women are not shackled to their sowing machines. Unions brought you the weekend man, be thankful. If not for any other reason big labor just provides a check to Big business.

The truth is that there is lots of pie, America is a wealthy country. We the people can actually all have a lot more pie with only the rich being affected. But even after that I am willing to pay higher taxes to have a more civilized and equal society.

You are right about one thing; our elite is disconnected to the concerns of the people of this country. They are incompetent and erratic. Read…

Anonymous said...

I dunno, I guess the rich bug me sometimes as well, but I don't think inheriting a lot of money is such a terrible thing. Sure, I guess you don't "deserve" it. Do you deserve your intelligence? Your work ethic? Do we deserve anything we have or would we be nothing without the grace of God? It's hard to judge which income is deserved and which is not. I'm not sure this is an area where policy makers are likely to have much insight.

Also, just a side note. I wouldn't be surprised if most of the population will inherit at least a little money at some point.

Bill, from your Tocqueville comment, it sounds like what you're worried about is inequality. I think that can be a worrying problem. I don't know of a great solution. I guess my first response would be find out if there are capitalism-friendly ways to mitigate this inequality. I actually think school vouchers (or if thats not politically feasible, then more emphasis on charter schools) would be a nice first step. A lot of the current inequality is related to "human capital" gaps. One relevant question in all this will be: how much of this human capital inequality is due to differences in training/education and how much is due to natural intelligence? Also, do all well paying jobs really require a bachelors degree? (probably not)

Anyway, this is all fascinating, but I don't think we've really gotten to any indictment of capitalism yet.


Bill said...

If you have yet to have seen any real indictment of capitalism yet from this conversation, I doubt anything I can say can help you.

It was not so much a Tocqueville comment as a link to a Tocqueville chapter. Do yourself a favor and read it. It addresses a lot of the problems we've been discussing. I have no problem with inequality. Inequality of outcomes is a necessary motivating force to get people to work hard. The purpose of the Tocqueville reference was to discuss the growing problem of a new aristocracy/idle rich class that is undermining our economic system.

Perhaps if you decided to approach this conversation without such a dismissive attitude you may have an easier time following what we're talking about here. But judging from your nihilistic response to a valid point I was trying to make about inheritance taxes I suppose you're not interested in having a serious conversation.

Anonymous said...

Tocqueville makes some interesting points, but I have my doubts about whether these trends have really continued into our own day.

The drudgery of the pin-makers that he describes is not the lot of most Americans. Perhaps in a place like China you'd see more jobs like that. But, if I had to guess, I'd say that on average the working class of today has somewhat more interesting, more skilled jobs than they did 50 or 100 years ago. I'm not saying most jobs don't suck. But not to the extent that those pin-making jobs sucked. E.g. many "unskilled" jobs today require some ability to read, use a computer, etc.

As for idle rich: I would also guess that the rich in our society are less idle than they are in almost any previous society and most other current societies. The contemporary rich are largely "workaholic" doctors, lawyers, businessmen, etc. The British aristocrat who disdains work that we see in P.G. Wodehouse novels from the 20s and 30s in largely a thing of the past.

Moreover, I don't really see how this class of idle rich could be undermining our economy. You can find the occasional Madoff or ambulance chaser who might be undermining the economy in some way (though idle isn't a word I'd apply to them), but I think they are exceptional.

Furthermore, I don't see the estate tax as much of a game-changer. I think most upper class types are competitive enough that they want the status that comes with a good job (doctor, lawyer, etc.) I think it is relatively rare that someone just sits on inherited money from an early age. And if you look at the fabulously wealthy, the ones who actually do shape our society (e.g. Gates, Buffett, google founders, etc.) I think you see a lot more entrepreneurs than anything else.

I also think that the justification you give for raising the inheritance tax is overly individualistic. I don't think one needs to be a self-mad man. I think it's fine to get some help from one's family and friends. I wouldn't be surprised if many of these people who inherit wealth "pay it forward" with philanthropy or a life in public service. Think of Nelson or Jay Rockefeller or Bush 41. There was that sense of noblesse oblige, no?

I personally think there are some problems with having a sharply divided country, in which there is the highly educated, highly ambitious elite on the one hand (largely from top 20 schools, largely living in DC, NYC, Boston, Chicago, etc.) and the regular folks on the other. I think it's true that they often don't have much in common and don't have the same habits or values, etc. I'm not really sure how to solve this. Perhaps the careerism and selfishness of the contemporary elite is largely a product of capitalism. I'm not sure. I suspect that there's more to the story though.