Hollywood Fights Market; Market Wins

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Money Monster isn’t billed as a comedy (in fact, it’s supposed to be a thriller), but it is still one of the silliest films I’ve seen in ages.

Lee Gates (George Clooney) is a cable TV investment personality of the Jim Cramer school, with a shtick that includes dancing girls, funny hats, crazy film clips, party noisemakers, and outlandish recommendations that often turn out to be profitable investments. He doesn’t think much about his viewers’ actual profits and losses because he never sees his viewers — that is, until Kyle Budwell (Jack O’Connell) shows up on the set with a figurative axe to grind and a literal gun in his pocket. He also has a funny explosive vest to go with Lee’s funny hat. He makes Lee wear it.

We are expected to believe that Budwell, the terrorist, would be able to wander onto a live set, simply because he is dressed like a deliveryman and carries a couple of cardboard boxes.

I’ll warn you here that this review is going to contain a few spoilers, but knowing some of the plot twists is not going to ruin the film for you; it’s pretty much ruined on its own, and these are mad meanderings, not genuine twists. Besides, I don’t recommend that you waste your money or your time on this monster of a movie, and revealing some of the plot is the only way I can demonstrate to you just how silly and unbelievable the premise is.

Hollywood will go to great lengths to cast aspersions on Wall Street, business, and the free market, even greenlighting a movie with a script with more holes than a Chuck E. Cheese Whack-A-Mole (and a lot less entertaining). First we are expected to believe that Budwell, the terrorist, would be able to wander onto a live set, simply because he is dressed like a deliveryman and carries a couple of cardboard boxes. Sorry, folks, the days of Cary Grant sneaking into the boss’s office carrying a florist’s bouquet are long gone, and security at a television station is much tighter than that.

Then we are expected to believe that the cameras would continue to roll and the signal would continue to be broadcast while a lunatic holds a gun to the head of a nationally known journalist — or anyone, for that matter. Regardless of what the terrorist (and the voyeuristic television consumer) might be demanding, someone — anyone — would have pulled that plug immediately.

We are also expected to believe that Kyle invested all his money — all his money — in a single hedge fund. The SEC has rules about that. Under the Dodd-Frank Act, “qualified investors” must have a net worth of at least a million dollars, not counting their personal residence, or an income of at least $200,000, in order to purchase shares in risky investment vehicles such as the one in the script. Kyle makes $14 an hour as a sanitation worker. He is not a qualified investor. The hedge fund would not have accepted Kyle’s money. George Clooney and Jodie Foster (the film’s director) probably don’t realize this because they have managers who invest their money for them. They’re qualified investors; they just aren’t qualified to play with investors in the movies.

Next is Lee Gates’ ridiculous solution to Kyle’s problem. It seems that Kyle invested his money in a hedge fund that Lee recommended a few weeks ago, and the fund’s price tanked, taking Kyle’s money with it. Lee turns to the camera and asks his viewers to start buying the stock in order to pump up the price for Kyle and his fellow losers. First, viewers would smell a rat if a showman like Gates made such an outlandish plea. Remember Soupy Sales? “Kids, take a dollar out of your mother’s purse and send it to Soupy at this address . . .”

Kyle's girlfriend bawls him out and dares him to pull the trigger on the bomb — while she is in the studio. Who in the world would be that crazy?

More importantly, Lee’s idea wouldn’t help Kyle or the others who have lost money, even if the stock did return to previous levels. Stock prices rise and fall as new buyers purchase shares from current owners. It’s the ultimate example of supply and demand. In this case, the people who sold on the way down don’t own any shares anymore, so they aren’t going to get their money back, even if prices climb to the sky. They’re just going to feel worse. The only people who could make money on Lee’s new deal are the ones who buy at the bottom and sell at the new top. And believe me, Lee Gates would be investigated for investment fraud after these shenanigans were over. (Assuming he made it out of the exploding vest in one piece.)

The cops are just as stupid. They bring Kyle’s girlfriend to the studio to talk some sense into him and calm him down, even though they know she’s fit to be tied about him. And she’s just as stupid. Instead of calming him down, she bawls him out and dares him to pull the trigger on the bomb — while she is in the studio. Who in the world would be that crazy? And then there is the usual Hollywood inanity of having SWAT teams or, in this case, bomb squads enter a highly volatile location without wearing helmets. I know, it’s a film technique considered necessary so that we (the audience) can see their pretty faces while they talk.

In such situations, we’re supposed to suspend our disbelief, and usually I do. But in this movie my disbelief was suspended so far above reality that I became positively giddy from lack of oxygen.

The denouement is just as ridiculous as the build-up. We are supposed to believe that the greedy director of the hedge fund has manipulated a mining strike in South Africa in order to buy low and then sell high when the strike is called off, but a glitch in his plan resulted in a loss of $800,000,000. That’s a lot of platinum for two weeks’ digging.

I’m sure that George Clooney, who produced the film as well as starred in it, thinks he’s doing the world a big favor by pointing out the evils of greed and investing, but all he did with Money Monster is point out his own monstrous ignorance. He still has the dark swoony eyes, though. Maybe he should leave the social justice films for a while and make a nice romantic comedy.


Editor's Note: Review of "Money Monster," directed by Jodie Foster. Tristar Pictures, 2016, 98 minutes.



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The Green, Green Cane of Cuba

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Cuba has garnered a reputation for, and has been touted as, a model of green, organic, non-GMO sustainable production and consumption. According to the Organic Consumers Association (quoting Cultivating Havana: Urban Agriculture and Food Security in the Years of Crisis, a study), many of the foods that people eat every day in Cuba are grown without synthetic fertilizers and toxic pesticides.

Some of this is true, but because the regimen has been adopted out of necessity and not out of ideology (unless you count the Communist ideology that brought this on in the first place), it is not rigorously adhered to in the way in which, for instance, an organic farmer in the US might adhere to it. It is expediency, with ideology added after the fact to capitalize on necessity.

At one time, killing what heretofore had been your own chicken but was now state property could land a campesino in jail.

As USA Today reported in March, “Cuba once focused on capital-intensive, industrialized agriculture on large state-run farms, but was forced to change after economic support from the Soviet Union evaporated. Beginning in 1990, Cuban food production fell precipitously. The country shifted to a low-input agricultural cooperative model. Even so, it suffered serious food shortages in 1994, which prompted further changes.” It might be added that, changes or not, sugar production has fallen by 60% over the past 30 years.

Unable to import industrial fertilizers and pesticides, Cuba resorted to using horse, cow, pig, chicken, and even human waste for soil nutrition. And it tried to become self-sufficient in food production. At one time, killing what heretofore had been your own chicken but was now state property could land a campesino in jail. And woe betide the gardener who broke a shovel — sabotage!

Into the breach stepped Uncle Sam, easing the embargo restrictions on exporting food and medicine to Cuba.

On my recent bike trip across Cuba, I was accompanied by a bourgeois socialist couple — retired on government pensions, upbeat about Castro’s “reforms,” berning-for-Bernie — who wanted to see the island before it was “ruined” by McDonalds, Walmarts, discount dollar stores, and other popular tendrils of free choice that might invade once the embargo is lifted. Fair-weather vegetarians (don’t mention bacon around them!), free-range egg fans, supplement-swallowing, sugar-hating, GMO-abjuring, organic-food faddists, they were also looking forward to eating “healthy” food in Cuba.

Well, Cubans don’t do vegetarianism. Castro pushed salads — mostly cabbage — on them during the “Special Period” in the ’90s; and, at least for tourists, greens remain a dependable staple, composed mostly of cabbage, tomatoes, beets, and cukes topped with canola oil and vinegar. But Cubans much prefer meat, beans, rice, and starchy veggies — yuca, malanga, and plantains, preferably fried — plus anything with sugar: rum (and any other alcoholic drink, such as the mojito, with an added dollop of sugar), guarapo (pure sugar cane juice), raw sugar cane, churros, cucurucho (a mixture of honey, nuts, coconut, and sugar), coffee brewed with sugar (traditional), malta (a thick, extremely sweet version of non-alcoholic malt stout), coke mixed with sweetened condensed milk, ice cream, and extra sweet pastries.

Our diet-conscious couple brought boxes of “natural” granola bars so as to avoid the pork. My wife and I brought a jar of peanut butter and a bottle of sriracha sauce to spice it up.

On our visit to Cuba, my wife and I saw chickens everywhere, scrawny but free range. Every evening when arriving at our lodging, our host would offer us dinner, an always preferable alternative to eating in a government restaurant. I’d ask what was available and, knowing Cuban cuisine, would decide for the group. Initially I’d lean toward chicken out of respect for my “vegetarian” companions. Invariably, the chicken portions would consist of a giant thigh and leg with meat so white one could have mistaken it for a breast.

Aside: contrary to popular US perception, Cuba does have a fast-food restaurant chain — El Rapido, a state-run enterprise. Guidebooks and trip accounts tout it as dependable, with food quality varying from passable to good, especially the chicken — again, a thigh and leg combo. We never ate at a Rapido — but not for lack of trying. The ones we stopped at were either out of meat or not serving food because something had malfunctioned, or something else had gone wrong — but still open, with full staff just sitting around.

Riding with me in a taxi one day, Melinda, one of my progressive companions, wondered how the chickens we were served were so big when the ones we saw roaming about were so rickety. So I asked our driver. He said Cubans don’t kill their chickens, they’re for eggs. Eatin’ chickens are stamped with madinusa. Not familiar with the term, I asked him what it meant. He looked wryly at me, sideways, and then I got it: Made in USA.

When I told Melinda she gulped and said, “You mean we’ve been eating Purdue chickens? From now on let’s ask for pork; at least it’s organic.”

Pork is the ubiquitous Cuban meat. The only available roadside lunch snacks were in-season fruit stands and roast pork sandwiches consisting solely of pork and bread. (Cuba grows no wheat; it’s all imported, some of it possibly GMO.) Our diet-conscious couple brought boxes of “natural” granola bars so as to avoid the pork. My wife and I brought a jar of peanut butter and a bottle of sriracha sauce to spice up the pork sandwiches (yes, it’s a strange combination, but delicious).

Beef was the least available meat, even though we saw lots of cattle in the central provinces. Apparently it’s reserved for the nomenclatura and tourists. Though not available in government ration stores, it can be obtained by anyone at convertible currency stores — if you have the money. At one B&B where the owner was tickled pink that I was a Cuban-American, it brought out her impish side. I requested ropa vieja, a traditional brisket or flank steak dish. She thought about it for a minute and said, “We can do that. And it’ll be the best ropa vieja you’ve ever had.”

I responded, “Remember, I had a Cuban mother.”

Without skipping a beat she retorted, “It’ll be the second-best ropa vieja you’ve ever had.” We both laughed.

Fish is widely available but of varying quality. Whenever it was offered as fresh and a good species, especially pargo, Cuban Red Snapper (nothing like it!), I opted for it. Yes, Cuba hasn’t overfished its stocks. But not for eco-ideological reasons; rather for “sugar cane-curtain” reasons: to limit small boat traffic along its shores, minimizing escape and infiltration attempts. Additionally, small-enterprise fishing businesses haven’t been allowed: the state will provide the fish. However, lobster is often available, and it is to die for — huge, cheap, and delicious.

Arguably, our best meal was at a paladar (private restaurant) in Playa Giron (aka Bay of Pigs). We were the only ones there. The menu, recited, not read, included a special trio of fresh fish, shrimp, and lobster, all for $15 each, including cheap imported Chilean wine and all the trimmings. When the waiter was through I asked him about caiman (the Cuban croc), which I’d heard was available for eating in the Zapata swamp area. He answered that yes, they served it but couldn’t announce it, as it was a protected species. Though I desperately wanted to try it and cock a snook at the Castro regime, we all opted for the special.

One of the worst personal and environmental assaults in Cuba is the air pollution. It’s not the brown clouds that bedevil Beijing — the source is nostril level and in-your-face.

One B&B owner, who’d been in the tourism business all through the Special Period, both legally and illegally (and had spent time in jail), elaborated on what food was like back then. He cooked us a typical dinner (as a side dish to the marlin and lobster he was serving us): boiled cabbage. I don’t know what he did to it, but it was surprisingly tasty. He added that breakfasts in the special period consisted of sugar water followed by labor in the cane fields — a dish he didn’t serve us.

You see a lot when you ride a bike through the countryside. At least once we saw someone spraying pesticides on crops. When I mentioned it to Melinda she despondently admitted that she too had seen it. But one of the worst personal and environmental assaults in Cuba is the air pollution. It’s not the brown clouds that bedevil Beijing — Cuba’s breezes dissipate that possibility, and there’s little heavy industry. The source is nostril level and in-your-face. All those old cars that look so charming have been retrofitted with diesel engines that have zero emission controls. Clouds of black smoke spew out of nearly every vehicle, to such a degree that one of our companions got sick. Riding for any length in one of those classic cars will make you sick. Floor holes funnel the poison into the cabs, which means that all windows must be open all the time. Our B&B in Havana closed all the windows facing the street, to keep the exhaust out. Though the problem is acute in cities and towns where traffic can be dense, even out on the highways we’d hold our breath and avoid in any way we could the passage of a bus or truck, the most common vehicles on highways.

Garbage, like many things in Cuba, is full of contradictions. Cubans are a very clean people. One informant told me that trash collectors are particularly well paid. In general, the streets are quite clean. But . . . every once in a while mounds of garbage dot cities, towns, and the countryside, almost as if they’ve been warehoused in discreet piles and then forgotten, only to make a sudden reappearance.

On the way to find my grandmother’s grave, I struck up a conversation with a street sweeper, about my age. He was pushing a two-binned pushcart and sweeping with a handmade broom. He had a very photogenic face and was smoking a cigar. Intermittently picking up trash — there wasn’t much — and sitting in the shade, he caught my eye. I asked if I could photograph him. He was proud to be so noticed. After some introductory remarks and typical Cuban give-and-take, he declared, “We want capitalism to come back.” I asked him to elaborate. He said things were much better before the Revolution; there was more opportunity, more dynamism, and more wealth.

According to one person I talked to, the only municipal potable tap water in Cuba is in Baracoa, in the Sierra Maestra mountains at the far east end of the island. And it is delicious. Cool, free-flowing rivers fill Baracoa’s reservoir. Elsewhere, municipal water is a mess. In Guantanamo and in Havana, where I actually watched the process of getting tap water (and likely in other places too), it runs like this: Early in the evening, the water mains fill up. In a couple of hours the water level in the pipes gets high enough to reach the house branches. At this point, my two B&B owners turned on an electric or gasoline pump to get water from the mains into a cistern. Another couple of hours goes by; then, around 11 pm, another pump moves the water from the cistern up to a rooftop tank. Voila! Domestic water! — though not provided in the greenest way. Rural areas depend on trucked water and cisterned rainwater. Potable, government bottled water is also widely available. It is definitely not delicious. Though it has no actual repellent taste or smell, I have never tasted worse purified water. The consumer cost of both water and electricity is trivial — again, hardly an efficient or green approach to conserving resources.

Cuba’s organic farm production and the Obama administration’s trade overtures have caused concern among Florida’s organic farm growers. The March 18 issue of USA Today reports that

Florida farmers say the Obama administration’s plan to allow Cuban imports threatens their $8 billion-a-year business. Florida’s larger organic growers, already struggling to remain profitable, may be particularly hard-hit because Cuba has developed a strong organic farming sector.

Initially, Cuba most likely would export many of the same products grown by Florida organic farms, and the communist nation would enjoy the advantage of lower wages, state subsidies, cheap transportation and the novelty appeal of Cuban products.

It’s not just the subsidized competition that is worrisome. One American farmer asks, “When you buy Cuban products, are you helping the Cuban farmer — or the Cuban government?” He goes on to note that he worries about diseases, pests, and invasive species. Two-thirds of Florida farmers are against any deal. Bell peppers, tomatoes, and cucumbers are the primary products of Cuban state farms, but avocados and more exotic produce such as guanabana (soursop) are in the running.

The street sweeper declared, “We want capitalism to come back.” Things were much better, he said, before the Revolution; there was more opportunity, more dynamism, and more wealth.

USA Today adds, “Eva Worden, a Cuban-American organic grower in Punta Gorda, Fla., supports a resumption of trade between the U.S. and Cuba but wants to be sure the fruit and vegetable needs of the Cuban people are met before encouraging exports.”

Natural, organic, and even “genetically modified” terms have always been a minefield of imprecision and ideology. When politics is added to the mix, it’s anyone’s guess what government policy might turn out to be. Best to let the consumer decide . . .




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Cuba, Obama, and Change

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Although Republicans and, no doubt, the Castro brothers perceive President Obama’s visit to Cuba on March 20 as American kowtowing, the perception on the Cuban street is entirely different.

To Cubans, the visit is an honor ranking right up there with the Pope’s visit, and one not vouchsafed to the island since President Coolidge’s visit in 1928. El mulato, as he’s informally referred to in the Cuban fashion of conferring nicknames on everyone, and his historic visit, bring the promise of hope and change to the island more concretely than any pronouncement ever made by the Castros.

I know. Three days ago I returned from a 30-day bike journey across the island, from Baracoa in the east to Havana. American flags were everywhere — in cars, taxis, horse- and pedal-drawn taxis, even clothing — even before the visit was announced. Warned by guidebooks and savants to minimize exchanges with uniformed personnel, and never to photograph any, I found the admonition accurate. These were all serious, unfriendly, incorruptible, suspicious, and averse to any sign of curiosity. But once the visit was announced, I decided to test the premises. Passing soldiers, policemen and God-knows-what functionaries, I’d yell, “We’re not enemies anymore!” and I’d add some typical Cuban sassy wordplay non-sequitur as a true native would. I managed to get a few smiles and even some playful responses. Things are changing.

The hustle, bustle, entrepreneurship, and raw energy that permeated every person was a far cry from the typical listless socialist citizen.

Back in March 2012, in a Liberty article entitled “The Metamorphosis,” I outlined the changes to the Cuban economy legislated by the Castro government (see also “Cuba: Change We Can Count On?”, Liberty, December 2010). The changes attempted to drop one-fifth of the workers from government jobs and make them self-employed — this in a country where everyone is employed by the government at pay scales of $1–2 per day. But the fine print indicated internal ideological conflicts. While dozens of job categories were authorized — from transportation to food, to lodging, to construction, to personal grooming (and many more) — permits, taxes, limits on employees and much red tape don’t make the goal easy to achieve.

Nonetheless, the hustle, bustle, entrepreneurship, and raw energy that permeated every person pursuing his hopes and dreams along miles of city streets and rural roads was a far cry from the typical listless socialist citizen. Ironically, even the poorest — those whom socialism is touted to help the most — were selling homemade sweets, cucuruchos, in the Sierra Maestra Mountains without permits! One told me he’d be fined $3,000 if caught. To a poor guajiro unable to pay such a fine, jail would await.

Seemingly everyone is trying to become independent of the government and develop self-employed income. One university economics grad student whose psychologist wife still works for the state now runs a B&B in Las Tunas, where I overnighted between Bayamo and Camagüey. Next year he plans on studying Milton Friedman and Frederick Hayek. I asked whether that was possible; he said definitely, in advanced academia. His study plan had already been approved.

Three blocks from the capitolio in Havana, along the Prado, I spotted a sandwich board advertising real estate. A university economics professor tended the spot. He had no office other than his board, his clipboard, and the built-in bench on the promenade. Though we’d seen many “For Sale” signs on many buildings, including the humblest of abodes, we saw no real estate offices. I excitedly elbowed my wife Tina, a realtor in Arizona, to engage her interest.

Bad move.

A middleman agent of finance — the epitome of freewheeling capitalism — just didn’t fit into her perception of a socialist economy. Either the man was deluded or he was a scammer (an unlikely scenario: the police are ruthless with physical and financial crimes). I insisted on us engaging the man. Immediately she blurted out, “How can you own property in Cuba when there are no property rights and the state can confiscate your property at any time for any reason?”

Seemingly everyone is trying to become independent of the government and develop self-employed income.

The poor man, without a vestige of the ingeniousness of an American used-car-salesman, took on a pained and thoughtful look. He didn’t know where to start, but he understood that Tina had zeroed in on the heart of the matter. Translating his response was an exercise in empathy. He told us of a building across the street from the capitolio whose residents had just been told by the government to move out: the government needed the space. He didn’t know whether compensation, alternative housing, or even a grace period had been granted. He was the first to admit that Cuba has no property rights and no judicial system to enforce them. Nonetheless, what was he to do? New laws, albeit extremely constricted, allowed for the buying and selling of cars and property. No mortgages are available; only cash transactions. Interest is still illegal. But someone was paying him four times the salary he’d made at the university. He had nothing but hope and an optimistic outlook: “This time the people will not let the changes be reversed.”

I reminded him of the roadside billboards that read, “The changes in progress are for MORE SOCIALISM” — a sure sign, he counterintuitively agreed, along with Obama’s visit, that the changes now have a better chance of sticking than any previous promises. Or as one informant put it, “Castro educated us; now we know what he’s up to.”




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The Big Short Finds Joy

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In 2008 the United States experienced the biggest collapse in the real estate market since the Great Depression of the 1930s. While many had been talking about the expanding bubble, no one really thought it would burst. Real estate was the one sure deal, the tangible investment that everyone needed and thus would never disappear. During the upward panic to get into the market before prices skyrocketed even further, buyers were snapping up houses within a matter of days after they were listed, often engaging in bidding wars that drove the sales price higher than the asking price. “What our houses are worth now” was the gleeful topic of every cocktail party in every neighborhood, whether you were interested in selling or not. Using easy credit made easier by the “no-doc” loans that guaranteed virtually everyone a mortgage, people who had no business buying houses got into the market, and people who already owned homes risked their solvency by taking out additional home-equity loans to use for other purposes. After all, real estate was too big to fail. Prices always go up.

Until they go down. In September 2008 the bubble burst, leaving overleveraged homeowners in precarious positions — unable to sell, unable to pay, unable to forestall foreclosure, and underwater with their mortgage-to-equity figures. The Big Short attempts to explain what happened, in a film that is sassy, quirky, glib, and sometimes even right.

After all, real estate was too big to fail. Prices always go up.

In the interest of telling a good tale, the filmmakers simplify it, presenting a small portion of the story as if it were the whole story. For example, they virtually ignore the Community Reinvestment Act, which was designed to make mortgage and investment money available in “underserved” (read: poverty stricken) areas. The Act was a noble goal, but it meant that people would be granted mortgages who really couldn’t afford them, and had no cushion whatsoever to deal with repairs, upkeep, or changes in employment (read: getting fired). These were called “subprime” loans officially, but “Ninja loans” derisively (No Income, No Job, Accept Anything). It also meant that the demand for homes increased dramatically, driving prices and new construction upward in response to this new bloc of buyers. By ignoring this Act, the filmmakers suggest that all of the blame lay in the private sector of investment funds and rating services.

Instead, this film focuses on the creation of mortgage-backed securities, which is an investment vehicle that spreads the risk of foreclosure by bundling many mortgages into a single security and then selling shares of that security to a number of investors. Everyone shares in the risk and the reward. And because of that, local bankers no longer keep the mortgages they grant to individuals in the community; as soon as the signatures are dry, the mortgages are bundled away onto the secondary market. In the interest of brevity and creating a single straw man, the film blames this on the mastermind behind the mortgage-backed security, Lewis Ranieri (Rudy Eisenzopf), but this is an oversimplification of what went wrong. Many factors were involved, including Federal Reserve policy on the national level and overproduction of building permits on the local level.

Let’s face it: life is not a screenplay. But that’s how this caper is presented. A few savvy investors notice the increase in late mortgage payments and foreclosures beginning around 2004, anticipate the collapse, and figure out a way to profit from it. All these characters are based on real people. One is Jared Vennett (Ryan Gosling), who breaks the fourth wall to narrate the film in a cool, hipster tone that draws us into the web. Others include the Silicon Valley-based eccentric Michael Burry (Christian Bale), the moralistic Mark Baum (Steve Carell), and two young founders of a trading fund called Brownfield Capital, Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock), who bring the also eccentric investment trader Ben Rickert (Brad Pitt) out of retirement and into their deal. Working independently from one another, these traders are convinced they can make a killing by shorting the real estate market (hence the title, The Big Short).

In order for our heroes to succeed in making their millions on short sales, the entire market had to collapse, with millions of Americans bearing the loss.

W.C. Fields made famous the idea that “you can’t cheat an honest man,” and the investment bankers at Goldman Sachs, J.P. Morgan, Bear Sterns, and Lehman Brothers personify that adage. They laugh conspiratorially behind the backs of these short sellers even as they take their money, so confident are they that real estate is “too big to fail.” Of course, we know that the last laugh will be on them. But the bankers will not go down without a fight. The film demonstrates the dubious shenanigans and downright manipulation they used to try to keep the market afloat and force the investors to close their short positions before they could exercise them.

If all this sounds a tad confusing, not to worry! The filmmakers explain such concepts as short selling, CDOs (Collateralized Debt Obligations), ISDAs (International Swaps and Derivatives), and other potentially dry, technical terminology, using the unlikeliest characters. A glamour girl lounges in a bubble bath, sipping champagne and explaining mortgage-backed securities, while the soap bubbles and the fizz bubbles provide a sleazy metaphor for the market bubble that is brewing. A chef chops up unsellable three-day-old fish to make a marketable stew as he explains the fishy rating system that kept these mortgage-backed securities at AAA status even when their defaults were ballooning. A stripper undulates on her pole as she explains yet another investment concept. Music videos appear unexpectedly to demonstrate the euphoria of various characters. These unexpected moments, coupled with a soundtrack reminiscent at times of an Ocean’s Eleven sting, keeps the film hopping and lively.

But this is not a fun topic, and the short-selling sting was not directed against a Las Vegas gangster who deserved his comeuppance. In order for our heroes to succeed in making their millions on short sales, the entire market had to collapse, with millions of Americans bearing the loss. And their brilliant scheme would deliver a double wallop to the already precarious investment banks. According to the film, six million lost their homes, and eight million lost their jobs. Rickert puts it into perspective when he reminds Charlie and Jamie, “If we make money, it’s because ordinary people lose homes, jobs, and lives.” Banks held the prices of their securities up as along as they could, hoping for a turnaround, but in the process they simply made things worse. Regulators were in bed with the companies they regulated, creating a false sense of protection that contributed even more to the disaster. The result was almost as devastating to employees of the major investment firms as the day the World Trade Center was attacked. In its scale, the personal devastation was worse.

The Big Short is not the whole story. It might not even be the true story. But it is an important portion of the story, told with an outstanding cast in an entertaining and engaging way. Surprisingly, it does not trash big business, even though it shows collusion, fraud and manipulation at many levels. Mostly it shows individuals putting their own needs first, protecting their own jobs and security and using their influence to manipulate the bond ratings and the markets to their advantage. No one is overtly evil in this film. It tells a very personal story, one that each of us might be drawn into on a smaller scale if we aren’t careful.

Joy, another film about business, opened the same week as The Big Short, focusing not on the big dealers but on the underserved. Both have been nominated for Golden Globe Awards and both are populated by an ensemble of AAA actors, including Melissa Rivers, who in Joy does a sharp but poignant turn as her mother, Joan Rivers, in her role as a QVC spokesperson. Both films rely on nonlinear storytelling, flashbacks, and dream sequences to make some of their points. This is especially effective in Joy, where disconnected, disorienting scenes demonstrate how seemingly disconnected ideas come together in the imagination to form something new and valuable.

Joy (Jennifer Lawrence) is a creative, bright, hardworking young mother of two and valedictorian of her high school class who has been held back from success by the emotional and physical demands of her eccentric family, most of whom live in her house. Her agoraphobic mother (Virginia Madsen) spends most of her days in bed, watching soap operas; Joy’s ex-husband Tony (Edgar Ramirez), a wannabe singer, lives in her basement and can’t keep a job; her philandering father Rudy (Robert De Niro) also lives in her basement when he’s between girlfriends; and her grandmother Mimi (Diane Ladd), who narrates the story, is the only person who believes in her.

Joy didn’t set out to make my life better, or anyone’s life better except her own. She needed to pay her mortgage, fix her plumbing, and put food on the table.

As a child Joy had big dreams of becoming an inventor, but her parents’ divorce drove her ambitions inside, much as a cicada (a recurring metaphor in the film) spends 17 years in unproductive safety underground. When she cuts her hands badly while sopping up the mess made by a broken wine glass, she figures out how to make a “wringless mop” and decides it’s time to reemerge into the light and dangers above ground to sell her invention to others.

I own this mop. I love it. It keeps my hands clean and dry while it makes my floor clean and sparkly. I also own the Huggable Hangers that the real Joy Mangano invented. They keep my silky shirts and dresses from falling onto the floor in my closet. I’m grateful that she had the spunk and tenacity to overcome all the obstacles she encountered on her way to success, and I’m glad her hundreds of household inventions have made her filthy rich, because her inventions make my life better. But she didn’t set out to make my life better, or anyone’s life better except her own. She needed to pay her mortgage, fix her plumbing, and put food on the table. And like so many other entrepreneurs, she did that by making other people’s lives better too. This is what I love most about this film.

To do it, she needed capital. She needed to conduct a patent search, apply for a patent, design molds to produce her mop, negotiate with manufacturers to make the mop, and market the mop to mass audiences. Capital is the lifeblood of entrepreneurship. Joy finally convinces her father’s latest girlfriend Trudy (Isabella Rossellini) to invest in manufacturing and marketing her invention. The rest of the film demonstrates both the elation and the devastation of entrepreneurship. Through it all, Joy never gives up — not on her invention, not on her family, and not on herself. Harry Browne fans will appreciate Joy’s advice to her young daughter: "Don't ever think that the world owes you anything, because it doesn't. The world doesn't owe you a thing.”

Eventually Joy creates a successful manufacturing and marketing empire that provides startup capital for other small entrepreneurs with an idea and a dream. Joy is a triumphant film about the power of persistence and innovation, desperation and conviction, and the possibility that a simple mop can change the world.


Editor's Note: Reviews of "The Big Short" directed by Adam McKay. Plan B, 2015, 130 minutes; and "Joy," directed by David O. Russell. Annapurna, 2015, 123 minutes.



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The Problem of Inequality

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Left unfettered, the capitalist system always has and always will produce a rising standard of living for the poor and the middle class, and for the people as a whole. It also produces a constant circulation of wealth among economic classes, ensuring that great capitalist enterprises will eventually be overwhelmed by competition, and great private fortunes will soon be dissipated by their heirs, who will be replaced in the economic hierarchy by nouveaux riches. Another way of putting this is that the poor will get richer and the rich will get poorer — but there will always be large differences of wealth between the people who are most successful at the moment and the people who aren’t.

If you don’t like that, you can consider what happens under the precapitalist system, which fools are always trying to revive — the system in which the state constantly tries to control economic differences by redistributing wealth, thereby destroying it. Isabel Paterson said it best: “Destitution is easily distributed. It’s the one thing political power can insure you.”

The poor will get richer and the rich will get poorer — but there will always be large differences of wealth between the people who are most successful at the moment and the people who aren’t.

Recently, after reading some of Hillary’s Clinton’s demagogic rants about “inequality,” I happened on some words that reminded me of the unfortunate fact that total ignorance of political economy is nothing new. The words are part of an essay, “The Absurd Effort to Make the World Over,” by the early sociologist William Graham Sumner. They were published in 1894, and they show how persistent economic fallacies, and their political exploitation, have been. They were chronic even in Sumner’s time, which was supposedly the great age of laissez-faire.

Sumner writes:

It is repeated until it has become a commonplace which people are afraid to question, that there is some social danger in the possession of large amounts of wealth by individuals. I ask, Why? I heard a lecture two years ago by a man who holds perhaps the first chair of political economy in the world. He said, among other things, that there was great danger in our day from great accumulations; that this danger ought to be met by taxation, and he referred to the fortune of the Rothschilds and to the great fortunes made in America to prove his point. He omitted, however, to state in what the danger consisted or to specify what harm has ever been done by the Rothschild fortunes or by the great fortunes accumulated in America. It seemed to me that the assertions he was making, and the measures he was recommending, ex-cathedra, were very serious to be thrown out so recklessly. It is hardly to be expected that novelists, popular magazinists, amateur economists, and politicians will be more responsible. It would be easy, however, to show what good is done by accumulations of capital in a few hands — that is, under close and direct management, permitting prompt and accurate application; also to tell what harm is done by loose and unfounded denunciations of any social component or any social group. In the recent debates on the income tax the assumption that great accumulations of wealth are socially harmful and ought to be broken down by taxation was treated as an axiom, and we had direct proof how dangerous it is to fit out the average politician with such unverified and unverifiable dogmas as his warrant for his modes of handling the direful tool of taxation.

Great figures are set out as to the magnitude of certain fortunes and the proportionate amount of the national wealth held by a fraction of the population, and eloquent exclamation points are set against them. If the figures were beyond criticism, what would they prove? Where is the rich man who is oppressing anybody? If there was one, the newspapers would ring with it. . . . Wealth, in itself considered, is only power, like steam, or electricity, or knowledge. The question of its good or ill turns on the question how it will be used. To prove any harm in aggregations of wealth it must be shown that great wealth is, as a rule, in the ordinary course of social affairs, put to a mischievous use. This cannot be shown beyond the very slightest degree, if at all.

I can think of only one exception to this line of argument, but the exception has become a mighty one. When people become convinced that wealth is indeed dangerous, and they create a political culture based on the fallacies Sumner reproved, they transform their fears into reality; they make wealth dangerous. Most rich people are politically harmless, but some act on the fallacies they have been taught, and try to better the country by political activism. The heirs of Ford, Rockefeller, Kennedy, and many others have done this. George Soros is doing it right now. Almost always, these people work toward constricting the capitalist system and therefore (strange, unanticipated, and unrecognized effect) toward freezing poor people in their poverty. And as government, under such influences, attains more power, it attains the power to generate fortunes directly. This, not the capitalist system, is the origin of the vast Clinton fortune, a fortune now being used, as was the fortune of Julius Caesar, the richest man in Rome, to devastate the republic in which it grew.

This, I believe, may be the great domestic political problem of our time. (We have a lot of others, I know.) How will libertarians address it?




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Cuba and the Yanqui Dollar

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Now that the United States has restored diplomatic relations with Cuba, the communist government is insisting that the US pay reparations for the gigantic economic losses allegedly caused by America’s long refusal to trade with the island state. Undoubtedly the Obama administration is hard at work figuring out how to provide disguised subsidies to the communist regime and to crony capitalists who would like to make money on “free trade” with the kleptocracy. “I feel very much at home here. . . . We wish each other well,” proclaimed John Kerry, at his August 14 lovefest in Havana. When American officials say things like that, communists and their capitalist shills hear cash registers starting to ring.

It’s highly unlikely that “reparations” will be openly paid. Nevertheless, the demand for reparations illustrates some of the global Left’s most mesmerizing fallacies. These fallacies have nothing to do with the interesting question of whether economic embargoes ever “work,” in the sense of penalizing those whom they’re supposed to penalize. That’s a matter for empirical research, which no ideologue can bear to do, except to “prove” some pre-existing notion. I’m talking about the perennial war of faith — faith in the state — against logic.

Of course, it’s always helpful to have someone else to blame for this morally stimulating poverty.

Every communist state has initially justified itself as an economic enterprise. That’s the point of communism, isn’t it? It’s an economic philosophy designed to deliver economic prosperity. Soon, however, there comes a surprise. Who woulda thunk it — communism turns out to be economically disastrous! But, this having been established, the communist state doesn’t slink off to the side and wither, demoralized by its failure to do what it proposed to do. Instead, it loudly justifies itself on opposite principles — heroic endurance of poverty, disdainful rejection of the good life, the prosperous society.

Of course, it’s always helpful to have someone else to blame for this morally stimulating poverty. For Cuban communists and their sympathizers around the world, and for many unthinking noncommunists as well, the United States is the one to blame. First the US was to blame for ruthlessly exploiting Cuba, by trading with it and investing in it; then, and still worse, the US was to blame for ruthlessly refusing to trade with it or invest in it.

It’s useless to say that you can’t have it both ways. Of course you can, if you refuse to think. In fact, if you’re an American leftist, you can even have it four ways: Cuba is prosperous; Cuba is impoverished; isolation from capitalism made Cuba prosperous; isolation from capitalism made Cuba poor. With these comforting thoughts packed away in all relevant heads, pity for Cuban communism and outrage over US imperialism can continue, with no reduction of self-righteousness. They will come in handy whenever the New York Times notices that post-embargo Cuba is cursed (like pre-embargo Cuba) with that worst of all evils, income Inequality. Again we will witness the catastrophic effects of exploitative free enterprise.




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What’s So Selfish About Capitalism?

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It is a mischaracterization of the free-market society that is as old as capitalism itself. One recent recycle comes from self-designated “libertarian socialist” and “anarchist” Noam Chomsky: “It’s just, I’m out for myself, nobody else — and that’s the way it ought to be” (Power Systems, p. 157).

Now it is absolutely true that laissez-faire capitalism allows someone to be “selfish” (in the most shallow sense), basically because such capitalism allows an individual to be any number of things. A man can spend every penny he has on trinkets (from which expanding circles of merchants and others will actually benefit), or he can donate all he owns to charity — or select among all the types of intermediate options. Freedom of property gives people these choices, in the same way as freedom of religion provides them with a smorgasbord of theisms, atheisms, and agnosticisms. The separation of state and religion doesn’t mean that everyone will embrace, say, Seventh-day Adventism, nor does it follow that the separation of state and economics means that everyone will embrace “selfishness” — or any one exclusive behavior.

The fear that freedom of charity — ending redistributive taxation, thereby completing the separation of state and charity — will mean not a diversification, but the utter death of charity, proceeds from the premise that the one thing everyone will do under capitalism is nothing — for or with anyone else. But this contention that individual liberty entails an abject disregard for others corresponds to no social reality. Does freedom of assembly mean that people will never assemble — in any way? Does freedom of trade mean that everybody will in fact stop trading? Does freedom of speech and of the press — an unregulated market in ideas — mean not that we will have a rich and engaging culture, but that nobody will exchange any ideas about anything?

Laissez-faire capitalism allows someone to be “selfish” because such capitalism allows an individual to be any number of things.

Consider freedom of sexuality. Now it is also absolutely true that capitalism allows someone to indulge in what was formerly euphemized as “self-abuse.” Does that mean that without government control of sex — without a nationalization of the means of reproduction — individuals will do nothing but lock themselves away in their rooms? That there will be no dating, no courting, no marriages? No births, no propagation of the species — is that how “rugged individualism” will “atomize” society? Will all of capitalism’s “sham-liberty” (Engels) degenerate us into an anti-civilization of hermits, morons, and masturbators? Is that the fate from which only coercion — by a hereditary monarch, a Putsch oligarchy, or the Election Day majority-plurality — can save us?

Forebodings of societal necrosis notwithstanding, there is no conflict between liberty and community — the former is each tree, the latter the forest. By allowing each adult to act on his own choices, liberty empowers consenting adults to interact in various ways within a multiplicity of modes: religious-philosophical, professional-economic, sexual-romantic, cultural-artistic, fraternal-humanitarian, and many more. Hence the profound error of thinking that capitalism — voluntarily funded government limited to the defense of person and property — has any one “way it ought to be” concerning socioeconomic matters (such as Chomsky’s “I’m out for myself, nobody else” burlesque). Its only commandment is political: the prohibition of the initiation of force or fraud — by either state or criminal agents. We may therefore confidently retire verso Engels’ and recto Thomas Carlyle’s “cash nexus” caricature of the open society. Whatever the skirmish, the conflict of freedom vs. control is that of diversity vs. conformity — the multifaceted, multihued consent nexus of capitalism vs. the flat, sanguineous coercion nexus of statisms left and right. When some lobbyist hands us the line “If government doesn’t do it, it doesn’t get done,” what he’s really telling us is: it doesn’t get done his way only.

Many of the giants of classical liberalism recognized the affinity of compulsion and conformity. Jefferson wondered: why subject opinion to coercion? His answer: “To produce uniformity.” And Ludwig von Mises, in a survey of paradoxical charges against the free market, observed: “The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicals blame capitalism for the spread of irreligion. . . .” Irreligionists identify capitalism with religion because capitalism (unlike leftism) doesn’t suppress religion, while religionists identify capitalism with irreligion because capitalism (unlike rightism) doesn’t suppress that. Let us put aside the question of whether such behavior — the refusal to extend to others the protection of law that one demands for oneself — constitutes “selfishness” in the most destructive sense. What this example illustrates perfectly is the statist projection inherent in linking laissez faire, which neither suppresses nor subsidizes, to any homogenized culture. A “capitalist society” is no more synonymous with “selfish materialism” than with “selfless spirituality.” The only thing everyone in a libertarian political order does — with no one’s mind, body, and property but his own — is act, not for his exclusive “gratification” against any consideration for others, but on his own judgment protected against any violence from others.

With regard to the nature of civil liberties, the freedom to withhold one’s wealth from the state — apparently the gravamen of the charge of capitalist “selfishness” — is wholly like any other human right. The state has no more claim to the individual’s private property than to his private body or his private mind. (Indeed, what a person does with his own property or body is what he does with his own mind — all coercion is “thought control.”) If we do not grant government the ability to more wisely or morally use a citizen’s mind or body, we do not grant it the ability to more wisely or morally use his property. Yet that is exactly what the accusation of “selfishness” wants to guilt us into conceding: that the state (essentially a handful of guys with guns) will manage each and every person’s money “better” than these people (essentially the entirety of the population) will do themselves. Just who is manning this administration — mortals or gods?

Will all of capitalism’s “sham-liberty” degenerate us into an anti-civilization of hermits, morons, and masturbators?

The importance of private property to political dissent was memorably demonstrated by an unexpected but significant source. In response to President George W. Bush’s launching of the Iraq War, the National War Tax Resistance Coordinating Committee issued a public statement entitled “An Appeal to Conscience: In Support of Those Refusing to Pay for War on Iraq,” which upheld a citizen’s right not to pay “all or a portion of one’s federal taxes as a form of conscientious objection.” Among the signatories were many who proudly wore the label “socialist,” including . . . Noam Chomsky. Now here were outright collectivists defending the right of every individual to keep his money from the taxmen, for no reason other than to reflect his private conscience — that is, his personal disagreement with government policy, even when the government was enthroned by the Election Day majority-plurality. (And certainly Bush 2000 won a much greater percentage of the popular vote than Chile’s Allende, whose “democratically elected” credential is repeated by the Left as calculatingly as Castro’s dictator status is not.) The “Appeal to Conscience” didn’t even contain a little pledge that each tax resister would spend his withheld wealth on good things (e.g., children’s charities) and not on bad ones (hookers and heroin).

Since war is a government undertaking, we must note the converse in America today: almost every government project is conceived as some kind of “war” — hence a War on Poverty and a War on Drugs no less than a War in Iraq and a War on Terror. If, as a matter of principle, a citizen may stop giving money to the state as a practical expression of his “conscientious objection” to any particular war — if he can in that manner legitimately protest national security and other policies — we thereby recognize that private property is essential to freedom of conscience. What then is left of any variant of wealth seizure? What are we left with but capitalism in its purest form?

Yet that is the very politics denounced by the Left, including even its antiwar tax resisters, as “selfishness.” One cannot help recalling the scene in A Man for All Seasons where Sir Thomas More, accused of high treason, explains that his believing a “loyal subject is more bounden to be loyal to his conscience than to any other thing” is a matter of necessity “for respect of my own soul.” Thomas Cromwell, the state’s advocate and More’s antipode in this “debate” — a rigged trial in which the defendant’s life is in peril — tries to undermine this statement of conviction in a common manner, sneering, “Your own self, you mean!” More doesn’t deny it: “Yes, a man’s soul is his self!”

Possibly the “egalitarian” supporters of the “Appeal to Conscience” believed that its broad principles should apply to only specific people — namely, themselves and those sufficiently parallel. That returns to the fore the refusal to extend to others the protection of law that one demands for oneself. Said refusal is a good working definition of what many actually champion as the corrective to capitalist “selfishness”: the social-democratic “welfare” state — the mixed economy:

To be capitalist or to be socialist?— that is the question. Precisely what is the mix of the mixed economy? When is it capitalist and when is it socialist? When does it protect property and when does it confiscate it? When does it leave people alone and when does it coerce them? When does it adhere to the ethics of individualism and when does it obey the code of collectivism? And just which is the metaphysical primary — the individual or the collective (e.g., the nation, the race, the class)? The fundamental truth about the mixed economy is that mixed practices imply mixed principles, which in turn imply mixed premises — i.e., an incoherent grasp of reality. With socialism, the chaos was economic; with “social democracy,” it’s epistemological. Ultimately, the latter can no more generate rational policies than the former could generate rational prices. The mixed economy doesn’t present us with a mosaic portrait of the just society, but with a jigsaw of pieces taken from different puzzles.

Unable to provide any philosophically consistent answers, the mixed economy demonstrates that the question of which rights will be protected degenerates into a struggle over whose rights will be protected. One example that virtually suggests itself: while a myriad of voices clamor for censorship, who ever says, “There have to be some limits on free speech, and we should start with mine”? Concerning “economic” issues, do we ever hear, “Y’know what? Give the competition the subsidies. Me, I’ll bear the rigors of the market”? As for intellectual and moral integrity: do we see the National Organization for Women (NOW) and fellow “progressives” bring to other issues the laissez faire they demand for the abortion industry — a heresy that elicited a charge of “possessive individualism” from Christopher Hitchens when in office as socialist inquisitor — except, that is, when these “progressives” demand tax dollars for abortions (and deny reproductive rights, the putative sine qua non for gender equality, to males)? Do we see the National Rifle Association (NRA) and fellow “conservatives” bring to other issues the laissez faire they demand for the gun culture — a deviation that roused Robert Bork, majoritarian mongoose to any perceived libertarian snake, to attack the NRA via a comparison with the ACLU — except, that is, when these “conservatives” demand that private property owners be prohibited by law from refusing entry to persons carrying firearms?

Whatever the skirmish, the conflict of freedom vs. control is that of diversity vs. conformity.

No matter what combination of contradictory positions any particular avatar of the mixed economy advocates on any given day, he is always a libertarian with his own liberty and a capitalist with his own capital, but an authoritarian with the freedoms of others and a socialist with their property. Such is the “idealism” that distinguishes modern liberalism and its special-interest lobbies from the “selfishness” of classical liberalism and its establishment of the same rights for oneself and one’s neighbors.

With social diversity now multiplying the types of special interests in many social democracies, the resulting political conflicts cannot be dismissed, let alone defused — least of all by the bromide that “we all accept that our tax dollars go to things we disapprove of.” No one in fact accepts that. Even though taxation exists to separate people from control of their money, selective tax protests span the spectrum of otherwise pro-taxation pressure groups. We’ve seen collectivists — reputed foes of all private property — endorse antiwar protesters who demand as a matter of individual conscience their right not to pay taxes. Years ago in The Nation, an ad told readers that “your tax dollars” funded what it alleged was Israel’s mistreatment of the Palestinians. Public school supporters, who never voice concern over how many “Americans really want to give tax dollars” to that monopoly, suddenly claimed great concern with what “Americans really want” at the prospect of those dollars going to “school vouchers.” And among traditionalists, tax protests involve everything from abortion to art (if it offends them) to foreign aid (for the countries they don’t like) to free condoms and free needles. Under a system that denigrates the concept of equal rights for all, everyone wants to be exempt from paying taxes for the things he disapproves of, but no one wants — any guesses why? — his neighbors to be exempt from paying taxes for the things they disapprove of.

There’s not a mote of doubt as to what — with the double standard as its only standard — exposes itself as the inherent politics of “selfishness”: the hypocrisy of social democracy. All the warring camps of social democrats brazenly acknowledge that hypocrisy — in the other camps. A snowy day stuck indoors will pass much more tolerably with a back-and-forth Googling of “liberal hypocrisy” and “conservative hypocrisy.” (Each camp also detects tyranny — “fascism” — in only the others; compare Jonah Goldberg vs. Naomi Wolf.)

And what of social democracy’s central claim to “social justice”: its redistribution of wealth from the “most greedy” (richest? most materialistic? least philanthropic?) to the “most needy”? Consider one form of redistribution that no North American or European “welfare” state allows — or ever would allow. Let us stipulate that I have no problems with (a) the government’s taking a portion of my money for the purpose of tempering my “greed,” (b) the idea of those tax dollars going to the “most needy,” and (c) the percentage the state takes. But there is one thing: I don’t consider the current recipients to be anywhere near the “most needy.” My definition does not include my fellow Americans, who even at their poorest are richer than most people on the planet. To get right to it: I believe that the “most needy” — the “least of these” — are undeniably the starving children of the Third World, and I insist that my tax dollars all be sent to them.

The mixed economy demonstrates that the question of which rights will be protected degenerates into a struggle over whose rights will be protected.

Now why is that a problem? I am not declaring a right to withhold my taxes from the government, with no assurance about what I will do with the money — unlike the antiwar leftists who signed the “Appeal to Conscience.” Nor am I trying to control what others’ taxes pay for. All I’m asking is that my money go to those who my independent judgment and individual conscience tell me are the “most needy.” Why should I pay for full medical coverage for all Americans, when the Third World children don’t have any food? Why should I pay for textbooks for American children, when the Third World children don’t have any food? So, why can’tmy tax dollars go to them? Because the Election Day majority-plurality decides that “charity begins at home” (i.e., nationalism trumps humanitarianism)? If the neediest-recipient principle justifies my money’s transfer to my fellow Americans, why doesn’t it justify the money’s transfer from these Americans to the starving Third World children? Isn’t the principle violated by the dictionary “selfishness” of voting other people’s money into one’s own coffer (“tax booty for me, tax burden for thee”)?

The redistribution of wealth in a “welfare” state is not directed by a neediest-recipient or any other principle. It is purely a matter of power. With its rejection of consistent property rights, social democracy forces all people to throw all money onto the table (which some resist more successfully than others) and then allows them to take what they can (with some better able to take than others). That’s right: The money goes from those who are politically unable to hold on to their wealth, to those who are politically capable of grabbing on to that wealth. The former are no more guaranteed to be the “most greedy” than the latter are to be the “most needy.” It would be criminal not to cite Lord Bauer’s denuding of foreign aid: the “transferring [of] money from poor people in rich countries to rich people in poor countries.” And it would be downright felonious to omit business subsidies. Any redistribution of wealth operates in only one way: from each according to his ability to contract via civil society, to each according to his ability to coerce via the state — a feature applicable (by degree) to both socialist dictatorship and social democracy.

The confusion of limited government with “selfishness” is reflected in the socialistic thesis that such government comprises nothing but the “class self-interest” of the business (“capitalist”) class. This thesis implodes almost immediately when we begin to ask precisely what concrete policies manifest that specific “class self-interest.” If respect for everyone’s property rights actually favors “capitalists,” why do corporations seek subsidies and “eminent domain” confiscations? If unregulated commerce leads to monopolization by these “capitalists,” why do real-world businessmen look to state regulation to gift them with monopoly entitlements? And if free trade gives an advantage to this class, why do each country’s business — and union — leaders lobby for protectionism?

The classical liberals formulated their principles of private property, laissez faire, and free trade — rejected by “socialists of all parties” and big business alike — not against the yearning of the have-nots for a better life, but in opposition to policies that favored the few over the common good, that is, the routine of “merchants and industrialists . . . demanding and receiving special privileges for themselves” (in the words of Robert B. Downs). Free-market economics (The Wealth of Nations) and American nationhood both arose as part of the revolt against such mercantilism — corporatism, in today’s parlance. The American “welfare” state, in contrast, began as a neomercantilist reaction against that revolt. “The essential purpose and goal of any measure of importance in the Progressive Era was not merely endorsed by key representatives of businesses involved,” observed Gabriel Kolko; “rather such bills were first proposed by them.” Big business has never stopped being a major driver of big government. Would President Bush’s 2003 prescription drug bill (the “largest expansion of entitlements in nearly forty years,” according to Jonathan Chait) have gone anywhere without its hundreds of billions in industry subsidies? Would Obamacare even exist without the “advice” and approval of the health insurance cartel?

If respect for everyone’s property rights actually favors “capitalists,” why do corporations seek subsidies and “eminent domain” confiscations?

Corporate privilege is a raison d’être — not a corruption — of the “welfare” state (aka “corporate liberalism”). Charity is not the purpose of the “welfare” state, much less its innovation. Concern for “the poor and stranger” long preceded its birth and will long survive its death. Like family life or the division of labor, charity is (to quote Paine’s view of society vs. state) “part of that order which reigns among mankind [that] is not the effect of government. It had its origin in the principles of society and the natural constitution of man.” What had its origin in government is the swarm of anticompetitive measures benefitting “connected” entities — the fixed economy of the mixed economy. Without tariffs, for instance, how many people would always prefer to buy domestic goods? And how many would ever write out checks to a multinational conglomerate for nothing in return? Those are the “market failures” that the opponents of a free market fear.

Any state initiation of force exists not for a noble end (which, as Jefferson said of truth, requires no such coercion), but for a sordid one. Regarding military conscription, Ayn Rand pointed out that a “free (or even semi-free) country has never lacked volunteers in the face of foreign aggression.” However: “Not many men would volunteer for such wars as Korea or Vietnam.” Likewise, people will allocate money for the education of their children, sound retirement funds, the less fortunate, and especially the services of a limited government. What they won’t do is give it to “teachers” who can’t teach, Ponzi schemes, Boeing, or Chrysler — or the Taliban, which just a few months before 9/11 received from Uncle Sam a total of $43 million for its “help” in the victory-elusive War on Drugs (a sum that too obviously pales next to the multiple billions handed over to Vice President Cheney’s compadres for the purpose of building infrastructure — in Iraq). Only pursuits of folly and injustice seek the means of force or fraud.

Portraying laissez-faire capitalism as the tailored benefactor of big business is transparently a projection on the part of the mixed economy’s corporate liberals. The consistent socialists, on the other hand, care no more whether commerce is privileged or left alone by government than whether religion is privileged or left alone by government. They want the abolition of commerce, of religion, of a free market in anything, of any independent institution of civil society: the replication of totalitarian theory and history.

Will only the unfettered state stop the virulence of “selfishness”? Ideally yes, asserted Plato, for whom the “highest form of the state” was one “in whichthe private and individual is altogether banished from life, and things which are by nature private, such as eyes and ears and hands, have become common, and in some way see and hear and act in common, and all men express praise and blame and feel joy and sorrow on the same occasions. . . .” Reductio ad fundamentum: There will be no more “selfishness” when there are no more selves.

Capitalism is being condemned for not assenting to the proposition that money grows on trees.

The unfettered market boasts no ability to effect a change in “human nature” — in social reality. There will always be situations in which people compete to get or to keep one position, one prize. But while the market can do nothing about this conflicting “selfishness” (and will do nothing about different parties’ demands for a guarantee of monopoly), it commands the common self-interest that people have in all competition being governed by an equitable rule: a ban on the use of force or fraud by any rival, the only possible such rule. The analogue of the market is not the jungle, but the stadium — more broadly, a network of stadiums and other venues.

Capitalism’s multiplicity of open competitions enables each individual to find the field where he can succeed. The free market’s profit-and-loss dynamic (to quote Adam Smith) “encourages every man to apply himself to [the] particular occupation” most sought after by others. These interactions synthesize the most prosperous social order as defined by the participants themselves — all of them, as opposed to any one party’s wish for the “way it ought to be.” It is an ideal that has been realized to the degree thata market mechanism has been implemented. In contrast, socialism’s “equality” has meant nothing but poverty for all. And in a jarring echo of the Great Depression, the mixed economy’s regulatory sector in recent years orchestrated a general downturn in the US (where the crisis was Orwellianly blamed on “deregulation”) and in Europe (the “PIIGS”). State intervention in production (i.e., one party’s wish for the “way it ought to be”), once heralded as the alternative to the market’s alleged class conflicts, evidently produces only the “common ruin of the contending classes” — to redirect a phrase from The Communist Manifesto. When the prescribed cure for “selfishness” actually afflicts the common good, we must reexamine the diagnosis of the condition.

Preponderant among the essential criticisms of limited government has been the charge that it fails to recognize as natural rights such things as food, clothing, and shelter, to say nothing of education (“from pre-K to Ph.D.”), advanced medicine, and whatever else might be tacked on. The sober reply: these items are not natural rights because they are not natural produce. It costs a man nothing not to coerce his fellow citizens, thereby respecting their rights to worship, speak, etc. But how can he provide everyone’s “right” to all those scarce materials and services? And why should he, when he himself is promised a “right” to those things whether he does any work or not? Realistically speaking, capitalism is being condemned for not assenting to the proposition that money grows on trees. And the condemners are quite serious in that belief: “The world has enough for everyone’s need, but not enough for everyone’s greed.” Wealth simply exists, and only capitalist “selfishness” prevents its equal distribution to every soul on earth.

Ultimately, the free-market society is guilty only of affirming each individual’s right to control his own mind, body, and property, a conviction that calls for a single sentence: if that is “selfishness,” let us make the most of it.

Recommended Reading

  • Yaron Brook and Don Watkins, Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government, 2012.
  • Nick Gillespie and Matt Welch, The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong with America, 2012.
  • David Kelley, Unrugged Individualism: The Selfish Basis of Benevolence, 2003.
  • Robert P. Murphy, The Politically Incorrect Guide to Capitalism, 2007.
  • Andrew P. Napolitano, It Is Dangerous to Be Right When the Government Is Wrong: The Case for Personal Freedom, 2011.
  • John Stossel, No, They Can’t: Why Government Fails — But Individuals Succeed, 2012.



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Advance Notice

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With 150 feature films, 106 shorts, dozens of panels and live presentations, nine days, a dozen theaters, thousands of volunteers, and 72,000 attendees, Austin’s SXSW film festival, presented this year from March 13–21, has grown to one of the most important festivals of the season. Many of the best films of the year are introduced there.

It can also be the most frustrating festival of the season, with its policy of not selling advance tickets to any screenings. Attendees purchase a badge (costing several hundred dollars) for the entire festival and then line up according to the kind of badge they have chosen. Locals can purchase a wristband for $90, but their line is the last to gain entrance, just ahead of the misnomered “rush” line of stragglers hoping to find an empty seat for ten bucks after all the others have gone inside. (During the entire week I saw only two screenings where rushers were able to get in.) Badgeholders are allowed to pick up an express pass for up to two films per day, but that often means being in line by 7 a.m. and waiting for the express line to open at 9.

The Road Warrior was filmed chronologically in 35 mm before computer graphics — every stunt is real, and they are spectacular.

For some, however, that’s part of the fun at SXSW, and friendships are often made in line. I talked with one young filmmaker whose goal for the week was to meet a particular director and talk to him about a project. On the morning of the first day, there was the director he wanted to meet, sitting next to him on the floor waiting for the express line to open. They chatted for nearly two hours and shook on the deal. Who would have thought it possible?

Many films with theatrical release schedules were screening at SX, but I spent most of my time seeing documentaries and smaller films that I won’t be able to see at my local Cineplex in the next month or so. The one exception was a screening of The Road Warrior (aka Mad Max 2),the 1981 postapocalyptic cult classic, newly remastered for the festival and introduced by director George Miller himself. What a treat to see this film on a gigantic screen in an old-school theater holding nearly a thousand enthusiastic viewers. RW was filmed chronologically in 35 mm before computer graphics — every stunt is real, and they are spectacular. It’s a great story too, demonstrating the kinds of communities that arise under anarchy. Max is a lot like Paul Newman’s character in Hombre, just trying to make his way, barter for gas, and protect what little he has. We were hoping to see a “surprise” screening of the new sequel, Fury Road, afterwards (why else would they have brought back a 34-year-old film?) and indeed, we were treated to several chunks of the new movie. But even without that, Road Warrior was easily the most fun I had at the festival.

Here are some documentaries you might want to watch for on Netflix over the next year:

Steve Jobs: The Man in the Machine, (directed by Alex Gibney, 127 minutes).When Steve Jobs died of pancreatic cancer in 2011, the whole world mourned the loss of the man who brought us the personal computer and the magical triplets that reside in our pockets or under our pillows: the iPod, the iPhone and the iPad.But, according to the many people who were interviewed for this doc, Jobs was not a particularly lovable man. He could be ruthless, selfish, and unfair. He was a man of complex contrasts, “a monk with Zen-like focus but no empathy” who fancied himself to be enlightened and asked to be canonized as a monk. He was one of the wealthiest men in America but paid only $500 a month in child support for his daughter; when he returned to Apple after being pushed out in the ’80s, he ended all philanthropic activities (unlike his counterpart at Microsoft, Bill Gates); his factories polluted rivers in China; he arranged for backdating of stock options to increase the income of key employees (including himself); and he created offshore companies in Ireland to reduce the company’s tax bill (nothing illegal about that, but the filmmaker suggests it’s unethical or improper for Apple not to pay “their fair share”).

Jobs wanted to change the world, and he did. At one point the narrator asks cynically, “Is creating a product that makes buckets of money for its shareholders enough to change the world?” I would answer emphatically, “Yes!” but not because of the money. Everything we do is different now, because of the magic box we carry in our pockets, embed in our Google Glasses, and wear on our watches. Even getting around town is easier today — it was less than ten years ago that I carried a large street map in my car and had to pull over to find my way. This week, navigating around a large and unfamiliar city, I never once got lost, because Siri told me when to turn and even how to avoid traffic. Right now I’m writing this review on my iPhone. I can look up details about the films instantly. The iPhone has indeed changed my world.

Jobs was one of the wealthiest men in America but paid only $500 a month in child support for his daughter; when he returned to Apple after being pushed out in the ’80s, he ended all philanthropic activities.

Jobs created something beautiful and useful, and he created buckets of money in the process. We love our iProducts. We caress them. We even sleep with them. We love them because they connect us to a wider world and family far away. But they also tend to isolate us from those who are near at hand. The narrator sums it up well when he acknowledges, “I love my iPhone. My hand is drawn to it in my pocket the way Frodo’s hand is drawn to the Ring.” Indeed, many folks today create “phone free zones” when they are together, in order to resist the powerful attraction of the ‘net. Jobs himself might not have been a beautiful man on the inside, but he certainly created a beautiful product.

Peace Officer (directed by Scott Christopherson and Brad Barber, 109 minutes) was the most powerful and important film I saw all week, and it rightly won the Grand Jury prize for best documentary. I am hoping to bring it to the Anthem Film Festival at Planet Hollywood in Las Vegas in July. It chronicles the deadly results of militarizing our police agencies through SWAT teams and “1033” programs that provide new and used military equipment to local police forces.

The police have become an occupying force in many neighborhoods and this leads to an adversarial relationship even when no one has done anything wrong.

William “Dub” Lawrence is the central figure of the film. A likable, personable man, he was the police chief of Farmington, Utah, when he started Utah’s first SWAT team in 1975. (He also is the man who broke the Ted Bundy serial murder case.) He thought it would be an effective way to reduce the drug trade in his sleepy little community. In 2008 that same SWAT team killed Dub’s son-in-law over a domestic dispute that escalated into a standoff that involved over 80 police officers. Because of his connection to the police department, Dub had access to police cameras that revealed a scenario different from the one reported to the media (that the young man had taken his own life). He quit the police department and spent the next several years piecing together the actual timeline of events calmly, methodically, and with a megawatt smile that belies the pain he feels from the death of his daughter’s husband.

Peace Officer tells several stories of law enforcement turned aggressively non-peaceful and non-protective. “A peace officer should be a trusted friend,” Dub explains. “But today they no longer ‘serve and protect.’ Now they are trained as soldiers, and we are the enemy.” The police have become an occupying force in many neighborhoods, according to the film, and this leads to an adversarial relationship even when no one has done anything wrong. Connor Boyack, president of the Libertas Institute, acknowledges in the film that this isn’t entirely the police officers’ fault. “Laws and programs have set up these conflicts and turned them into soldiers,” he suggests.

One of the laws that has led to the most serious invasions of privacy and safety is the “no-knock warrant,” which allows SWAT teams to barge into a home in the middle of the night, rifles drawn, screaming at anyone in the house to back off. Awakened and terrified, the homeowners try to defend themselves from what appear to be home invaders, and they are often killed rather than arrested. The father of one young man who is dead because of such a raid (and who admittedly was growing marijuana in his basement) asks angrily, “What were they protecting us from? Marijuana plants?”

Several things are wrong with our law enforcement system, and Peace Officer reveals many of them. It’s an important, timely documentary that should keep the conversation going about the growing abuse of police power.

Raiders! (directed by Jeremy Coon and Tim Skousen, 95 minutes). In 1982, three 11- and 12-year-old boys undertook an ambitious project: as fans of Indiana Jones and the Raiders of the Lost Ark, they would recreate the Steven Spielberg masterpiece shot-for-shot. This was before the film was available on VCR; amazingly, the boys were able to recreate the entire film from watching it in a theater and reviewing the story in a “Raider’s” comic book one of them owned. Over the next seven years, from middle school through high school, they would enlist their friends to serve as cast and crew, commandeer their parents’ houses as movie sets, and spend their summer vacations filming the project. By the time they graduated from high school, all but one scene was finished: the one in which Indie and Marion fight off a German airplane mechanic while a WWII airplane rolls around in circles with propellers running. Now, 33 years after beginning the project, they have gone back to film that missing scene.

Raiders! documents the project from start to finish, incorporating footage from 30 years ago along with the scenes of the new project. How they managed not to burn down their parents’ houses or run over a cast member or two during the chase scenes was a feat in itself. These background stories are told with unabashed glee and deadpan humor. As grownups the filmmakers faced a host of new obstacles, including funding the project, getting time off from their fulltime jobs, and dealing with days and days of rain that threatened to end the filming before it even began. Still, they were determined to finish this project. It’s an amazing story of perseverance, creativity, sacrifice, and pursuing one’s dreams. The film is funny, smart, and inspiring. I’m also hoping to bring this film to the Anthem Film Festival this summer.

How they managed not to burn down their parents’ houses or run over a cast member or two during the chase scenes was a feat in itself.

Raiders of the Lost Ark: The Adaptation (directed by Eric Zala, 107 minutes). After watching the documentary about the making of the greatest fan-film ever made, audiences were treated to the film itself. These kids were remarkably skillful in recreating Spielberg’s actual shots, including the dialogue, the costumes, the camera angles, and even the facial expressions. It’s fun to watch their ages change, as many of the scenes were filmed out of sequence. And of course, it’s hilarious to see them emerge from the underground temple nearly 30 years older in the newly finished scene, still wearing the same clothing! The Adaptation has developed a cult following since it premiered at Harry Knowles’ “Butt-Numb-a-Thon” at the Alamo Draft House in Austin several years ago; now, partnered with the documentary about its completion, it is going to grow in stature. You can get a copy by donating to their crowdfunding campaign at raidersguys.wix.com.

Finders Keepers (directed by Bryan Carberry and Clay Tweet, 82 minutes).If you’ve ever watched the cable TV show Storage Wars, you know that the strangest things often show up in storage units. When people don’t pay the rent on their units, the facility owners are entitled to sell the contents to the highest bidders. Most of the time they end up with household furnishings and personal effects. Occasionally they might find an expensive piece of jewelry or a cache of valuable collectibles. When Shannon Whisnant bid on the storage unit rented by John Wood, he had no idea that he would find a human leg inside Wood’s smoker grill.

The two men argued for several years over who was the rightful owner of the leg (amputated when Wood was injured in an airplane crash). Whisnant wanted to put it on display and charge people $3 to look at it. ”The cholesterol was dripping right out of it!” he says with glee as he describes discovering the leg. Wood simply wanted to keep it and have it buried with him some day. They were invited to tell their bizarre story on talk shows worldwide and even ended up on an episode of Judge Mathis. But Finders Keepers is not so much about the legal battle to determine ownership of the leg as it is a study of these two backwoods North Carolinians (you know you’re in the deep South when subtitles are required for people who are speaking English). As presented by the film, both struggle with addictions, Wood the traditional kind (drugs and alcohol) and Whisnant of a less tangible kind — he craves attention and longs to be on television making people laugh. “I’m pretty smart,” he says shortly after describing the events that “perspired” regarding the leg. “I’m pretty sure you’ve figured that out by now. “ He thought the leg would be his ticket to fame and fortune.

This colorful and engaging documentary was a favorite with the SXSW audience. It’s funny without being exploitive, and bizarre without being gross. Participating in its making was life-changing for both men, but not in the ways they expected.

Brand: The Second Coming, (directed by Ondi Timoner, 125 minutes, festival headliner). Russell Brand is another character from a poor socioeconomic background who craves attention on the world stage. Best known for his deviously charming smile, his outrageous wit, and his raunchy and irreverent stand-up routines, a few years ago Brand decided to “re-brand” himself as a serious thinker with a plan to change the world through books, op-ed pieces, impassioned speeches, and a stand-up comedy tour that focuses on his four new heroes: Gandhi, Jesus, Malcolm X, and Che Guevera. (For an example of Brand’s unscripted humor, google Russell Brand/Morning Joe to see the interview in which he completely overwhelmed three veteran MSNBC TV anchors.)

Brand’s number-one goal is to end inequality. He has no idea how to do that, however, other than to say that rich people have too much and poor people have too little and that isn’t fair. He doesn’t understand how the world works, and believes the old mercantilist philosophy that “where there is profit there is deficit.” He simply doesn’t understand that the pie can be made bigger. But he has millions of followers (mostly of the “Occupy” ilk) who think he’s right. Rosie O’Donnell gushed, “If I could sell everything I have and give it to his cause, I would!” to which the logical response should be, “Well, what’s stopping you?”

Brand’s epiphany occurred after seeing children in Africa digging through garbage dumps in search of recyclable goods to sell. To his credit, his heart was broken by the sight. But then he opines, “I live in a mansion, and these children dig around in a garbage dump. And the same system put both of us there.” Of course, he’s wrong about that. The system that put him in a mansion is based on Western values, capitalism, and free markets. Audiences chose to spend their money enjoying the entertainment that he provides, and it makes him wealthy. The system that put those children into a garbage dump is anything but market based or embracing of Western values. Moreover, selling his house and living in a tent is not going to change their plight.

Rosie O’Donnell gushed, “If I could sell everything I have and give it to his cause, I would!” to which the logical response should be, “Well, what’s stopping you?”

Brand makes a solid case for decriminalization of drugs, and if he used his celebrity to focus on that one cause, he would probably be quite successful in his goal to “change the world.” He also turned one of his building complexes into a self-sustaining rehab center, which is pretty impressive. Addiction is a topic he knows well, at least according to his own reports. “Prison isn’t working!” he proclaims, and he is right. “As long as it is illegal, they will continue to use dirty needles and back-alley doctors. . . . Drug laws penalize the people at the bottom of the scale.” He did his homework and presented a strong case at the UN meetings in Vienna. I wish he would continue to lead that charge.

Brand should stay with what he does well — unscripted, irreverent comedy — and focus on causes with which he has valid, knowledgeable experience, such as the problems of drug addiction. He is no Messiah, and his knowledge of economics is laughably shallow. But I think he is a good man at heart who sincerely wants to make a difference in the world.

Love and Mercy (directed by Bill Pohlad, 119 minutes).This biopic about Brian Wilson, the musical genius behind the Beach Boys, was one of only two narrative films that I caught during the festival. I was expecting to see a feel-good story about a feel-good band from my youth, but I was sadly mistaken. It is a horrifying story that left the audience in absolute silence at the end. It is true that Wilson suffered from mental illness and was away from the music industry for several decades because of it. But this film is so unrelentingly sad that I walked away convinced that I will never be able to enjoy hearing a Beach Boys song again without thinking of the nightmares Wilson experienced while creating them.

Despite his debilitating mental illness, Wilson was able to create harmonies and musical arrangements that are considered today among the best of the era.

Wilson is played by both Paul Dano (1960s) and John Cusack (1990s). The decision to use two actors who don’t look at all alike instead of simply aging Dano through prosthetics seems odd, but it serves to emphasize Wilson’s schizophrenia — not only does he hear voices in his head, but we see two different people inside his skin. Young Wilson is plagued by an abusive father who seems to exacerbate his illness, while the older Wilson is abused by his tyrannical psychiatrist Gene Landy (Paul Giamatti) who eventually lost his medical license for his mistreatment of Wilson.

Despite his debilitating mental illness, Wilson was able to create harmonies and musical arrangements that are considered today among the best of the era. We see him in the studio, pressuring the musicians to create the sounds he hears in his head, and while it is amazing to watch him at work, it is also devastating to see the agony he experiences while trying to get it right. This is the kind of film that could end up winning numerous awards, while earning very little at the box office. It is just too sad to endure.

I had marked dozens of other films that I wanted to see, but there wasn’t enough time and the films I wanted were often scheduled in conflict with each other. I was also distracted by multiple other features of the festival, including a four-day interactive gaming and creative technology show, live music performed at nearly every corner, and crazy good food that you can only get in Austin, and often only from a truck. It was a great experience, and I will definitely be back.




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Good-Bye, Uncle Kodie

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The recent bankruptcy filing by the Eastman Kodak Company was a shock to me, but not exactly a surprise. It was certainly another sad reminder that the world I once knew was gone forever. I worked for the company at its Kodak Park Works in Rochester, New York in the 1960s, leaving of my own accord in 1970. A detailed autopsy of its decline and fall must await a soul with perceptions keener than mine. But I suspect its decline was a result of its very domination of the imaging market. With little competition, the company’s leaders had simply forgotten how to compete — which involves adjusting to changing market conditions, which involves making sound and timely decisions.

I hired on as a research chemist in the Organic and Polymer Chemistry Department, part of the Chemistry Division, which was part of the famous Research Laboratories established in 1912 by noted photographic theorist C.E.K. Mees. I had done poorly in graduate school — quantum mechanics and its chemical and philosophical extensions struck me as moonshine. Still, I revealed some small gift for research in organic chemistry. Of course, there were many fine organic chemists at Kodak’s laboratories, some famous, and they sent a steady stream of publications to scientific journals.

In the 1960s, Kodak was riding high. Its most profitable market was the amateur photography market. Its Instamatic camera appeared in the early part of the decade. It was a huge success, and Kodak’s amateur film business was booming. And of course, the company sold film to professional photographers, motion picture film to Hollywood, and X-ray film to the medical profession. Needing chemicals free from impurities that could harm silver halide emulsions, Kodak had long ago begun making its own. And this led it into the successful marketing of research chemicals and polymers through its Distillation Products Industries and their Tennessee Eastman and Texas Eastman Divisions.

The annual wage dividend was a result of a profit-sharing plan begun by George Eastman to discourage socialist tendencies.

I worked in Building 129, and then in Building 82, the latter a brand new research building with the best interior design for the working chemist I’ve ever seen. There were other chemistry laboratories in Building 59, which also housed the Applied Photography and Emulsion Research divisions. These two divisions were considered chimneys to the top administrative positions in the Research Laboratories and to those in the company hierarchy. In those days, the company promoted entirely from within — was this the fatal flaw?

In any event, for the plain old-fashioned organic chemist, the opportunities to learn and grow within the science were enormous. In research at a fundamental level, no one is really certain of what will yield useful results. Some with imposing credentials may think they have an accurate crystal ball, and some may even prove correct in their educated guesses. But in the long run, innovation is best served by research leaders who know when to stand aside — and how to choose people who don’t require nagging supervision. The chemists at Kodak, free to roam, were devoted experimentalists and produced a huge amount of new work, including new synthetic techniques, new reactions, and new organic compounds.

Of course, every chemist took the company course in photography, one that covered both theory and practice. It gave everyone an intellectual nudge toward the practical problems of image-making with silver-halide emulsions. And there was a photography-related testing program. Each new compound was sent to the Emulsion Research Division for testing — was it an antifoggant? A diffusion transfer agent? Did it promote undercut? And from time to time, a request would come back for more of a particular compound that had proved interesting. But I was quite free to explore my favorite field — heterocyclic chemistry. I might have done it all for room and board, but I was paid a decent salary and, in addition, got that famous annual wage dividend. The dividend was a result of a profit-sharing plan begun by George Eastman — to discourage socialist tendencies. Such rewards helped me endure the long snowy winters of Rochester.

Curiously, at each implosion, the mood was festive, and the onlookers cheered. I don’t think the cancelled-stock holders cheered.

The company had accumulated an enormous expertise in the manufacture of photographic film. It had developed the precise system of emulsion coatings, the proper mixes of silver halides, the sensitizing dyes, and the dye couplers for the amazing color processes. And with all this knowledge, and the success of the Instamatic line, came the idea that nothing would ever change. Oh, there was some distant thunder — I recall the suggestion from Varian Associates’ Edward Ginzton that his company was looking for an electric camera. This was back in the sixties, after I had bought some Varian stock. Yet within Eastman Kodak, I heard it said that, like the internal combustion engine (so help me), silver photography was such a perfect invention that it could never be replaced. Perhaps voicing this assumption was a gesture of loyalty to the company. Widely held, it lightened the burden of its top executives. Any far-reaching decisions, however imperative in the light of reality, could be postponed, if not altogether avoided. Still, as early as 1975, the executives had good reason to believe that digital imaging would, sooner or later, replace silver photography as a means of taking pictures. In that year, Steve Sasson, an electrical engineer working in a Kodak laboratory, constructed the first crude digital camera.

Looking back, I can recall seeing signs of fatty degeneration within the company. There were organizational slots being filled, but little work to occupy those who filled them. Some employees seemed to be struggling to find things to do. And I myself wondered, from time to time, why I was there. Perhaps I should have been replaced by an electrical engineer, though I couldn’t have guessed that at the time. I did leave my name on nine published papers and a number of company reports and memoranda, along with some novel unpublished work and two patents — neither patent of any real importance. My papers were sniffed at by certain academics, but I still have a collection of requests for reprints, and the papers are still referenced here and there. Certain compounds I made were superior antifoggants — but fogging isn’t a problem in digital imaging, at least not fogging by allylthiourea.

During my stay at Kodak, one new road to possible profit was almost, but not quite taken. The company hired a professor away from academe to establish a testing program, meant to identify potential drugs among the huge number of new compounds prepared by the organic chemists. But Kodak fired the man not long after it hired him. The “powers that be” decided they didn’t want to get involved in the making and marketing of drugs. I remember being surprised by the firing — having already made organic compounds by the boxful and sent them off to some storage area. I’ve always wondered what happened to those compounds and whether some wonder drug existed among them. Much later, of course, Kodak bought Sterling Drugs, to give it “worldwide infrastructure” — for what exactly? If it had tested its own compounds as potential drugs, it might have made plenty through licensing, without acquiring an enormous debt.

Within Eastman Kodak, I heard it said that, like the internal combustion engine, silver photography was such a perfect invention that it could never be replaced.

As I indicated earlier, the Eastman Kodak Company had for years been more than just a camera-and-film company. Eastman organic chemicals were common in research laboratories everywhere, and the company marketed its manufactured polymers through Tennessee Eastman and Texas Eastman. Yet none of these functions now belong to the parent company — all were “spun off” as the Eastman Chemical Company in 1993. The following year, Kodak sold its remaining interests in Sterling, the drug company it had bought just five years earlier. Its management team had apparently given up on its idea of diversification. It had decided instead to concentrate on its core business — and cast away those profitable but distracting assets. From diversification to downsizing in five years? This is the picture of a floundering management team.

Kodak’s decline had, I’m sure, a terrifying effect on Rochester. The misfortunes of the company nearly erased the value of Kodak stock — and in reorganizing under bankruptcy, the company cancelled the stock. It created new stock shares, but the former stockholders were left with nothing. In the 1960s, the earlier issue had risen above $140 a share, then split and headed upward toward its previous high. The annual wage dividend was calculated, in part, on the value of the common stock, and the company’s stock acquisition plan provided many employees with what they regarded as a nest egg. Local businesses prospered from Kodak’s payroll. I can recall Christmas shopping at the B. Forman Department Store. Mr. Forman would walk the floor, and once, when I told him I worked at Kodak, he said, “Good, you can have the whole store.”

Life was good in those days. Eastman Kodak was not just a company, but a city within a city, a kind of mini-civilization. There was a Kodak Park Athletic Association, whose softball team once had a pitcher named “Shifty” Gears — his feats are now recorded in the National Softball Hall of Fame. And there were the Kodactors, the employees’ prize-winning theatrical group. Many of Kodak’s professional people lived on the same street and attended the same social gatherings. For perhaps too many employees, the company was their world, encouraging the sense of a carefree existence. And it all proved to be a summer before the storm.

From diversification to downsizing in five years? This is the picture of a floundering management team.

Ah, but I recall my years at Kodak as a time of youth and affluence. I took dates to Eddie’s Chop House, heard my favorite piano player, Erroll Garner, at the Eastman Theater, and swam and sun-bathed at Ontario Beach. I recall talking to a Ph.D. candidate who had worked at Kodak and, when he got his degree, planned on returning to “Uncle Kodie.” Alas — Kodak is no longer Rochester’s rich uncle. And the world it created is now, if not gone, then greatly contracted.

Small businesses along State Street have disappeared — their clientele was mostly Kodak employees. From what I’ve read and seen online, Kodak Park, once an enormous manufacturing and research complex on Lake Avenue, is now much reduced. A number of its once-important buildings have been imploded. And curiously, at each implosion, the mood was festive, and the onlookers cheered. I don’t think the cancelled-stock holders cheered.

Markets change — and when markets change, management must respond. As Ludwig von Mises told us long ago, a business makes its profits by adjusting its total business practice to market conditions. Fujifilm, the Japanese photographic company, adjusted competently; Kodak simply failed to adjust with comparable skill. The capacity for sound decisions simply wasn’t there. Kodak’s leaders had the future in their hands, but didn’t recognize it — or found some excuse for evading the necessary decisions. In recent decades, the company had anointed a procession of George McClellans, when what they needed was a Robert E. Lee, or even a Nathan Bedford Forrest. Before stepping aside in March 2014, CEO Antonio Perez was himself a significant drain on the company’s assets. But he did smash and bash the company into some new things, leading it into and out of bankruptcy, drumming up trade in business markets. In the process, silver-emulsion coating became touch-screen technology and color photography became ink-jet printing. And now, the company’s stock is back on the Big Board. There may yet be a life for Eastman Kodak — though I suspect it will be as a mere pebble in a huge cultural and economic crater.

SOURCES
“Antonio Perez.” Forbes. www.Forbes.com/profile/antonio-perez/
“Antonio Perez Won’t Have Many More Kodak Moments.” New York Business Journal, 1 Aug. 2013. www.bizjournals.com/newyork/news/2013/07/31/kodak-ceo-to-resign-after-bankruptcy.html?page=all
Appelbome, Peter. “Despite Long Slide by Kodak, Company Town Avoids Decay.” The New York Times, 16 Jan. 2012. www.nytimes.com/2012/01/17/nyregion/despite-long-slide-by-kodak-rochester-avoids-decay.html?pagewanted=all&_r=0
Brancaccio, David. “Decline of Kodak Offers Lessons for U.S. Business.” Marketplace, 20 Dec. 2011. www.marketplace.org/topics/business/economy-40/decline-kodak-offers-lessons-us-business
DiSalvo, David. “The Fall of Kodak: A Tale of Disruptive Technology and Bad Business.” Forbes, 2 Oct. 2011. www.forbes.com/sites/daviddisalvo/2011/10/02/what-i-saw-as-kodak-crumbled/
Dobbin, Ben. “Digital Camera Turns 30 — Sort Of.” NBC News.com, 9 Sept. 2005. www.msnbc.msn.com/id/9261340/ns/technology_and_science-tech_and_gadgets/t/digital-camera-turns-sort/
“Eastman Kodak Building 23 Demolition.” You Tube, 1 July 2007, inter alia. http://www.youtube.com/results?search_query=eastman+kodak+building+demolition
Feder, Barnaby J. “Kodak’s Diversification Plan Moves into a Higher Gear.” The New York Times, 25 Jan. 1988. www.nytimes.com/1988/01/25/business/kodak-s-diversification-plan-moves-into-a-higher-gear.html
Fruedenheim, Milt. “Business People: Senior Kodak Officer to Head Sterling Drug.” The New York Times, 21 Aug. 1988. www.nytimes.com/1988/08/12/business/business-people-senior-kodak-officer-to-head-sterling-drug.html
“Harold (Shifty) Gears. The National Softball Hall of Fame. www.asasoftball.com/hall_of_fame/memberDetail.asp?mbrid=177
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“Kodak to Sell Remaining Sterling Winthrop Unit: Drug: Smith Kline Will Buy the Consumer Health Products Business for $2.925 Billion.” Ibid, 30 Aug. 1994. http://articles.latimes.com/1994-08-30/business/fi-32940_1_health-products-business
LaMonica, Paul. “The Anti-Kodak: Eastman Chemical.” CNN Money, 27 Jan. 2012. http://money.cnn.com/2012/01/27/markets/thebuzz/index.htm
Mees, Charles Edward Kenneth. The Organization of Industrial Scientific Research. New York: McGraw-Hill, 1920. http://books.google.com/
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Mises, Ludwig von. Human Action: A Treatise on Economics. Third Revised Ed. Chicago: Contemporary Books, 1966.
Munir, Kamal “The Demise of Kodak: Five Reasons.” The Wall Street Journal, 26 Feb. 2012. http://blogs.wsj.com/source/2012/02/26/the-demise-of-kodak-five-reasons/
“The Rise and Fall of Eastman Kodak.” The Night Owl Trader, 25 Sept. 2011 and added posts. http://nightowltrader.blogspot.com/2011/09/rise-and-fall-of-eastman-kodak.html
Pfanner, Eric. “Fujifilm Finds Niche With Niche With Old-Style Cameras That Mask a High-Tech Core.” The New York Times, 19 Nov. 2013. www.nytimes.com/2013/11/20/business/international/as-digital-camera-sales-sputter-fujifilm-finds-its-niche.html
Scheyder, Ernest. “Focus on Past Glory Kept Kodak from Digital Win.” Reuters, 19 Jan. 2012. www.reuters.com/article/2012/01/19/us-kodak-bankruptcy-idUSTRE80I1N020120119
“Summer Arts Theater Presents Two Plays.” Spencerport NY Suburban News, 23 July 1964. inter alia. (The Kodactors). http://fultonhistory.com/

http://www.bizjournals.com/newyork/news/2013/07/31/kodak-ceo-to-resign-after-bankruptcy.html?page=all




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Iron Man 3: The Low-Down

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Literature is fraught with examples of the hero who longs to be ordinary: the prince who covets the life of the pauper, the mermaid who trades her magical tail for the legs of a human, the gods who walk the earth and mate with mortals, the bewitching bride who abandons her powers to marry a mortal. These are just a few.

Iron Man is such a hero. He is torn between a sense of duty to protect his country from the attacks of weaponized soldiers and his desire to enjoy the luxurious lifestyle his successful entrepreneurship affords him. In Iron Man 3 he spends much of his time outside the super suit, fighting the bad guys not as Iron Man but as his alter ego, Tony Stark (Robert Downey, Jr.).

I like Iron Man. He’s my favorite superhero. First, his alter ego, Tony Stark, is anything but a “mild mannered” Clark Kent. He’s spunky, witty, and unpredictable. Sometimes it’s hard to know whether he’s a visionary or a maniac. Or just manic. I also like the fact that he isn’t stoic. When he gets punched, he bruises and bleeds. In this episode he suffers panic attacks too.

Stark is a scientist, not a mutant as most of the superheroes are. He designed and built his own superhero suit to counteract a nearly deadly injury to his heart. He calls himself “a mechanic” because ultimately, like most practical scientists, he fixes things. He’s also an entrepreneur. Yes, he’s wealthy, but he earned his wealth through intelligence, capital, and hard work. I like that.

OK, he also made much of his money by creating weapons of war, so I can’t give him an A-plus as a libertarian . . . but hey, he’s just responding to the market! And it’s the Department of Defense, not War, that he helps, right? But it does bother him that his scientific experiments contributed to the technology for creating the weaponized soldiers who are now attacking America. He feels responsible.

Superheroes have become our modern mythology, representing the changing values and beliefs of a changing culture.

As this episode begins, Stark is no longer the bon vivant playboy of previous iterations; he is now in a “committed relationship” with Pepper Potts (Gwyneth Paltrow), his long-time, longsuffering assistant. Pepper is no longer a wallflower in the background but a buff and courageous überwoman who even gets to “suit up” in the Iron Man paraphernalia a couple of times. Nevertheless, she is kidnapped, early on, by an evil anatomist (Guy Pearce) who has created a new army of weaponized soldiers. Meanwhile, the world is threatened by an Osama-like villain known as “The Mandarin” (Ben Kingsley) who is taking credit for suicide bombers exploding in public places throughout the world. Tony spends most of the film fighting these hybrid soldiers, thwarting the maniac, and rescuing his damsel. He vows: “No politics or Pentagon this time — just good old fashioned revenge.”

While chasing down clues to the bad guys in a small Tennessee town, Tony runs into a cute kid named Harley (Ty Simpkins) who helps him fix his Iron Man suit and get it recharged. The sweet, casual interplay between these two characters creates the best part of the film. Tony doesn't have any experience with kids, and as a result, he talks to Harley in the way he would to a grown-up, and Harley responds as though they were best buds. Their conversations are charming and natural.

Iron Man 3 is not as good as the original, but it is certainly better than the second episode. The story is tighter, the villains are stronger, and the character development is deeper. Stan Lee, who created Spider-Man, Iron Man, and many other superheroes of the Marvel comic book franchise, makes his usual cameo appearance, this time as the judge at a Tennessee beauty pageant. Jon Favreau, who directed the first two Iron Man movies, chose to produce and act in this one instead: he plays Tony's overzealous bodyguard, Happy. It's not great filmmaking by any means, but it’s interesting as a cultural artifact.

Superhero movies are the safest bet for Hollywood studios today. They require big budgets, but they bring home big box office receipts. No fewer than four are slated for release this summer. Fans attend midnight showings on the first day of release, and audiences applaud enthusiastically throughout the show. It's almost like attending an old tent revival meeting. This isn't terribly surprising, because superheroes have become our modern mythology, representing the changing values and beliefs of a changing culture. The various superheroes continue to cross over into each other's mythologies, with numerous references to each other within their separate movies. It is worth watching the films if only to see how their characters and values change from year to year, and to observe the cultural phenomenon they have become.


Editor's Note: Review of "Iron Man 3," directed by Shane Black. Marvel Studios, 2013, 130 minutes.



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