Michael Moore’s new movie: “Capitalism: A Love Story,” advocates for the idea that capitalism has failed. Since I haven’t seen the movie yet, all I have is this Larry King interview:
King: Are you saying capitalism is a failure?
Moore: Yes. Capitalism. Yes. Well, I don’t have to say it. Capitalism, in the last year, has proven that it’s failed. All the basic tenets of what we’ve talked about the free market, about free enterprise and competition just completely fell apart. As soon as they lost, essentially, our money, they came running to the federal government for a bailout — for welfare, for socialism. And I thought the basic principle of capitalism was that it’s a sink-or-swim situation. And those who do well, the cream rises to the top and, you know, those who invest their money wrongly or, you know, don’t run their business the right way, then they don’t do well.
So Michael Moore believes that the primary principle of capitalism is the Darwinian part (I would debate this, but he has a right to believe it): good businesses succeed, bad ones fail. Yet, isn’t that precisely what happened? The investment banks who said “oh, those credit default swaps are a bad idea, I will not purchase as many” are doing much better than the ones who did. The car companies that made efficient cars people wanted are doing better than the ones that didn’t. It seems like things are going exactly as Michael Moore’s imaginary capitalist might want. Well, with one exception:
And if you run your business the wrong way, where does it say that you or I or anybody watching this has to bail them out?
Michael Moore, upon hearing about the debate (that he himself described this way) between the capitalist method of letting a company “sink-or-swim” or the non-capitalist method of “bail[ing] them out,” he declared that he felt we shouldn’t choose the latter. Which side is he on? Similar misunderstandings persist:
I understand why everybody seemed to get behind it, because a lot of people were afraid, because these people down on Wall Street had taken our money and made bets with it. I mean, they essentially created this invisible virtual casino with people’s money — people’s pension funds, people’s 401(k)s. They took this money and they made bets. And then they made bets on the bets. And then they took out insurance policies on the bets. And then they took out insurance against the insurance — the credit default swaps.
Suddenly we’ve forgotten the entire “sink-or-swim” mentality. The only thing I can glean from this is that Michael Moore believes that pension funds and 401k’s are not “capitalist,” because he implies that they shouldn’t be used as “bets.” Michael Moore’s imaginary capitalist would approve of the failure of those who invested their 401k’s poorly. It’s fine to say that people’s retirement funds should not be subject to the whims of the stock market and should be guaranteed somehow, but if capitalism is all about “sink-or-swim,” you can’t blame it when things, well, sink. Michael Moore can’t even make his case against a strawman.
And here’s why I know it’s a strawman:
Moore: It didn’t change in terms of what I was looking at, but it did, obviously, offer probably the best example of why this is a system that is really corrupt at its core — corrupt because it doesn’t, it isn’t run with democratic — small “d” — democratic principles. There’s no democracy in our economy. You and I and the people watching have no say in how this economy is run. The upper 1 percent, the people down on Wall Street, the corporate executives, they’re the people that control this economy.
I think lots of people oppose capitalism for exactly the same reasons I oppose more central control economies: because they have this concept that a shadowy cabal of Wall Street corporate executives sit in a dark, smoky room and chart the course of our economy. And so the logical response is “hey! we should have more say in how this goes; if this is capitalism, it must be bad!” But this is just people’s limited understanding of complex systems — in the same way that a religious mind immediately jumps to “creationism” when they see the immense complexity of biology, someone like Moore says: ”I do not understand this, therefore someone must be controlling it.” Yet all those shadowy corporate execs were unable to prevent the destruction of so much of their wealth. Those at GM were unable to stop customers from fleeing their brand like the plague. It’s almost like something else is controlling the system.
And this is where Moore’s “economic democracy” is very scary. Yes, sure, accuse me of communist fear-mongering, but what else is he proposing? Right now our economy is “controlled” (using Moore’s terms, because he’s not going to get the reality) by the economic decisions of billions of people. I say “I want a Ford, not a GM!” and if enough people agree with me, Ford succeeds and GM fails. It’s easy to get behind the idea of snatching the reins of power away from greedy CEO’s, but if democracy is going to rule our economy, it’s going to get to vote whether or not I get a Ford or a GM too. Is this me exaggerating a slippery slope? What else does Moore imply? It’s precisely what our democratically elected government is doing right now with tariffs on tires, bailouts of GM and so forth — they are actually, democratically, influencing the economy. Yet Michael Moore doesn’t like these bailouts because he (accurately) sees this as (for better or worse) taking our money and giving it to powerful corporations. Does he want more or less economic democracy?
He really doesn’t get this:
Moore: I’ll tell you why. Because your employees are your biggest success. And, as you’ve noticed in the last few months, as the unemployment rate has gone up, so has the Dow Jones. Now, you’d think, you know, that Wall Street would respond with “Oh, my God, unemployment is going up, you know, this is bad for business.” But the reality is, is that Wall Street likes that. They like it when companies fire people because immediately the bottom line is going to show a larger profit.
King: Are you saying the investor is more important than the employee?
Moore: Yes. The investor — and the investor, these days, they want the short-term, quick profit and they want it now.
But as Moore just pointed out, the investor and the employees are not separate groups of people. Most people think “shadowy guy in a suit” when they think investor, but Moore was kind enough to point out that they are really pension plans and 401k’s — owned by you and me, employees of other companies. So if a company lays off a worker and splits up their salary amongst the investors, they were actually doing something Moore wanted: making the 401k’s and pension plans succeed. Which do you want?
A final insanity:
Moore: And General Motors, that year [20 years ago, when Moore made Roger and me], made a profit of $4 billion. And yet they had just laid off another 30,000 people. Now, why would you lay people off when you’re making a record profit of $4 billion?
I mean that was totally insane. But they thought, well, you know, we can make a bigger profit. Maybe we can make $4.2 billion if we move those jobs to Mexico. And so they’re always, you know, we can make a little bit more money if we do this. By firing those workers, Larry, they got rid of the very people who buy their cars.
Yes, the reason GM went out of business was because their laid-off employees weren’t buying enough of their cars. Does Moore seriously believe this? Even if GM were purely a company that made cars (it isn’t) it’s hard to imagine that even if every single person who had ever been laid off by GM over the last 20 years used that experience to decide to never buy another GM car, that it would’ve had the effect on GM that we see today. Ford was pretty damn aggressive with their workforce awhile back, but they seem to be doing much better than GM. It’s almost like there are other factors at work!
Is this really the best anti-capitalism can muster? A guy who thinks things actually work like this? I’m accusing Moore of attacking a strawman of capitalism, but I kind of feel like I’m cheating because he’s a strawman for anti-capitalism. The sad part is, he can’t even show that the evil thing he’s imagined capitalism to be is wrong.
And we haven’t even really explored the” everything else” that is capitalism. If you think it’s only CEO’s in dark rooms of Wall Street, then again, you’re an idiot. Every day that food shows up on your table, you go see a bad documentary at your movie theatre, or buy gas at the station, all of these things are capitalism not failing. It’s funny that he chose the last 20 years as the setting for his statements, especially when those 20 years have seen a billion people in China and India escape poverty as a result of adopting more capitalist systems. It is fine to say “I feel like we should do more to mitigate the times that capitalism results in crises” but you can’t condemn the entire system without analyzing the benefits as well — at least not without stating why you feel like those billion people are worth sacrificing for your more equitable financial system. And I’m not exaggerating — it’s Moore who said that the financial crisis was a condemnation of capitalism as a whole — as opposed to just a call for minor tinkering of our financial regulation, while leaving the rest intact.
A final cheap shot, and no, it’s not because he stole my last name: is anyone really going to listen to the economic advice of a guy who hangs out with Hugo Chavez?