Capitalism: A Love Story

Michael Moore’s new documentary, Capitalism: A Love Story explores the current economic crisis in the United States, and presents his view on how capitalist greed has brought us to this point. We see stories of people evicted from their homes, laborers laid off from their jobs, and politicians expressing their frustration with the choices thrust upon them.

I have mixed feelings about the movie.

I tend to enjoy Moore’s films. Bowling for Columbine was fascinating, and Fahrenheit 9/11 succeeded at getting me good ‘n riled up. Sicko was full-on horrifying. For some reason, though, while I enjoyed many parts of Capitalism, I also took umbrage at a few parts.

We see two middle-class working families being evicted from their homes, and of course we’re meant to be outraged over the treatment they receive. We know they stopped making their mortgage payments and are thrown out by the bank, but we don’t find out how they got to that point.

Did they an ARM mortgage with a low interest rate, and then find themselves a couple of years later with a jacked-up interest rate and a payment they can’t afford? Then shame on the homeowner for not taking the time to research and understand what he/she is signing. If you don’t understand, find out before you sign your life away.

On the other hand, let’s be honest and accept that they may have been tricked into it by a smooth-talking salesperson. Shame on the mortgage loan officer who may not have done a good job explaining the risks. Shame on the bank that approved the mortgage based on the low ARM payment, not the eventually higher payment. There’s the potential for a lot of blame to pass around here, and legitimately so.

There’s also a whole segment on the Republic Doors and Windows situation, where the company couldn’t make its payroll and wanted a loan from their bank. The bank, seeing that the company was in financial trouble, refused to loan them money that they might not be able to pay back. So when the company didn’t pay its employees, the bank was blamed. Well, as a customer (and an employee!) of the bank in question, I’m glad that the bank didn’t want to loan my deposits (and my future paycheck) to a company that wasn’t likely to be able to pay it back.

Yes, I’m a bank employee, and I’m biased. But seriously, this movie seems to suggest that homeowners who can’t pay their mortgage should be allowed to keep their home anyway, and that companies who can’t pay their bills should still be entitled to a loan from the bank despite being unable to pay it back. So essentially, people who can’t pay bills should have the banks pay them anyway, which means all of the other bank customers should have to shoulder the burden.

Don’t get me wrong: these are heartbreaking stories of personal loss, and I genuinely feel bad for the people who lose their homes or their jobs due to circumstances outside their control. I just think we’d be better served understanding how they got there, not focusing on the financial system that expects people to be held accountable to their obligations. After awhile there needs to be an element of personal responsibility, and we shouldn’t feel entitled to a free house or a loan that we don’t have to pay back.

There are great scenes in the movie talking about the vehement push from the White House — in both the Bush and Obama administrations — to take drastic actions in response to the burgeoning crisis. Hearing some of the politicians lamenting about the pressure to vote in favor of the “bailout” bills, with no time to really understand what they were voting on, was fascinating.

And this isn’t just “buyer’s remorse” with politicians backing off of their previous stances, as we got to see actual footage of their speeches on the house floor saying that we shouldn’t do this. It was nice to see some of the historical debate.

Frankly, I wish more of the movie was like those scenes. The parts that were less “tugging at the heart strings” and more “here is what happened” were compelling, and that’s the story that needs to be told. The film works best when it’s an actual documentary, educating the public and helping tell the story of what we need to do differently.

If you’re interested in the debate about rich versus poor, personal responsibility versus guaranteed rights, capitalism versus “socialism” and so on, go see this film. Even if you don’t agree with the stances that Michael Moore takes on issues, it’s still thought-provoking and great material for impassioned discussions.

Just promise to keep an open mind and consider all sides of the debate, regardless of your personal leanings… M’kay?

6 Responses to Capitalism: A Love Story

  1. Dave G says:

    Well put kevin. I don’t get a chance to read all of your blog entries, but I couldn’t agree more with your stance on this. To your point, while you feel for the families and companies going through hard times, personal responsibility needs to be the highlight of all this.

    If you’re ready to get a mortgage, own a credit card, open a small business, etc then be prepared for the risks. Agreed that the financial system certainly needs reform, but while we’re operating with what we got you need to know the rules. Ignorance of the law isn’t a suitable defense in criminal cases, and the same applied here.

    Financial insititutions have a vested interest in your success when they work with you because your success translates into monetary success for them as well.

    My opinion is often disregarded since I work for one of “them” as well and they they think i’m just regurgitating the progpaganda we’re fed, but people need to stop looking for the scapegoat and focus on how to make sure we’re never in this situation again.

  2. Anthony says:

    Regarding “the financial system that expects people to be held accountable to their obligations”…
    I think part of the shift in public opinion is that while the financial system holds individuals accountable, some (not all of course) financial institutions haven’t been held accountable for their own debts. So some say “If you get bailed out, why not me?”. If I owe the bank money, they can chase me to the ends of the earth, while some corporations have been able to scam the system and get out of their responsibilities. I’m not saying anyone or anything should be bailed out at all, but that horse has left the barn/genie out of bottle/pandora’s box opened etc.

  3. gatoruptown says:

    Just remember: the “bail-out” of the banks was a series of loans, not free money. The bank I work for has paid $893 million in interest payments alone so far, and will have to repay the original principle still.

    That’s why I get annoyed at the overuse of “bailout” in these discussions… It’s definitely not coming without a price.

  4. I think Moore’s primary issue vis-a-vis the foreclosures is that housing shouldn’t be such an outrageously expensive thing in the first place. He made a point of mentioning that true home ownership (not just mortgages) were within reach of more middle class families in the past than they are today. My understanding is that if the market drives real estate prices so high that ordinary people can’t afford to own a home, then the market price isn’t just and some sort of correction needs to be applied.

    As for the banks, I agree that liquidity needed to be restored. I think the government failed in its responsibility to taxpayers when it abdicated its authority to oversee how that money was spent.

  5. gatoruptown says:

    Michael, you’re missing the point of “market rates” — the market will charge whatever people are willing to pay. If not enough people can afford to pay the asking price for houses on the market, then the houses won’t sell and the price will come down. If people keep paying the “market rate” for homes, builders will see the opportunity and create more houses to sell at that price.

    What we’re facing right now IS the correction you say needs to be applied. Housing prices got way too high, and now people can’t afford to pay them, so prices are coming down in a hurry. New construction is being halted, because there isn’t a market to purchase them. The correction is in full, brutal swing.

    Here’s the problem: it’s sudden, and relatively unexpected. It didn’t follow the normal gradual adjustments that we’d expect from a market economy — prices shot up with unabashed enthusiasm and unfounded certainty that home values would continue to rise, and they’re plummeting with equal mania as people panic and the economy tanks.

    In short, it sucks. But we’ve just got to suffer through it, as we’re seeing the correction that should’ve happened sooner (and less traumatically) if people had been more realistic and cautious.

  6. Kevin, the market created lots of short-term incentives for people to “purchase” homes they couldn’t afford. Values were distorted–in some cases by government subsidy (lobbied for by the agencies that stood to profit and some well-meaning liberal idiots).

    This is the crux of the problem with capitalism. People are not fundamentally rational. As a species, we generalize our own experiences, trust anecdotes over data, and have a very difficult time considering long-term issues in anything but the most abstract sense. Now you may say the market disproportionately rewards the few of us who are better at those things, but for a long time it very clearly did not. The market incentivized the extension of credit to patently unworthy individuals and companies because there was profit to be made in the short-term. Now that the “correction” is here, it’s disproportionately affecting those of us who didn’t profit off the inflated values because the market ALSO incentivizes the ability to involve the government on your behalf. There’s a market for power and influence too and it’s also measured with dollars. It’s so self-evident that it’s become a slogan: socialized risk, privatized reward.

    I think Alan Greenspan said it best: too big to fail means too big. I understand the benefits of large banks but I think it’s beyond obvious that the costs are too high.

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