In Defense of Capitalism: A True Love Story

My writing is a byproduct of my investment process, I think through writing. I don’t do movie reviews and don’t watch Michael Moore’s movies. A Denver Post reporter invited me to a private showing of Moore’s latest flick last Monday Capitalism: a Love Story, it stirred up a lot of memories and I recently finished reading Atlas Shrugged which had a great impact on me. A combination of all those things motivated me to write this.

In the 1980s, in Soviet Russia, a few times a year, my class walked to a movie theater, where we were shown a documentary. Attendance was mandatory. The documentaries were different but the themes were the same: to the accompaniment of patriotic music, we learned about the righteousness of socialism, the greatness of Mother Russia, and the intelligence and foresight of our great leaders. To demonstrate how good we had it, we were shown images of “decaying” American capitalism. Of course, capitalism did not get the benefit of patriotic music as we were shown the poverty-stricken homeless, the KKK burning crosses and lynching blacks, and Russia-hating capitalists being poisoned by hamburgers (of course, later I learned this part about hamburgers was not a complete lie).

This past weekend Americans voluntarily spent a few million dollars to see a documentary by Michael Moore – Capitalism: A Love Story. But don’t kid yourself, this piece of work is not a documentary. It lacks objectivity and has no intention of seeking the truth. It is anti-American and anti-capitalist propaganda. Mr. Moore is a talented propagandist; in Soviet Russia this documentary would have gotten him a medal and elevated him into a state hero.

A successful propaganda initiative has to have three elements: (1) to influence attitudes, instead of providing information, (2) to selectively present facts (i.e., lying by omission) to achieve a certain synthesis, and (3) to get an emotional rather than a rational response.

There is little information in this movie. Moore spends the bulk of the film going through our country’s trash and presenting it as the main course. For instance, a corrupt judge sentences innocent teenagers to spend months at a privately owned (i.e., for-profit, nongovernmental) youth-correction facility, while the judge is getting kickbacks from the facility owners. Moore interviews these poor teenagers, and we feel bad for them, as we should. We feel angry. Moore directs this anger towards capitalism (i.e., private enterprise): it is rotten and corrupt. Of course, the fact that corruption and bribery are the rare exception in the US, not the rule (as in Russia), is never mentioned.

Really, if you want to make a successful propaganda movie, you must evoke emotion and rightly or wrongly direct it at your subject of hate – in Moore’s case, capitalism. Moore shows families being evicted from their houses, in which some of them have lived for twenty years, and some of them have kids. Again, we feel bad for these people, we feel their pain, and we want to help. We are angry. That’s what Moore wants. But should we be angry at the bank that has given these people a loan? Or perhaps we should accept the fact that some people will make bad financial decisions, and they’ll pay a price. It is the easiest thing to blame a bank, or capitalism – they are not very popular today.

But let’s do the impossible, let’s humanize a bank. Let’s say you and I and a few friends put our life savings together and start a bank. We take deposits and make loans. Should we “forgive” a loan on a house to a person who overextended, made bad financial choices, or found himself facing hardship and unable to earn his way out of it? If we do enough of this “forgiving” we’ll go bankrupt, our kids won’t go to college, and we’ll need to ask someone else to “forgive” us for the loans on our houses, credit cards, etc. I am not even mentioning our depositors losing their money (and the FDIC – the taxpayer – bailing them out) and our employees losing their jobs.

So the heartless bank – you and I and a few friends – have to make a choice between sacrificing the well-being of our families for the sake of strangers. What would you do? See, this point is too rational and lacks the sensationalism of good propaganda; and thus Mr. Moore, who I am sure thought of it, omitted it.

Moore attacks BofA (BAC) for not resorting to charity and not extending a loan to a factory in Michigan, even after BofA received TARP money. The same logic I just went through applies to the huge, unpopular BofA. Should BofA have thrown away money in a loan to the factory, knowing that the factory would not be able to repay it? Is this not what got us into the present problem in the first place?

Banks and Wall Street in general played a role in today’s crisis, but they were just one of many responsible players. Consumers in pursuit of keeping up with the Joneses overextended themselves (with the exception of cases of outright fraud, no one was forced to buy a bigger house). Rating agencies were getting paid by the customers they were rating. The Federal Reserve kept rates at very low levels for too long, politicians pressured lending at any cost, regulators were not regulating – and the list goes on. Vilifying banks as the only culprit is intellectually dishonest and a very myopic way to look at this complex problem, and Mr. Moore does just that!

Moore brought a brigade of priests to proclaim: “Capitalism is evil, immoral”; “Jesus doesn’t like the rich”; “the rich will have a hard time getting into heaven.” Two employees from a factory, talking on camera, made a really important point about capitalism. They said something along the lines of, “Maybe we should start a cooperative or something, but no, we cannot; we don’t have the money, we are not capitalists.”

Ayn Rand said it well in Atlas Shrugged:

But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy?

Moore neglects to admit that capitalism has brought people out of poverty and socialism sunk them there. He blames rising health-care costs on HMOs, though HMOs are just a pass-through vehicle between payers and service providers. He accuses capitalism as a system that “allows getting away with paying so little.”

He offers no alternative to our “broken” capitalism system other than let’s have “democracy.” This is laughable, as democracy is not a market system, it is a political system. What he wants is a command-based economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Ayn Rand’s Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s version of a “democratic” economy (still not sure what that means). Mr. Mouch decided how much everyone produced, at what prices goods were sold, and what “fair” wages everyone got paid. In the end, despite sacrifice after sacrifice, Mr. Mouch’s economy collapses. Mr. Mouch’s visible “fair” hand fails to accomplish what the invisible “impartial” hand of the free market accomplishes so effortlessly.

Mr. Moore’s propaganda flick ends with pictures of the aftermath of hurricane Katrina. The images are powerful, full of emotion, and again in his final misdirection Moore manages to blame it on capitalism.

Comments

[Jasper M:]

"Mr. Moore’s propaganda flick ends with pictures of the aftermath of hurricane Katrina . . in his final misdirection Moore manages to blame it on capitalism."

Oh, that's Rich!
I am reminded of a quote from Disraeli, the British Prime Minister, who at one point predicted (accurately as it turned out) to the Queen that he would be out of office soon.
"We are most displeased to hear this" she said (she had gotten a bit fond of him by then). "But how can you be so sure?"
"Your Majesty, England has suffered 2 bad harvest in a row. And history has shown that the English people will surely turn on any government that demonstrates a consistent inability to effect the weather".

The only documentary I want to see from Michael Moore is an autobiographical piece on the lifestyles of total dirtbags.

Oct 07 04:45 AM

[Roger Knights:]

"He offers no alternative to our “broken” capitalism system other than let’s have “democracy.” This is laughable, as democracy is not a market system, it is a political system. What he wants is a command-based economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Ayn Rand’s Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s version of a “democratic” economy"

Let's set aside a blue state or two for him and his allies where they can show us how much better they'd do. Start with California.

Oct 07 05:17 AM

[Roger Knights:]

PS: And give them a huge loan at the start, so they'll have no excuse when they fail. "Let them have everything."

Oct 07 05:28 AM

[H.J. Huneycutt:]

This is mostly a good article. The author is very effective at discrediting Moore (who deserves to be discredited).

All the same, I've never seen any value in the silly capitalist versus socialist dichotomy that Ayn Rand promoted and Michael Moore currently promotes. Economics should be treated like a science; obviously, it's an "inexact science", but in general, people tend to act in certain ways when confronted with particular situations.

There's not a "more capitalist" or "less capitalist" way of doing things. "Capitalism" is merely a term used to describe the economic system that began developing in early Modern Europe (back to about the 13th Century in Italy). 14th Century Venetian capitalism, 17th Century British capitalism, 19th Century German capitalism, and 21st Century American capitalism only have so much in common with one another.

In essence, it is what it is. It's a realistic system; whereas, socialism is a pipe dream. Socialism is essentially a promise of a Utopian world that can never exist because human nature contradicts it. That's why attempts to create "socialism" ultimately fail. It can't be "created"; so instead, we get boneheaded attempts at micromanaging the economy.

I digress, though --- good article. I just think it works better as a critique of Moore and socialist thought than a true defense of capitalism.

Oct 07 08:00 AM

[Mad Hedge F...:]

ndr Let me tell you why I turned down lunch with Michael Moore last week, and why I am reviewing a movie that I will never see. His immense, bulbous frame waddled through San Francisco promoting his latest fiction masquerading as documentary, Capitalism, A Love Story. Michael has a problem with facts. He has a tendency to bend, twist, or alter real facts to fit into whatever story line, political viewpoint, or bias he is peddling at the moment. In Roger and Me (1989), he made the case that GM’s problems sprang from paying its workers too little, not too much. In Bowling for Columbine (2002) he equated violence in the streets with our missile defense shield. I find this approach an affront because I have spent a large part of my career bending over backwards to make sure my stories are accurate and true. Michael obviously harks back to an earlier age of reporting, when “You never let the truth get in the way of a good story.” In the trailers it appears that much of the movie involves humiliating security guards attempting to prevent his entry into firms like AIG (AIG) and Goldman Sachs (GS), ostensibly some of the same working stiffs he is trying to defend. I find this neither informative, nor entertaining. In fact, Michael Moore’s principal business is to dress up as a working class hero so he can make hundreds of millions of dollars selling questionable cheap shots to the uninformed. He is an embarrassment to the causes he claims he is advancing. I have never walked out on a film, but I’m such a tightwad that I hate wasting two hours of my life and $7 on my senior citizen ticket. Better just not to go.

Oct 07 08:19 AM

[Pat C:]

Hopefully Michael Moore's outrageous movie will pull everyone to the middle which is where we need to be to solve the problem. Personally, I believe, he creates more problems than he solves, but at least he may get ordinary Americans thinking about our current economic situation so we can find answers.

Oct 07 10:23 AM

[Tony Petroski:]

It takes a Russian to show the Americans how good they have it.

Thank you Vitaliy.

The Russian that firmly cemented my love of capitalism was Aleksandr Solzhenitsyn and his Gulag Archipelago--those volumes sent shivers through my spine and made me realize that whatever defects the society of a free people produced--and there are many, those defects pale in comparison to the horrors of socialism, either of the national or international kind.

The Madman weighs in only this time with a reverse name-drop "I did not go out to the movies with Michael Moore even though I was invited." Nice going madman.

Irving Kristol wrote "Two Cheers for Capitalism." There are virtually no defenders of capitalism giving three cheers. Churchill said that capitalism was the worst system, except for all the others--that's about one cheer.

Perhaps Milton Friedman said it best: Capitalism, as it really exists, with all its faults is always compared to socialism as it might exist.

Two and a half cheers for capitalism.

Oct 07 10:58 AM

[thiazole:]

This is such a good article, I'm going to link it to my Facebook page. Thanks Vitaliy!

Oct 07 02:15 PM

[Jasper M:]

(I do believe that's the best post I've ever seen from Mad Hedge!)

Oct 07 04:15 PM

[thiazole:]

I was thinking the same thing - it was actually about the article!


On Oct 07 04:15 PM Jasper M wrote:

> (I do believe that's the best post I've ever seen from Mad Hedge!)

Oct 07 07:35 PM

[Old Trader:]

Pat,

A good sentiment, but totally unnecessary. All the average American needs to do is check the value of their 401k/IRA, take a look around their place of employment and note all of the missing faces, and see the foreclosure notices in their neighborhoods.

They can save the $8-$10-$12 price of the movie ticket.


On Oct 07 10:23 AM Pat C wrote:

> Hopefully Michael Moore's outrageous movie will pull everyone to
> the middle which is where we need to be to solve the problem. Personally,
> I believe, he creates more problems than he solves, but at least
> he may get ordinary Americans thinking about our current economic
> situation so we can find answers.

Oct 07 08:22 PM