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I don’t do movie reviews, and I haven’t watched Michael Moore’s previous movies. But when a Denver Post reporter invited me to a private showing of Moore’s latest flick, “Capitalism: a Love Story,” its subject matter enticed me to check it out.
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 was depicted without the backdrop of patriotic music and replete with images of poverty-stricken homelessness, 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).
By contrast, this past weekend, Americans voluntarily spent a few million dollars to see a movie by Michael Moore – “Capitalism: A Love Story” in much the same vein. Any who believed they were seeing a documentary were kidding themselves. It lacks objectivity and has no intention of seeking the truth. It is anti-American and anti-capitalist propaganda. Moore is a talented propagandist; in Soviet Russia this documentary would have gotten him a medal and elevated him to a state hero.
Successful propaganda has three elements: (1) to influence attitudes, instead of providing information, (2) to selectively present facts (i.e., lying by omission) to convey its message, 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) juvenile correctional facility, while 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, he tells us. Of course, the fact that corruption and bribery are the rare exception in the US, not the rule (as in Russia), is never mentioned.
To make a successful propaganda movie, you must evoke emotion and direct it toward the object of hatred – in Moore’s case, capitalism. Moore shows families – some with children – being evicted from homes in which some have lived for twenty years. We feel sorry 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 gave 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 easy to blame a bank, or capitalism as a whole – neither is 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 – has to decide whether to sacrifice the well-being of our families for the sake of strangers. What would you do? My rational perspective lacks the sensationalism of good propaganda; and thus Moore, who I am sure thought of it, omitted it.
Moore attacks Bank of America for not resorting to charity to extend a loan to a factory in Michigan, even after the bank received TARP money. The same logic I just went through applies to 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 played a role in today’s crisis, but they were just a few of many irresponsible players. Consumers in pursuit of keeping up with the Joneses overextended themselves. (With the exception of people who were victims 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 an intellectually dishonest and incredibly myopic way to look at this complex problem, but that doesn’t stop a polished propagandist like Moore.
In a display of unabashed sensationalism, Moore shows a brigade of priests proclaiming: “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 can’t; we don’t have the money, we are not capitalists.” Ayn Rand addressed this 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 sank them there. He blames rising health-care costs on HMOs, though HMOs are just a pass-through vehicle between payers and service providers. He derides capitalism as a system that favors businesses because it “allows them to get away with paying so little.”
He offers no alternative to our “broken” capitalist system other than “democracy.” This is laughable, as democracy is not a market system, it is a political system. What Moore wants is a command-based dictatorial economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s “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 and impartial hand of the free market accomplishes so effortlessly.
I was shocked when Moore mocked Americans for electing a movie actor, Ronald Regan, President. Twenty-five years ago, as a third grader in Murmansk, a city in the northwest part of Russia, I read the same mockery in my Soviet (unquestionably anti-American) textbooks, almost verbatim.
Moore’s propaganda 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 this natural disaster on capitalism.
Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007). To receive Vitaliy's future articles my email, click here.
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