For the past 20 years, my assignment at The Washington Post has been to explain and interpret arcane and complicated economic developments to general readers in ways that are interesting, relevant and credible. It’s left me with deep admiration for those who do it well — a list that now includes two young documentarians, Jim Bruce and Jacob Kornbluth.
Neither Bruce (“ Money for Nothing ”) nor Kornbluth (“Inequality for All”) has much of an economics background. Bruce worked on films such as the horror flick “Freddy vs. Jason,” although he did start a financial newsletter in 2006 that warned of the coming crash. Kornbluth wrote and directed several indie dramas and stage productions in Los Angeles.
You get the sense that both originally came to their projects with an ideological agenda: Bruce, from the right, to expose the dangers of the Federal Reserve’s easy-money policies; Kornbluth, from the left, to show how the hollowing out of the middle class is undermining our economy and our democracy. As with today’s markets for best-selling books and cable television news, the market for documentaries is showing signs of political polarization. Yet despite their ideological motives, both have produced subtle, sophisticated and compelling economic arguments that are well grounded in fact and solid analysis.
The theme of “Money for Nothing” is that it’s not free markets that are to blame for the recent economic crisis but instead the well-meaning but excessive manipulation of those markets by a Federal Reserve that clings arrogantly to the conceit that it can successfully micromanage the ups and downs of the economic cycle.
In Bruce’s telling, it was the Fed’s easy-money policies that created the stock market bubble of the 1990s and the real estate bubble of the past decade. And when those bubbles burst and the economy teetered, it was the Fed that compounded its mistakes by riding to the rescue with yet more easy money to bail out the banks, the financial markets and an ailing economy.
This dangerous addiction to easy money was confirmed several weeks ago when the Fed announced that it would continue to pump an additional $85 billion into the financial system each month rather than proceed with plans to finally begin reducing the extraordinary monetary stimulus begun five years before. On cue, the stock market rallied to new highs. As narrator Liev Schreiber said of earlier bouts of “quantitative easing,” it’s the economic equivalent of “giving the drunk another drink.”
But wait! What about those sleazy mortgage brokers and greedy bankers and compromised rating agencies? Weren’t they also to blame for the financial crisis? To answer that objection, Bruce turns to Peter Fisher, a former Fed and Treasury official, who explains that blaming the money men is like blaming faulty rivets when an overheated boiler explodes. According to Fisher, the Wall Street crowd was merely responding to the distorted incentives, false signals and illusion of prosperity created by the Fed’s easy-money policies.
The chief villain of Bruce’s tale is former Fed chairman Alan Greenspan, whose undue faith in the self-correcting nature of free markets was exceeded only by his excessive faith in his own ability to manipulate them. Ben Bernanke, the current chairman and Greenspan’s successor, also is portrayed in a harsh light, not only for embracing Greenspan’s cavalier attitude toward bubbles but also for his willingness, in the name of economic stability, to print gobs of money to prop up financial markets once the bubble burst — and then deny that’s what he’s doing.
This monetarist view that it’s all the Fed’s fault is, of course, an oversimplification. Even if you buy the boiler analogy — which I don’t — you’d have to assign at least equal blame to China and other trading partners, which eagerly provided cheap and easy financing for large U.S. trade deficits to keep their export economies growing. While Bruce is right to focus on the fundamental imbalances that set the stage for the financial crisis — and that persist to this day — he ignores the increasingly global nature of those imbalances.
What makes “Inequality for All” a more entertaining and affecting film is that it features real-world characters who allow it to be more human and more moving.
You can’t help but empathize with the young Hispanic couple who have fallen out of the middle class and now live on an economic cushion of a full tank of gas, a pantry full of canned goods and $25 in the checking account. You share the quiet anger of the once-comfortable Mormon couple whose conservative beliefs give way to union activism when faced with the reality of declining wages and record corporate profits. You revel in the honesty of the wealthy Seattle business owner who can’t figure out why he even needs the $10 million he made last year and acknowledges he’s no more of a “job creator,” to use the familiar Republican construction, than the customers who buy his pillows.
You also can’t come away from the film with anything but admiration for Robert Reich, the diminutive Berkeley professor and Clinton-era labor secretary who is the narrator and hero of the movie, as well as Kornbluth’s collaborator. Reich has been kvetching about income inequality since before it was much of a problem, honing his argument into what has become a highly polished critique that he delivers regularly as a talking head on radio and television, to his amphitheater-size classroom at Berkeley, and now to a nationwide movie audience.
The strength of “Inequality for All” is that it doesn’t demonize rich people. (In that respect, it is quite unlike another documentary out this month, “99% — The Occupy Wall Street Collaborative Film.”) Reich sees the growing gap between haves and have-nots as the result of long-term forces such as globalization and technology acting on a free-market system. His pitch, however, is that the large and growing gap between the rich and everyone else is neither desirable nor inevitable but can be reversed by tweaking the rules by which markets operate and refashioning the political, social and legal contexts in which capitalism exists.
And that, ultimately, is what links these two illuminating documentaries — their shared vision of a more sustainable and widely shared prosperity based not on easy money or squeezing workers wages but on the things that have always generated long-term economic growth: investment in education, basic research, the latest technology and modern public infrastructure.
There is nothing particularly extreme in either viewpoint. Bruce is not some gold bug who insists on doing away with the Federal Reserve, just as Reich and Kornbluth are not closet socialists hankering for government to micromanage the economy and massively redistribute wealth. What they give voice to in both films is a deep frustration with an economy that is not delivering and a political system that seems incapable of doing anything about it.
Pearlstein is a business and economics columnist for The Post. He also is a professor of public and international affairs at George Mason University.
At Landmark’s Bethesda Row, Landmark’s E Street Cinema and Angelika Film Center.