I ventured to the mall last night to see “The Big Short”. How could I not? A commitment to watch every film on finance and political economy themes is not very committing.
I’ll get two things out of the way at the outset. First, the uptempo, jokey, quick-cutting style was effective enough. I’ll say more about what I think it contributes to the message of the film in a moment, but for now, consider me entertained. In particular, the Brechtian asides were great and left me wondering why this technique isn’t used more often. It was a pleasure to watch Dick Thaler explaining synthetic CDO’s.
Second, I don’t worry very much about the factual precision of the film. It’s not a documentary. It’s main impact is in firming up some memes or stereotypes and dampening or precluding others. We’re in the world of pop culture, not podcast lectures. This means I don’t worry about whether it’s really true that only a handful of traders knew there was a housing bubble in 2005 (it isn’t), nor even how important the threat of financial collapse was in the instigation of the Great Recession or the subsequent Great Nonrecovery.
Here is what matters, in my opinion.
1. Pre-2008 culture was thick with glorifications of money-making as an end-in-itself. From fund managers to rappers, simply being hosed with cash was presented as glamorous, the ultimate high. This ethos was called into question by the crash, and one of the more interesting cultural battles has been over the emotional pull of extreme wealth. The Big Short is ambivalent, more than it probably intended to be. There are on-screen depictions of early 2000s types, transfixed by the opportunity for a big score; this is exemplified in particular by the two Colorado garage band hedge fund neophytes, in roles that can only be described as inverted Capra. But there are also morose, disillusioned traders and ex-traders for whom big money has lost its magnetism. If you had only the script to go on you might call it a draw or even a win by decision for the post-materialists. But here’s where the style comes in: two hours of jumpy, jokey high adrenalin depictions of high stakes gambling on Wall St. tips the balance back toward hyper-acquisitiveness. The movie feels like a classic caper flick, with the heroes being the ones who make the final score, no matter what the script says.
2. How to interpret the Big Shorters? The film presents two narratives of their strategy. One is the revenge of the nerds: Wall Street and the mortgage industry were in the grips of idiots, and the smart, quantitatively literate skeptics ate their lunch. Brains triumphed over dull mediocrity. The other is moral: the financial system had descended into a cesspool of fraud and short-sighted greed, and the shorters were like a sheriff’s posse, out to take down the bad guys. Interestingly, the film even tells you there’s no need to choose; at a critical moment one of the players says that fraud and stupidity are reflections of one another, and when one of the key shorters (Steve Carell) gives a speech at the end expressing his disillusionment his critique of fraud is that it is doomed to fail. My response is that this is a fudge: one of the big stories of the post-2008 world is that fraud hasn't been punished, and the really big winners from the entire process, from the takeoff of financial market liberalization in the 70s to the present, still run the world. The profits of the shorters, measured in tens or even hundreds of millions of dollars, are chump change by comparison. The ethical critique simply can’t be folded into a narrative about the triumph of the smart guys. In a way, the film supports this in its concluding (and witty) postscript on how the financial sector avoided any real reckoning, but this comes after two hours of watching what you think at the time is the impending destruction of the ultra-rich.
3. And what’s the larger image of Wall Street that emerges from this film? Every critique implies an alternative, a counterfactual in which the critique doesn’t apply. A useful way of assessing the scope and accuracy of a critique is to identify this counterfactual. What sort of financial system would be immune to the barbs of The Big Short? You may recall that this was a nagging question in Michael Lewis’ book, which alternated between deep cynicism and a bedrock assumption that most financial market activity was or could be socially productive. The film adds a visual dimension to the issue. For instance, when our reverse-Capras wander through a Lehman Brothers trading room after it’s been abandoned, the viewer can’t help but wonder what’s been subtracted from the world by this event. And the film, true to the book, doesn’t offer any answers. The deeper questions about the allocation of capital and the relationship between finance and “real” economic activity don’t surface, not even visually. It’s not clear how Wall Street would be different if it were reformed on the terms implicit in this story. It would be more honest, yes, but smaller? Would it recruit and reward its minions on different principles? And how would such unavoidable concentrations of wealth be redirected to socially productive purposes? To repeat, I don’t expect a narrative film to answer questions like this, but they illuminate the immense whitespace in a script that encourages an ostensibly skeptical perspective on finance.
For those of us who live from one economics-themed film to the next, the inevitable comparison is to “Margin Call”. In a way, that’s unfair. Margin Call was an exceptional movie that could never hope to win the mass audience of The Big Short. It had a much slower pace, sustaining the illusion that events were taking place in real time. Its characters were deeper and more contradictory, with less reliance on pop culture stereotypes. (It also had one very substantial female role for Demi Moore, where The Big Short could give even the magnificent Melissa Leo only an example, not a real human being, to play.) That said, it also asked bigger questions. Stanley Tucci’s “I used to build bridges in Pennsylvania” speech problematized the entire enterprise of modern finance, while Jeremy Irons’ final historical sum up superbly crystallized a political economy perspective. Above all, fraud, which was the central topic in Margin Call, was presented not (only) as an emanation of character but an outcome of the incentive structure of the industry.
So I’m happy I went, and I had a good time. When the movie ended a guy down the row from me shouted, “Feel the Bern!”