A Rant, and A Movie Review, Sort Of
I went to see Michael Moore's "Capitalism: A Love Affair" a few weeks ago, working for WPTF radio. And, I actually thought it was pretty good. Funny. And the middle part was excellent, really first rate. MMoore smashed four people who needed smashing. Those four? L. Summers, T. Geithner, B. Frank, and C. Dodd. Two economists, a narcissistic goofball, and an unprincipled drunk, in that order.
But then I read something by the good DeLong. And it struck me....well, here's my rant:
Folks, there is a contest out there for who understands economics better. The contestants are Dr. Brad DeLong, econ prof at Univ of Cal-Berkeley, and....the filmmaker, Michael Moore.
Almost unbelievably, and frankly *I* can't believe I'm saying this, the winner is....Michael Moore.
Dr. DeLong is fussing and moaning that a few people have finally come to their senses, and (as he puts it) "dug in their heels" on the enormous deficit. As it stands, folks, combining the state and federal government deficits for the next two years, what we already KNOW about, each working person in the U.S. owes well over $100,000, mostly to the Japanese and Chinese, who have bought our bonds, our debt, our Treasury bills.
(Editor note: "working person" means people with jobs. There are only about 150 million working people in the US. The projected debt of the feds is about $70k / worker, and the states is about $30k / worker)
But Dr. DeLong thinks that is not enough! He is clearly disdainful of those of us who are worried about selling our country, about mortgaging the birthright of our children. He says that if we have one more, just one more, bad economic downturn we may now have a return of the Great Depression. DeLong puts the probability at 5%. What he wants to do is to spend our way out of the recession, but he is not sure we can, because our deficit is so big.
Amazingly, Dr. DeLong cites a discredited theory, a theory no real economists believe anymore. Again, I can scarcely believe this, but DeLong bases his argument on the so-called "Phillips Curve," the theory that unemployment can be driven down by increased inflation.
Folks, this theory has been debunked, and debunked, and discredited, yet policy makers still want to use it. I can cite you a whole fistful of Nobel Prize-winning economists who have proved, absolutely proved, that announcing you are going to use inflation as a policy NEVER reduces unemployment.
So, Dr. DeLong gets an F: back to school, sir!
On the other hand, and I can't believe I'm saying this, either: Michael Moore, in his new movie, gets the cause of the crisis, and the damage of the bailout, about 75% correct. A solid C, for Mr. Moore, a gentleman's C.
Who is to blame? It is clear in the movie, if you watch "Capitalism: A Love Story." The cause of the financial crisis, Mr. Moore is very clear, the men at the center of the financial crisis are....the guys who are now the Obama economic team, and the people in Congress who want to blame everyone but themselves.
Michael Moore lines them all up, and skewers them: Tim Geithner, now head of Treasury. Larry Summers, now Director of Obama's National Economic Council . And, this is the best part, he also goes after people in Congress. Chris Dodd, the Senator from , and Barney Frank, the guy who forced our banks to make all those bad loans to people who couldn't pay them back! Barney Frank, the guy who knocks down old ladies if they get between him and a microphone, and who wants to blame Wall Street....Michael Moore shows how Barney Frank helped cause the crisis! It's delicious.
The point is that the only thing we have to fear is, Porkulus itself! DeLong wants us to spend more, to increase the deficit. But we can't do that. Because, as none other than Michael Moore himself showed, all that TARP money, all that Porkulus money, was wasted, thrown away, poured down a rathole.
DeLong is right about one thing: if we have another crisis, we will really be in trouble. Because we won't be able to bail out Wall Street again. But the reason is that we already spent too much on a useless bunch of policies. We spent like drunken sailors on shore leave. I'm sorry, I take that back, it's an insult to drunken sailors.
The bottom line is unbelievable! Michael Moore gets it right, at least for about ten minutes of his otherwise terrible movie. And Dr. Brad DeLong, a Berkeley economist, gets it wrong. The Phillips Curve is dead. Let it rest in piece, Dr. DeLong.
Whew! I feel better now.