The Mises Blog long ago spoke of the film Margin Call and it has just been rewarded by the Academy of Motion Picture Arts and Sciences with a nomination for the Best Original Screenplay.
Here is an interview with J.C. Chandor.
Jeffrey Tucker said of the film that it was “the best finance/Wall Street movie I’ve ever seen. The impression it leaves is extremely powerful. There are no splashy scenes, no trumped up relationship dramas, no shocking bits of surprise, violence, etc. Instead, we get the straight dope with a very deliberate pacing of time that is stable and yet the drama remains incredibly intense.”
The new film Margin Call is a tale of a Lehman-like collapse and a Goldman Sachs-like crony return that is the first to even try to explain the Austrian Business Cycle Theory in a major studio film even though they do miss the cause of these fluctuations that is the Federal Reserve, central banks, and the the fiat currencies that cause these bubbles, panics, booms, manias, and busts.
The head of the investment bank during the height of the financial crisis tries to justify his existence and his actions mixing a little Austrian Business Cycle Theory as well as Helmet Schoeck’s theory of envy and social behavior as well as an equilibrium hypothesis:
”So you think we might have put a few people out of business today. That its all for naught. You’ve been doing that everyday for almost forty years Sam. And if this is all for naught then so is everything out there. Its just money; its made up. Pieces of paper with pictures on it so we don’t have to kill each other just to get something to eat. It’s not wrong. And it’s certainly no different today than its ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987 – Jesus, didn’t that [$#@&] me up good – 92, 97, 2000 and whatever we want to call this. It’s all just the same thing over and over; we can’t help ourselves. And you and I can’t control it, or stop it, or even slow it. Or even ever-so-slightly alter it. We just react. And we make a lot money if we get it right. And we get left by the side of the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers. Happy foxes and sad sacks. Fat cats and starving dogs in this world. Yeah, there may be more of us today than there’s ever been. But the percentages-they stay exactly the same.”
Despite his moralizing he is on to something. Identifying the problem is the start to the solution.
The film was written by the son of a Merrill executive and stars Kevin Spacey, Jeremy Irons, Stanley Tucci, and Demi Moore.
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I didn’t watch the movie, and while I believe you that it can be better than average as far as economics go, that quote reeks of the Fixed Pie Fallacy…
That’s what I was thinking.
When you start off by saying “I didn’t watch the movie…” you automatically lose the argument.
It’s a good thing he was commenting on the quote and not the movie, then
It was a good movie and I liked it, but “even though they do miss the cause of these fluctuations that is the Federal Reserve, central banks, and the the fiat currencies that cause these bubbles, panics, booms, manias, and busts” is a LOT to miss…
I’m not getting why this is ABCT – could you explain?
Isn’t he describing a set of facts that everyone accepts?
I think Mr Ptak’s point is that this dialogue illustrates the concept of creative destruction, or Bastiat’s “the seen and the unseen”, which is more related to the Austrian recipes to face a crash than to the actual explanation of how they come to be. The message is that no matter what you do with your business, some people will benefit from it and some people will suffer from it, but sometimes you don’t see those who suffer and sometimes you don’t see those who benefit. For instance, if your company is doing well, your competitors suffer, and if it’s doing bad, your workers suffer. Of course, the pie does grow over time, but nonetheless everyone wants as much of it as possible. Winners increase their share of the growing pie, while losers get a lower share, which may well still be more pie than they had before.
It did not specifically mention the ABCT or the FED and it’s role, but still a very well done film, nonetheless.
The fallacy of the “Fixed Pie Fallacy” is that under socialism the pie actually shrinks, plus we have a lot more bureaucrats taking more than their fair share. So your share is actually going to shrink. Not to worry, the Obama Administration has a fix for this – MORE FOOD STAMPS. (Not to mention that Michelle Obama blames more pie as the cause of steatopygia.)
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