“The Deal Professor,” Steven M. Davidoff, has a good piece at The New York Times website about the indispensability of finance to our economy. It briefly rebuts the view popularized in the Oliver Stone movie Wall Street, in which financiers are portrayed as greedy parasites. I left a comment at the web page, noting that our documentary The Call of the Entrepreneur makes a similar case. I include the comment below, since it may not pass muster with the page’s comment moderator:
A documentary that explores the wealth-creating role both of the entrepreneur simpliciter and the finance entrepreneur in particular: The Call of the Entrepreneur. The film appeared on more than 80 PBS affiliates nationwide, including repeated airings in several major markets. And in what may be a first, it appeared both on PBS and Fox Business. I mention this by way of reassuring readers that the documentary isn’t screechy.
The one-hour film is a combination of narrative and expert commentary that many have found useful for explaining what entrepreneurs and merchant bankers bring to the economy, a particularly useful explanation for friends and family who wouldn’t read a lengthy article or book on the subject but will watch a documentary with high production values. It doesn’t pretend that there isn’t corruption or greed on Wall Street, but it does insist that these elements do not provide a full picture.
Full disclosure: I wrote the script for the documentary and am a fellow of the institute that created the film, The Acton Institute. The film is available at calloftheentrepreneur.com/. Also, the film doesn’t address the market distortions generated by Alan Greenspan and others, distortions that encouraged excesses in the financing world leading up to the economic crisis. Those issues are tackled at our web page on the economic crisis: acton.org/issues/economy.php/.
— Jonathan Witt
Memo to documentary filmmaker Michael Moore: Free markets didn’t cause the financial crisis. The biggest culprits were government planners meddling with the market. That’s the message of Acton’s newest video short.
So why on earth is Michael Moore (Capitalism: A Love Story, Sicko) so eager to route even more power and money through Washington? Centralized planning is economic poison. Doubling down isn’t the cure.
(Also, Acton’s resource page on the economic crisis is here.)
Much of the blame for the current financial crisis has been aimed at Wall Street and the bankers who, the story goes, created toxic debt instruments and then lined their own pockets with the proceeds. In “Verdict on the Crash: Causes and Policy Implications,” a new analysis from economists and scholars — including Acton Institute Research Director Samuel Gregg — the London-based Institute of Economic Affairs comes to the opposite conclusion: It was governments and regulators who erred. Moreover, the IEA report says, the people most often berated for their part in the crisis – the hedge fund managers and those who run tax havens – are among the least guilty. The report also spells out the need for a “radical overhaul” of the financial system to guard against a repeat of the errors that led to the crisis.
The authors of “Verdict on the Crash” assert that “a revolution in financial regulation is needed. The proposals of the G20 governments and the EU are wholly misconceived. Specific and targeted laws and regulations could restore market discipline.”
Read a letter to London’s Daily Telegraph from the economists and scholars who wrote the “Verdict on the Crash” report for IEA. Read highlights and download the full report from the IEA blog. Acton’s Samuel Gregg authored the chapter titled, “Moral Failure: Borrowing, Lending and the Financial Crisis.”
We’ve posted Rev. Robert A. Sirico’s Oct. 30 speech delivered at the Acton Institute annual dinner in Grand Rapids, Mich. The dinner also featured a keynote address from Rev. John Nunes, president and chief executive officer of Lutheran World Relief, and remarks from Kate O’Beirne, National Review’s Washington Editor, who accepted the Acton Institute Faith & Freedom Award in honor of the late William F. Buckley, Jr.
Excerpt from Rev. Sirico’s speech:
Today we find institution after institution “in the tank” for unrestrained government intervention. One is reminded of Italian philosopher Antonio Gramsci’s call for the left to begin a long march through the institutions of Western Civilization. The left, it seems, got the memo. How will we respond to this disheartening situation? Now is no time to retreat in disarray. Now is no time to stumble. There remains a remnant … a potent remnant who has not bowed the knee to big government. My call to you tonight is a transparent one: strengthen the soldiers of that remnant. In particular—strengthen that band of brothers gathered with you tonight, the Acton Institute.
Never in Acton’s nearly 20 year history has our message been more essential than right now. As an institution that cherishes the free and virtuous society, we are living through this thing with all of you, and we need your help to continue. Our history of integrity; the quality of our products and programs; the responsible tone with which we approach the questions at hand, all speak to the fact that this work is worthy of your investment. I humbly ask for it with the promise that we will use it well and prudently.
The fact of the matter is that too many of us have become much too comfortable and yielded to a perennial temptation, the temptation to take our liberty for granted. Those of you who have invested in the work of the Acton Institute over the years know—and especially those of you who have had a chance to see our latest media effort “The Birth of Freedom” know—we believe the time has come for a renewal of those principles that form the very foundation of civilization, the same principles that make prosperity possible and accessible to those on the margins.
Liberty is indeed, as Lord Acton said, “the delicate fruit of a mature civilization.” As such it is in need of a nutritious soil in which to flourish. In this sense you and I are tillers of the soil, if you will.
Liberty is a delicate fruit. It is also an uncommon one. When one surveys human history it becomes evident how unusual, how precious is authentic liberty, as is the economic progress that is its result. These past few weeks are a vivid and sad testimony to this fact. As a delicate fruit, human liberty as well as economic stability must be tended to, lest it disintegrate. It requires constant attention, new appreciation and understanding, renewal, moral defense and integration into the whole fabric of society.
Read the entire speech here.
What is the root cause of the sub-prime crisis shaking the global economy? We need to know so we don’t allow it to screw up our economy even worse.
Many point to dishonesty and poor judgment on Wall Street. There was plenty of that leading up to the near-trillion dollar bailout, and even now the stock market is busily disciplining stupid, dishonest companies.
Others point to the many people who falsified loan applications to get mortgages beyond their means. That too played a role.
But dishonesty and poor judgment are as old as Adam and Eve. Something more was at work in the present crisis, a crisis of unprecedented scope. Why didn’t profit-minded loan companies run thorough credit checks? Why did they keep pumping out low interest loans to high risk borrowers, ignoring the risks?
It’s as if somebody spiked the financial system’s punch bowl with stupid juice, driving normally prudent financiers to dash, en masse, over the cliff.
It seems that way because it is that way. The brewers of the stupid juice were largely (if not exclusively) politicians in Washington who sought to redistribute wealth from the rich and middle class to poor people with bad credit. These politicians fostered various laws and institutions that directed, cajoled and legally bullied mortgage companies to extend big loans to people with little credit.
“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.
… At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.