I finally saw Michael Moore’s ‘Capitalism: A Love Story,’ and you should too. There is much in it that’s simplistic or manipulative, but it is at the very least three things: rivetingly interesting, moving, and thought-provoking.* And as you watch you can do the same two things I did: try to find the flaws in his argument; try to figure out how things should be (unless you think they’re perfect now).
*Note to Michael Moore: please don’t quote the last part of that sentence without also including the first part.
An example of a flaw, it seems to me, is the section on Dead Peasants Insurance. The section is introduced with a tearful family in financial crisis because the husband has died young. They have discovered that his employer had taken out a policy on his life naming itself as the beneficiary. So the guy dies, the company gets a fat check, shares none of it with the family, and you are meant to feel outrage.
Indeed, a great many big-name companies have done the same thing, taking out policies on tens of thousands of their employees. The younger and faster the employees die, the more money the companies make. A memo is shown expressing concern that death rates are below projection.
This is offered as an example of how greedy and heartless capitalism is.
Yet it’s actually an example of how nutty our tax system is and of how many of our brightest minds are wasted finding ways to outwit it. If you insure tens of thousands of employees, the insurance company can take a little bit for its trouble and still, after the tax advantages, you, the employer, can expect to come out ahead.
Which is an example of our system at its least productive – absolutely no productive benefit comes from this – but that’s not the point the movie makes. The movie makes it seem as though the companies hope you’ll die young. That they’ve done all this not as a reprehensible tax dodge, but as a way to make money from your death. Yet that’s nonsense. Insurers are not in business to lose money. So unless employers are actually finding ways to speed the death of its employees (committing murder in order to defraud the insurance companies) – which Michael Moore nowhere alleges – this is just a tax avoidance ploy.
Dead Peasants Insurance has nothing to do with the point Moore uses it to make.
So that’s a flaw.
And it’s not the only section of the movie you will find simplistic or misleading or manipulative.
Then again, you can’t possibly watch ‘Capitalism’ without empathy for its victims. The suffering across the land is real, and brutal, and takes on an extra dimension when you see some of it, not just read about it.
You can’t possibly watch ‘Capitalism’ without being concerned for the viability of our system. How do we get out of the hole that years of over-borrowing, over-consumption, over-extension (e.g., Iraq) and under-taxation have dug us into?
Michael Moore is talking revolution. He shows 1944 footage of FDR calling for a second bill of rights – the right to a job at a living wage, to health care, and more – and saying that we need to set to work attaining these rights as soon as we win the war. Well, we won the war and, as Moore points out, Japan, Germany, and Italy, all now enjoy the rights FDR was talking about (we sent folks over to write their constitutions) but we don’t. He thinks we should.
How much longer will people feel the financial vise tighten before they greet the news of $140 billion in Wall Street pay and bonuses with real anger?
The left wants to channel anger at the corporations and the banks. The right wants to channel anger at illegal aliens, welfare moms, unions, elitists, and ‘government.’ Both sets of targets are wrong. (Not to say any of those targets are perfect actors.) But the anger is real and the problems are real and this movie will surely get you thinking about both.
From where I sit, the President is spot on in trying to reform health care (Moore’s ‘Sicko‘ shows how much room we have for improvement) . . . in calling for a strong Consumer Financial Protection Agency . . . in looking to direct more resources to infrastructure and science and education . . . in planning, sooner or later, to restore Clintonian tax rates on those at the top of the economic ladder* . . . and more.
*I say: sooner. Even as we speak, hedge fund managers who earn $100 million in ‘carried interest’ on money they themselves do not have at risk are taxed at a 15% capital gains rate . . . something that everyone from Warren Buffett to some hedge fund managers themselves finds outrageous – yet, so far, Congress, even with its large Democratic majority, has not acted to fix this.
Michael Moore is Woody Guthrie with a camera, Ralph Nader with a sense of humor, a truly good and brilliant man who loves his country even more, arguably, than those who blindly defend everything about it.* Of course, on balance, Ralph Nader wound up doing more harm than just about anyone who ever lived; and capitalism, skillfully regulated, is a terrific force for good. But don’t miss this movie.
*Note to Michael Moore: please don’t quote that sentence without also including the next one.
If we’re lucky, Dendreon’s prostate cancer drug will be proven effective and I’ll lose money. Fine with me, if it meaningfully extends lives. That would be terrific. But my guru thinks it is not effective and will be turned down for FDA approval next year. So here’s a bet that will make sense for some people to make:
Buy (say) six January, 2011, DNDN 20 puts for around $500 each. Total cost: $3,000. Each put gives you the right to sell (‘put’) 100 shares of DNDN to someone at $20 each. The stock is near $30, so the puts have no current intrinsic value – they are ‘out of the money.’
If the drug is approved, sell your puts for next to nothing and you will have a $3,000 short-term capital loss to lower your 2010 taxable income. If you are in the 35% tax bracket, that saves you about $1,000, so you’re really out $2,000.
If the drug is not approved, the stock could easily drop below $5, and the right to sell it at $20 (‘let me put it to you this way’) becomes worth $15 or more a share – 600 times over in this case (each put represents 100 shares) – so you could well realize $9,000 on your $3,000 investment for a $6,000 gain . . . and if you waited a year and a day from the time you bought them, that would be a lightly-taxed long-term capital gain, leaving you with perhaps $5,000 after tax.
My guru is generally – but certainly not always – right. If we assign odds of 50/50 to his being right this time, the bet is $5,000 you win, $2,000 you lose.
You really, really, really, really could lose. Indeed, in this scenario, you’re as likely to lose as not. So this is under no circumstances a bet to make with money you can’t truly afford to lose. But for some, it may be a good bet to take.
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