standard Inside Job: Fuel for an intelligent debate

The screening of Inside Job in Durham, UK hosted by Tipping Points was a success for a number of reasons.  First, it should be stated that this film has had a fairly limited world release, so having it in a small town like Durham in an 84-seat capacity cinema, it’s no surprise that it generated such a large interest within the Durham community and the North East.  Living during the end/aftermath of a financial crisis has been difficult for some, but extremely difficult for many (mostly poor) people living in the world today.  What the film Inside Job reveals is that many of the people who governments and the public depend on to regulate financial services, banking, capital etc. are the very ones that turned their backs on everyone, not to mention themselves.

Since the film delivers an articulate portrayal of the events before and after the banking crisis of 2008, it gives much to talk about.  Could regulation in the US, for example, have prevented the banking crisis from taking place?  Was it merely the result of poor legislation or in some cases no legislation at all for governing banks in the US?  Producers of Inside Job argue clearly and concisely that regulation of banks in the US has been declining at least since the Reagan administration.  Another important point made by the film is the issue of criminality.  No one went to prison for causing the financial crisis.  Those involved in creating and then ‘riding’ the debt bubble in the US till it burst were never incriminated for their acts, although there is some rather comical footage of many well-known bankers on Wall Street being interrogated by members of US congress.  The rhetorical strengths of the film help turn the US financial system inside-out.

After the film, panelists from the Tipping Points project led the debate on the cause of the banking crisis as well as on the state of global financial system itself.  Many people who attended the screening were full of questions and after going into a brief comparison with the 1929 Great Depression in the US, everyone found themselves well into a thick debate on how the financial system should change.  It was clear that nearly everyone present agreed with at least the basic points made by the essay of the film — that bankers involved in the crisis were mostly to blame and that at the very least new financial regulation is needed to prevent a future crisis from taking place that could potentially be far worse.

The perspectives of researchers of the Tipping Points project are far from unified; they disagree and agree about a wide variety of issues having to do with the banking and global financial system in place today.  Indeed, going about researching the financial crisis from multiple perspectives is what Tipping Points is all about.  The debate was in fact the opposite of academics vs. ‘the public’ which is why it gradually built into a discussion that was both compelling and relevant to the world we live in.  There are no easy answers to this problem.  What is clear, however, is that more debates of this kind need to take place, not just amongst communities and academics, but politicians, financial regulators, economists, stock brokers and, yes, bankers.

The world needs to have more intelligent debates about how financial crises occur and what people can do to either prevent or prepare for them.  After all, if the world wishes to achieve democracy it isn’t simply about making your voice heard, it’s about making your voice heard before those who oppose you and challenging the beliefs those in power hold onto so dearly.  But let’s be realistic.  Would megalomaniac billionaires with their mansion homes, multiple jets and six figure salaries really involve themselves in a public debate of this sort?  No, likely not, and if they did find themselves in such a place they might have concern for their personal safety.

What is amazing about the film Inside Job is that it actually managed to interview quite a few people who either witnessed firsthand the banking crisis play out in the US  or played a role in it.  Yet there were also many key players who refused to be interviewed according to the film, including not surprisingly, Alan Greenspan, whose shallow financial ideology shared by many is one of the reasons why the US got itself into the mess that it’s in.

Topics touched on within the debate included the impact of the banking crisis on China’s economy, particularly poor working class people, but also the fact that China’s economy actually grew during the crisis.  Another comment worth mentioning is that in all likelihood it is nearly impossible for people who work within the financial system, such as those who trade derivatives, to empathise with the people they might affect.  If it’s all a gamble anyway, it doesn’t really leave much room for morality, let alone empathy.  The globalised economy has become a highly technological place.  Its modes of operation are based on the technological and its order, not that of people.  You don’t see people beyond those numbers blipping in and out of existence on an investor’s computer screen.  You see a cold, virtual interface that provides a mathematically diverse, yet monolithic reality that dominates every interaction within the system.  No computer system forgives you for making a mistake and some of those who lost paid the ultimate price – self-termination.  But of course many did not and in fact are living quite comfortably even though the banks or firms they worked for collapsed.

During the debate there was a sense that justice was not served and simply wiped away.  Does watching Inside Job make people angry?  Yes, of course, who wouldn’t be?  Hundreds of millions of people were suckered into a doomed financial system that they had no say in.  It’s obvious, but banks aren’t democratic institutions, they run on profit, not votes.  So if you remove any intelligent regulation from the equation what’s left?

Now regulation is needed, without a doubt, this could perhaps be agreed on universally despite resistance from many of those in government or extremely wealthy financial institutions.  But there’s a problem, still.  What kind of regulation do you have in place?  And will it allow the economy to still provide jobs, make progress, evolve and so on?  The reason people often vouch for self-regulation of banks is because of their sophisticated understanding of how the financial system works.  Inside Job demonstrates clearly that many of those in charge simply can’t be trusted, but the issue of what kind of regulation should be put in place was what made the debate at the end of the film so lively.

The film and the panellists emphasised the fact that even if regulation is in place it’s not necessarily followed. There are always ways of tweaking the system.  In the US, the Glass-Steagle Act  is an excellent example of this.  It separated commercial and investment banking since the Great Depression, but eventually it was seen by banks and government as too restrictive, so they bypassed and eventually repealed it.  If there’s a will then there’s a way, especially if you have billions in cash or assets and high-ranking politicians and government officials in your back pocket.  But still, it’s the bankers fault though right?  Even if you put the complex economic and political context to the side, could criminalising bankers solve the problem?  Put’em in prison with some rather unsavoury roommates and throw away the key?

What Inside Job revealed was that many big players in banks and financial firms are quite seedy characters to begin with.  In the film, they were portrayed as something out of a cheap pulp fiction novel — psychopathic, delusional risk takers with an appetite for cocaine and prostitution that they charge to their company’s credit card under ‘technical service’.  The economist Paul Ormerod, who has written a number of well-known books critical of conventional economic theory, noted that bankers have always been greedy and that it’s not greed alone that causes a financial crisis, it’s something much more than that.  It could just as well be argued that greed feeds a highly competitive financial system, although one that is in perpetual danger of tipping over.  But while getting rid of the criminal bankers would certainly help, it may not prevent the world from falling into a financial crisis once more.  Many people seemed to agree that intelligent, effective regulation of banking is needed and that it needs to be implemented sooner rather than later.

2 Comments

  1. Nothing is going to change. We can all talk ourselves blue. That’s all it will ever be is talk. Politicians don’t listen to their constituency anyways unless it’s time for re-election, and that’s only so they can give the correct lip service. People are inherently selfish, self serving, and above all greedy. Our government is now based on. Of the elite. By the elite. And for the elite. Real change will only come when the rich and powerful have screwed the people to a point that people out of anger and frustration rise up to throw off the chains they helped put on themselves. Then it will start all over again. And again, and again. Just my two cents.

  2. Myself, and I think many, many people throughout the world share your concern. Although the ’cause’ of the financial crisis took place on multiple levels, failure of leadership within government played a massive role. However, I do think there were people within the banking industry, the media, academia as well as government that attempted to communicate to others that a crisis was likely, but of course they were ignored. The question of whether the world can better prepare for these financial disasters is still open for debate and at the moment there is much room for public input, but it is a matter of whether political ‘elites’ actually listen this time. One could argue that modern political systems do not allow this level of democracy, but I’m a bit more optimistic than that. Regimes come and go and do their damage while others attempt to restore what has been lost. I really think that if we are to continue with this current ‘financial system’ those at the top will at least have to admit that crises are inevitable and that those responsible need to be held accountable. The point made by Charles Ferguson in his speech (http://www.youtube.com/watch?v=mpz5DVwnbnk) at the last Academy Awards still stands really and I think the world has yet to see a criminal justice system that adequately addresses crimes of this sort. But there’s no time like the present!
    Thanks for your comment.

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