The Bat Segundo Show: Eduardo Porter

Eduardo Porter appeared on The Bat Segundo Show #381. He is most recently the author of The Price of Everything.

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Condition of Mr. Segundo: Shopping for a new religion.

Author: Eduardo Porter

Subjects Discussed: Faith and the Pascalian wager, whether or not Americans perceive faith in fair prices, the idea of a price embodying the making of a thing, Marx and labor, how our understanding of prices is a function of transaction, worker exploitation, Dan Ariely and behavioral economics, “buying a sense of our own goodness,” tipping in Japan, Porter being needlessly concerned with the price of a Los Angeles condo he sold years earlier, new economic frontiers without speculative bubbles, Robert C. Wright and predicting bubbles, Keynesian beauty contests, orange juice and the weather, derivatives and probability, the inability to separate legitimate bubbles with sham bubbles, subprimes and low interest rates, John Rawls and society maximizing the well-being of the least fortunate, the extension of the Bush tax cuts for the wealthy, ephemeral jobs and speculative bubbles, unfair income redistribution and prices, diversity and labor, William Julius Wilson, Sir Nicholas Stern’s idea of the wealth of the individual remaining steady throughout the years vs. human life as priceless, the 9/11 Commission and Kenneth Feinberg’s compensation discrepancy, anti-egalitarianism, competing subjective viewpoints about the price of a life, economic consequences that emerge from changing a speed limit, the value of a person toiling in a maquiladora vs. the value of Clive Owen, connections between pricing and elitism, time and the value of human life, France’s price on Haiti, and the colonialist implications of price.

EXCERPT FROM SHOW:

Porter: In the mid-1990s, a study by the Intergovernmental Panel on Climate Change tried to come up with an early estimate of the economic impact of global warming. And to do this, it used some of these estimates of the value of life. And it decided that the value of life in poor countries was $150,000 and in rich countries $1.5 million. Now you can imagine that didn’t go down very well at an international meeting with rich and poor countries. I mean, this was a rebellion. “What do you mean?” So if rising seas are going to wipe out Bangladesh, it’s cheap. But if something is going to happen in Switzerland, then we really have to worry. So ultimately, at the end of the day, they came to a political compromise. And they redid this, valuing everybody at $1 million.

Correspondent: But on the other hand, for the sake of argument, if you have some central authority making such an insensitive statement — that a person born in one country is worth less than someone born in an industrialized nation — wouldn’t that open up the fact that we’re all living within unseen disparities? That the value of someone toiling right now in a maquiladora or an export processing zone is, we all know, worth less than the life of President Obama. Or the life of actor Clive Owen, who is probably worth more than either of us ever will be.

Porter: Well, yes. This is a manifestation of the inequities in life. That it’s just a replication after death of a very unequal distribution of opportunities and rewards. That’s true.

Correspondent: Well then. If pricing essentially confirms that, it’s almost as if pricing confirms an Ortega y Gasset-like notion of elitism. That really what we’re denying in denying these crude and cold and insensitive prices is denying the inherent elitist nature of the capitalist system that we live by in this purported democracy that you, in the book, actually uphold.

Porter: I would say that that’s essentially correct. I mean, capitalism is not an equal society. And I don’t think it can work as an equal society. Disparities are what steer resources to be allocated into one place or another. Pay differentials lead people to take one choice rather than another. To move into one job or another. To get one type of education or another. So the idea that everybody must be paid equal is, I don’t think, functional. It does not function within a capitalistic society. If you’re asking for my opinion on the ultimate — I don’t want to use the word “justice.” If you’re asking for my opinion on whether this is an ideal way to live, I would tell you no. But it’s because of the depth of the disparity. Not because of its existence. I will agree that disparities will exist. I have a problem with the size of them.

Correspondent: You mention Bangladesh earlier. And this is in relation to climate change. William Nordhaus’s idea that in estimating future damages, we need to use a rate that reflects the productivity of long-term investments. Then of course, you’ve got Sir Nicholas Stern’s idea: “The welfare of a person hundreds of years from now is worth the same as as the welfare of someone alive today.” And of course, not everybody can agree on that either. Now we’re adding time to this. Even more problems. If you were to look at the history of Haiti, you see France in 1825 — they don’t wish to recognize Haiti’s sovereignty unless Haiti paid them 150 million gold francs. Haiti, of course, couldn’t pay back the money until 1947. And they had to take up long-term interest loans.

Porter: That’s incredible.

Correspondent: This is the ultimate in a big joke about price. Haiti wanted to be recognized as a nation and they have to pay this considerable amount of money. So this leads me to wonder if price — I seem to think, particularly after this conversation — is a huge mess that creates ever more problems about other viewpoints, other peoples, and simply existing. The more we think about the way money is attached to an individual person, the more we realize that certain systematic norms cause the person to be trivial. I think that’s rather sad.

Porter: The thing is that here we’re moving between senses of price that are really kind of unrelated. The purchase of Haiti’s independence, I think, has very little to do with capitalism. It has more to do with colonialism.

Correspondent: Capitalism could be argued as a strand.

Porter: But this deal could have been made outside of a capitalistic society. This deal is not a function of capitalism. It is a function of the fact that one country controlled another and would not relinquish it unless getting something in return. And in fact, this has been a characteristic of colonialism way back into pre-capitalistic times. I wonder whether you’re not attributing too much significance to the idea of price as an ultimate driver of things that functions throughout history. And always in the same way. It seems to me that when you’re talking about the price of Haiti or the price of gas or the price of milk, the processes that you’re describing, with which you arrive at this ultimate variable of price, are totally different. And the transactions that are involved are totally different. And so yes, they’re all prices of course. But I’m not sure that they’re comparable. They seem a little bit like apples to oranges.

Correspondent: Even though price has a serious consequence upon a human life in some capacity, you’re saying that it’s best to look at price in terms of who sets the price and the consequence? I think I’m looking at it consequentially and you’re looking at it from a causist standpoint.

Porter: Well, yeah. But consequentially. Let’s say clothes have enormous consequences. Lack of clothes have enormous consequences. The fact that having or not having the appropriate clothes for the appropriate weather is consequential. I’m not sure that that allows me to go any further in trying to tell me anything about the dynamic underlying clothes or the goodness of clothes. They are consequential. Sure.

The Bat Segundo Show #381: Eduardo Porter (Download MP3)

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Review: Capitalism: A Love Story

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It seems to me that, if you’re rolling out the howitzers with the intent to destroy an ideology, you should probably blow the shit out of everything. But Michael Moore’s latest film, Capitalism: A Love Story, feels passe and diffident, despite the fact that it has gone out of its way to include footage from only a few weeks ago. Maybe this film’s dated feel has much to do with our present information age. In an age of YouTube and Twitter, how can any well-meaning documentary capture a permanent image for posterity? But Moore’s best films (Bowling for Columbine and Sicko) have worked because they operated within a specific focus. By examining one aspect of the failed American system, Moore has demonstrated a knack for showing a regular audience how the world works according to his mind. But with a more general emphasis, Capitalism: A Love Story, much like Moore’s narcissistic offering The Big One, is unfocused, messy, and even contemptuous of its intended audience.

For example, Moore suggests that the derivatives which guide the stock market cannot be understood by anybody but the Wall Street guys. As one economist explains a derivative to Moore, we see Moore’s eyes glaze over. Moore then cuts to an academic having difficulty explaining a derivative. Lost within all this didactic comedy is the fact that a collective website called Wikipedia allowed people to come together to explain a derivative in fairly straightforward terms .

But forget how the Internet can galvanize the people (and lead Obama to presidential victory). Let’s talk about the distinct possibility that Moore’s starting to rust within his gilded cage. Since Moore has clearly not thought much about his thesis, he seems to have fallen asleep at the wheel of his liberal limousine. He looks into the recent Pennsylvania child care scandal, in which two Pennsylvania judges bartered kids for cash. But he doesn’t use his ambush tactics to interview the two judges. (In fact, unlike Moore’s other films, this film lacks a heavy along the lines of Phil Knight or Charlton Heston for Moore to confront at the end. And without that perceived villain, Moore’s hollow demagoguery is revealed for what it is.)

To the film’s credit, it does go after Democrats — including Senator Christopher Dodd — and points to Democratic complicity in the Goldman Sachs bailout. Moore hasn’t been this vocal about the lies of the two-party system since he campaigned for Ralph Nader in 2000. (He later campaigned against him in 2004.) But Moore is hardly the fearless agitator he thinks he is. He’s too afraid to criticize Obama’s many failings, preferring instead to dwell on that hopeful day in November when we elected “our” candidate and we used “our” votes to get the Democrats into office. Of course, months later, millions of jobs have been lost, the unemployment rate hovers around 10%, and universal health care — part of FDR’s Second Bills of Rights, a clip of which is included in this film — remains distant. But Moore doesn’t pin any of this on Obama. In fact, Bush 43 receives more camera time than Obama. (That’s a bit like a bunch of philosophers arguing about the 1968 riots as people are losing their jobs. Oh wait. I saw that happen last year when Bernard-Henri Levy and Slavoj Žižek argued last year at the Celeste Bartos Forum. I guess we’ll never have the guts to discuss current predicaments.)

Moore points out that Jonas Salk offered his polio vaccine for free. And at the film’s end, Moore suggests that the audience should be doing what Moore’s doing. Of course, this comes after we’ve paid $10 to see the movie. Moore stands to make millions from this movie. Is he really all that different from a rapacious CEO? Glenn Beck may want all of his pie, but then so does Moore. It’s insulting to have someone in the film referring to mainstream media coverage as “propaganda,” when this film clearly serves the same function.

This is not to suggest that our nation doesn’t need a corrective or that Moore’s services are no longer required. There is, frankly, no other filmmaker out there who can get progressive messages out to a mass audience. He is not, as The New York Times suggested, our little tramp, but there’s nobody else out there stepping up to the plate in quite this way. But Moore’s party mix of stock footage, snarky narration, and righteous indignation is starting to wear thin. It’s the kind of thing we expect out of a filmmaker in his twenties and his thirties, not a 55-year-old filmmaker. Moore naively believes that Wallace Shawn’s presence will somehow attract his established liberal affluent audience. But this is clearly a film made for Middle America, and it doesn’t understand that Middle Americans are often much smarter than bicoastal elitists.

Case in point. The naive majorette Rachel Sklar, who participated in an intellectual sweatshop during her tenure at the Huffington Post by collecting a salary while not paying her contributors, tweeted in response: “WOW. Michael Moore’s latest movie is gonna stir up some SERIOUS shit. Wow. Wow. One more time: Wow.”

No, it’s not. You can cream your pants like it’s the first time all you want, but capitalism isn’t going away.

In fact, Moore’s film really isn’t all that anticapitalist. As Moore points out, capitalism under a more equitable tax system wasn’t so bad for the middle-class. (See this helpful spreadsheet from the IRS containing lowest and highest bracket tax rats from 1913 through 2008. From 1944 to 1963, the highest bracket tax rate hovered around 91%.)

Moore pins the blame on Reagan. And the highest bracket tax rate did indeed fall from 70% to 50% in 1982, eventually down to 30% in Reagan’s second term. But drops, as we all know, occur in degrees. This didn’t happen overnight. Surely President Johnson should be held just as accountable.

So if we accept Michael Moore’s latest film, Capitalism: A Love Story, as a series of generalist sentiments designed to fire up the masses, then, to my mind, it’s probably Moore’s most toothless and tepid film. The film is entertaining enough. We get the obligatory shots of Moore being denied entrance into corporate buildings by security and Moore shouting through a bullhorn. We are horrified by Wal-Mart filing a life insurance policy against one of its employees and collecting a tidy sum (without a cent going to the family), as well as the phrase “dead peasants” used in the insurance policy. On the other hand, if people have allowed capitalism to continue, shouldn’t they be taken to task just as much as the corporations? The film’s credits feature numerous quotes from John Adams and Thomas Jefferson. One key Jeffersonian sentiment that’s missing: People get the government they deserve.