Economic Lessons from Capra: Don’t Give Potter Money!

by John Mark Reynolds [author, academic]

I am watching much of the Frank Capra collection for a class I am teaching this term. Was there ever a better time to watch the best film maker of the Depression and World War II era?

His movies portray honest bums (!), politicians (!!), and even bankers (!!!) facing down the graft that comes with a combination of Big Money and Big Government.

His best known film today is “It’s a Wonderful Life,” though I think his best film is “Meet John Doe.”

There are a great many lessons to learn from “It’s A Wonderful Life.” I once claimed that you could learn almost everything from it. My brother and I later discovered you should ask Dad, because he almost always does know. Friendship is more important than making money. Being married to Donna Reed is a great thing. A good rule in this economy is not to panic, because Potter is not selling Potter is buying.

Which brings us to that evil banker Mr. Potter . . . a man who tries to send poor George to jail for the crime of being honest and happy, thus showing the world what a farce it is to pursue money and power. Of course, old George’s happiness is not quite complete, because he harbors a belief that he could have been happier, and God uses Potter’s sin to show George his error.

Today Mr. Potter would be running AIG with his own Chris Dodd to call on the phone to do his bidding.

You cannot watch the film without realizing that Big Money will always control Big Government. Potter can call Senators and keep them on hold. (See “Mr Smith Goes to Washington” for a longer exposition on the dangers of Big Government and Big Money.)

Big Government easily becomes a tool to help Big Business crush competition. The Bailey Building and Loan will not have the money to obey all the new government regulations, Potter does, so regulations hurt the small company more than the big one. This trick did not take long for Wall Street giants to master.

There is a role for government to enforce the rule of law, the sanctity of contracts, and truth-telling in a free market system. Teddy Roosevelt had it about right when he was in office. Government must check big business when it perpetuates frauds and swindles on the American public. It must root out graft and corruption.

Government provides a justice system to allow the rich and poor equal protection under the law.

Instead of stopping at the reasonable role of making sure the rules are fair and the system is open so investors can trust it, Big Government starts trying to manage and control it. This neo-fascism is popular with both, but crushes liberty.*

At least in Capra’s time “bailout money” mostly went to consumers who could not know what their bankers were doing and not to the bankers. FDR and Congress guaranteed the life savings of Americans. If there has to be a bailout, and sometimes there does, then that is the right place to put the money. To use a Capra case: let the widow keep the money from her husband’s life insurance that the greedy speculators lost, and make sure the greedy speculators get fired.

Sadly, President Obama has taken the opposite approach. Building on short-term crisis cash infusions by the Bush administration, trillions more have been given to the banks themselves. This apparently follows the same sort of reasoning that would argue the principle that because firemen spray water on burning houses, building pipelines to deliver free water to mansions is also good.

Potter wasted our money on risky schemes and now Potter is getting bailed out.

The present Obama administration makes the Bush team look like pikers in their zeal to spend money. The ludicrous notion that one should raise taxes on the productive rich (who will move it elsewhere to avoid taxes) in order to give it to the wastrel rich who created this crisis will ruin the good credit and standing of the United States.

We are taking money from businessmen like George Bailey to give it to crooks like Potter.

If you risked too much on real estate or credit card financing, the government and business are (rightly) letting you fail. If you had been able to risk the nation with real estate or credit financing, the government will give you more credit and let you pay yourself a handsome bonus.

Potter is too big to fail, we think.

No.

A government that will not let business fail will soon have the power keep them from succeeding.

Let Potter fail and the George Bailey banks that stayed around, and there are quite a few, will grow. Let Potter fail and a generation of bankers coming into the market will learn the relationship between risk and return. Let Potter fail and investigate who took Potter’s money and we will find the corruption that allowed our laws to be flouted.

Let Potter fail. Take what you can get from Potter and give it to his small investors, who could not know the fraud. If the health of the nation requires more money, give back the money of small investors who were duped by the lies told by Big Money, Big Government, and Big Media.

Let Potter fail, shrink government overall so there is less reason for money to want to go there, and go after the graft in Washington with Frank Capra zeal.

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*Capra also points out how elites try to demonize the “other,” whether it be African-Americans, Catholics, or Jewish persons. Bigotry is a tool used to divide people so bad men can rule. If he were alive today, Capra would warn us about the increased danger of hatred and bigotry in times like our own. Let’s blame crooks for crookedness, accept that some downturns are part of the system, and keep our cool.

“Love your neighbor” was a favorite Biblical idea in many Capra films.

By the way, he would also warn us to go after rich crooks, but not to fall into the stupid notion that all the wealthy are crooks. To Capra, socialism was just another evil “-ism” to be avoided through embracing good old Americanism. ExileStreet

copyright 2008 John Mark Reynolds

John Mark Reynolds is the founder and director of the Torrey Honors Institute and Associate Professor of Philosophy at Biola University.His personal website can be found at www.johnmarkreynolds.com and his blog can be found at http://scriptoriumdaily.com.

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