Action Hero Class Warrior Motifs

Class warfare as Action Hero movie narratives:

  • If you shoot the Wall Street Corporation, the switch they are holding is released, the bomb goes off and the city is destroyed. This is “Too big to fail”, but also even if the banks were much smaller- it doesn’t matter because they are tied together like alpinists climbing a mountain. One goes into the crevasse and they drag all the others in. That is, there are massive interdependencies in modern financial instruments in the digital world, where you push over one small domino, and the collateral call ins create a cascade of failures. Paul Solman of PBS Newshour illustrated in a simple form in this video. So tieing together doesn’t work for Alpinists if the others cannot hold on. That is, the financial firms could not hold on because of the Massive leveraging problem created by instruments like naked credit defacult swaps. Dodd-Franks still allows such instruments which are not properly collateralized.
  • Bad Guy uses middle class wage earners as human shields. Shoot me and all these people go out of work (Bloomberg argument).

This is not a Left-Right axis issue. This is on the Up-Down axis, and people on both the left and the right want to shoot the bad guy.

There is substantial temptation for demagoguery here- channeling the energy into the emotionally appealing Action Hero’s clever decisive solution to the Bad Guy’s plan where Head’s he wins tails we lose. That is, the sort of unthinking rage on the part of the public is not such a good thing because though there were bad actors who did bad things, when you look at systemic solutions, you can’t really make any entity clearly the scapegoat- even obscure entities like derivatives. Not all exotic financial instruments are imprudent or ways to bamboozle investors and regulators with opacity and complexity. They also can be used in a moderated way to create greater liquidity which translates to more economic activity.

The temptation among the left to scapegoat business owners is almost irresistible but Elizabeth Warren to her credit refrains from it.  Warren defends the rationale that entrepreneurs must be able to keep a “hunk of wealth” as reward for their risk taking. She has taken fire from progressives who would like to place restrictions on not just on obscene hunks of wealth, but any hunks of wealth retained by those who create new businesses. Even among progressives who don’t buy the GOP-lite positions of Clinton’s third way, there seems to be widespread agreement on the right that a majority of progressives believe as Warren does.


About John JMesserly

Mostly harmless

Posted on 2011-10-26, in class warfare, credit default swaps, Elizabeth Warren, to big to fail. Bookmark the permalink. Leave a comment.

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