Jordan Belfort, Terence Winter, and Martin Scorsese, 2013
#2, 2013 Skandies
So the gimmick here is that we've seen this story before — perhaps most notably in Scorsese's own Goodfellas. A kid sees that gangsters get to wear expensive clothes, drive fancy cars, fuck beautiful women, and receive deference from everyone around them, and yearns to be one of them. As an adult, he rises through the ranks, gets everything he ever wanted (and becomes a crazed drug addict in the process), runs afoul of the law, turns over his former associates, does a short stint at Club Fed, and sells the movie rights to his story for big bucks. The difference is that this time around the gangsters belong not to the Mafia but to the financial sector, which is worse. The Mafia has never crashed the global economy gambling on derivatives.
While this film's titular predator, Jordan Belfort, does break the law, the real crime is that so much of what he does is legal. People who read my site regularly already know my spiel about this by heart, but for the newcomers, it goes something like this. For the vast majority of human history, when communities consisted of thirty to fifty people apiece and everyone was well acquainted with everyone they interacted with, personal relationships determined how the limited material wealth of a band, chiefly food, was distributed. Things got more complicated with the advent of large settled populations. How do a bunch of strangers pool together the goods and services they have produced and divide them up? Because if they don't, and live under autarky, that puts a severe cap on living standards. Specialization and trade can lift that cap, but direct barter is stupidly inefficient. Far superior is the system that the development of money made possible. It takes a real leap of faith for a society to adopt money, because on the surface it requires crazy behavior: I walk into a shop, and someone gives me something with real value, like a loaf of bread, that took time and effort and physical resources to create, and I brazenly walk right out with it having left nothing behind but some gaudy scraps of paper and a few metal discs. And I can get away with this because some time earlier I taught a kid how to multiply fractions, and that kid's mom gave me these tokens that, though intrinsically worthless, represent to the stranger behind the bakery counter that I therefore deserve a loaf of bread. Which isn't to say that people are consciously thinking of the moral underpinnings of money when they accept it; they accept it because they trust that in due time they'll be able to trade it for stuff they want. But the moral underpinnings are important — they're why money achieved the universal buy-in that makes it useful.
But after that buy-in has been achieved, it's very easy for money to come unmoored from its moral underpinnings, and in recent decades money has done an increasingly shitty job of signifying what people deserve, as it has flowed from people doing productive work to those who merely dick around with the tally sheets. A very basic example of this sort of thing is gambling. When the baker takes the five dollars I paid him for the loaf of bread and uses it to buy an ice cream cone, it essentially amounts to my telling the ice cream shop proprietor that the baker has contributed a loaf of bread's worth of value to the world, and that he deserves an ice cream cone for his trouble. But if instead the baker loses that five dollars to his neighbor in a poker hand, that is not a withdrawal from the common wealth of society. It is simply a transfer of my testimonial to someone for whom it was not intended. And when the neighbor buys an ice cream cone with his winnings, I am now vouching for someone who doesn't deserve it, because getting lucky in a card game adds nothing to our pool of goods and services. So not only did an ice cream cone go to the wrong person, but the gamblers have effectively made a liar out of me. And this is how Jordan Belfort makes his fortune. He essentially operates a casino, calling people up, pressuring them to gamble hefty sums on stocks, and pocketing half the wagered amount regardless of whether the price rises or falls. In theory, Belfort is adding value to those transactions that entitles him to his cut, by offering his clients the hard-won expertise that will direct them toward good investments and away from bad ones. In reality, there is no such value. As Belfort's mentor explains: "Number one rule of Wall Street: nobody — I don't care if you're Warren Buffett or Jimmy Buffett — nobody knows if a stock is gonna go up, down, sideways, or in fucking circles, least of all stockbrokers." People in the financial sector, he continues, "don't create shit. We don't build anything." Instead, the "name of the game" is to "move the money from the client's pocket into your pocket". Think of how nonsensical this appears if we translate money back into what it represents, which is social credit. You do a lot of useful stuff in the community, and the rest of us appreciate you for it enough to make you things and help you out in various ways, but then one day a scam artist wins your confidence, and you… point at him and tell us, "Actually, appreciate him instead!" And, uh, no! Gratitude and esteem are not transferable that way. But money is. That's a problem.
At this point it would not be out of line to object that, wait, people are more than just economic productivity units, and there shouldn't be a strict one-to-one correspondence between your contribution to society's resource base and your claim on it. True! I once audited a class on prehistory and was surprised to learn that early human communities apparently did offer a safety net to their unproductive members — more so than modern society does, in some ways. Yes, survival was often a struggle, and entire bands would frequently starve to death, but when food was available, everyone got to eat, regardless of whether they had contributed to obtaining the food, or were unable to, or had simply chosen not to. The modern equivalent of this ethos would be the guaranteed minimum income that has been proposed in some quarters as of late — Alaska already offers a small one, for instance, and Switzerland will be voting on a $30,000/year proposal next fall. But some degree of economic hierarchy is still currently necessary, for at least three reasons. Probably the most obvious is scarcity. For instance, one of the first things Belfort does with his massive income as a stockbroker is buy a fancy car. And, well, there are only so many fancy cars in the world. Not everyone who wants one can have one. We need some way to determine whom they go to, and for luxury items like these, I don't have a problem with letting the price rise to the point that they aren't within the reach of everyone. The existence of the hierarchy is fine; the problem is that all too often the wrong people (e.g., stockbrokers) are at the top.
Again, you can argue that economic productivity isn't the sole measure of who are the "right" and "wrong" people to get stuff, and I will agree with you. The problem with Jordan Belfort and his cronies is that not only are they economic parasites, but they have no other merit whatsoever. I was surprised to discover that, while Goodfellas and stories like it tend to have their share of darkly comic moments, The Wolf of Wall Street is a comedy first and foremost — but it's a comedy from the 30 Rock and Coen Brothers school, where the joke is "ha ha, aren't these people horrible?" And they are, so much so that their existence is too depressing to laugh at. There is a widespread sense that people in the financial sector deserve the lion's share of society's wealth because they keep the economy humming — which they do not; on the contrary, they cripple it — and because they're really smart, and that is a personal quality worthy of reward. But this generally isn't true either. I mentioned above that I used to make my living teaching kids how to multiply fractions, but to tell you the truth, I actually made a big chunk of it teaching adults how to multiply fractions before sending them off to business school. Everything I've read suggests that the new hires at the investment banks aren't exactly the best and the brightest, but rather are to economists what script kiddies are to programmers. And Jordan Belfort and his coterie are all painfully stupid. This movie is largely made up of scenes in which dimwits have dimwitted conversations while clearly believing they're engaging in deep intellectual discourse. (I thought that the movie was borrowing a page from The Sopranos in this regard, but as it turns out that the screenwriter was one of the main writers on that show, I suppose that stands to reason.) More importantly, though, Belfort and company are terrible human beings — not just idiots, but rapacious idiots. They treat people like garbage and care about nothing but sating their basest appetites, spending the money they've cheated people out of on cocaine, quaaludes, prostitutes, status symbols like sports cars and yachts. Again, an economic system is just a subset and application of a moral system. And any economic system that ends up allocating society's wealth in a manner that places someone like Jordan Belfort at the front of the line is flawed on its face and needs radical reform.
So the first argument for economic hierarchy was that it's necessary due to scarcity, and the second is that it reflects a hierarchy of personal merit. The third is that an economic system should not only offer a means to determine each person's share of society's pool of goods and services, but also a means to expand that pool — "to make the pie higher", as George W. Bush would say — so that each of those shares is worth more. This is why "everyone is entitled to the exact same share of the pool, regardless of how much that person contributed" is a poor system: it removes the material incentive to work, leaving coercion (an extremely ugly option) or conscience (good luck!). Better is a guaranteed minimum income that spares people true suffering, but which is still meager enough that people aspire to a more comfortable life by doing useful work: diagnosing and curing illnesses, devising more efficient solar panels, teaching children to read, all the things we need people to keep doing if we want to prevent the world from sliding further into dystopia. But while a little inequality is salutary, add just a little more and suddenly you hit a tipping point past which it becomes immensely counterproductive — and that tipping point comes when some people get so rich that they can scoff at other people who do useful work. When Belfort first gets his job selling penny stocks and asks, "Who buys this crap?", his contact at the company replies, "Mostly schmucks." Who are the schmucks? "Postmen — there's always postmen. Plumbers." But until recently, written communication was hardly even possible without postmen, and houses would be virtually uninhabitable without plumbers. If the range of incomes has expanded to the point that the lives led by postmen and plumbers have come to be viewed with contempt, then it's time to take measures to narrow that range back down again. The problem with the extreme and increasing inequality of income we have nowadays is not just that it's unfair, though that's reason enough to hate it, but also that it removes the incentive to do useful work — people won't be satisfied with these sorts of occupations if they're going to have shitty lives anyway. If there is no comfortable middle, if the only way to avoid grinding poverty is to strike it rich in the casino that has gobbled up the real economy, the result is that even people who aren't as morally bankrupt as Jordan Belfort will end up abandoning the sorts of careers that make the world a better place. It is telling that The Wolf of Wall Street closes not with a shot of Belfort, but with an image of a diverse sea of faces at one of his seminars — regular people eager to learn how to sling bullshit and take their places in the predatory class.