06 December, 2012

"Let's Make Money" Documentary: Interesting and Informative, Wrong Conclusions

Just the other day on Croatian website Dokumentarci.com.hr I came across an Austrian documentary titled “Let's Make Money” (see below) that was produced in 2008. For some odd reason it didn't come to my attention much earlier. Though it is kinda late to comment on it, I feel the need to say a few things, especially because this film largely caters to the conventional collectivist wisdom that blames “greedy” capitalism for all the economic turmoils of today.

The documentary:

To begin with, “Let's Make Money” is an interesting and informative piece of work filmed in various locations around the world and interviewing ordinary folks, businessmen, investors, bankers, and government officials. Just to be able to see and hear the different stories of varying human fortunes is a beautiful thing, and I highly recommend everyone to watch it. In it, the viewer is reminded of the extremely harsh living conditions in some of the third world countries, where it is also correctly pointed out that that their misery is partly the result of economic trade protectionism of the West. Through insiders' interviews the documentary is also effective in giving viewer an insight into the global financial operations. Especially interesting is how banks manage and invest taxpayers' money around the world in so called emerging markets, as well as revelations of such investment hazards such as the growing property bubble in Spain.

My first beef with this film is that it never makes a clear distinction between the crony capitalism or corporatism, or corporate fascism which it chooses to describe as neoliberalism and between the good free market capitalism, which is responsible for creating most of the wealth in the world we enjoy today. Instead, the word neoliberalism is in it a synonymous with the word capitalism, thus implying the conclusion that capitalism is a bad thing. Well, crony capitalism is bad, free market capitalism is good.

Next, globalization is mentioned as evil which is destroying the way of life in the West. However, before making any such conclusions about globalization we need to look deeper at its context. Globalization in the sense of free trade is a very positive thing, because amongst other things it leads to more efficient allocation of resources, higher productivity, cheaper products and services, and finally to wider spread and more just redistribution of wealth through incentive of productive work, and not through everyone's favorite social justice, that is choking Europe at the moment and making everyone there more equally poor.

Globalization in sense of harmonization under one central government, as is the case with the European Union, is a very bad thing. It leads to creation of one case fits all legislations that may benefit some people but hurt others. Such centralization also lessens people's ability to influence enactment of laws to fit their needs. Harmonization also leads to decrease and eventual ceasing of market competition. What comes instead are acts of protectionism, implementation of production quotas upon the more successful countries and businesses, and providing subsidies to those that are failing but are successful at lobbying politicians.

This all doesn't look like the free market capitalism that was never properly mentioned in the documentary, does it? In free market capitalism, the rules of the game are such that the success is rewarded through sales (through votes coming from consumers' wallets), and failure falls by the wayside without the help from government.

Significant attention of the Let's Make Money film was given to attacking tax havens, something which I believe is completely unjustified. Tax havens are an innovative answers of the market in countering tyranny of world's governments, that are trying to tax away the fruits of individual labor. What is wrong with wanting to avoid double taxation of honestly earned money? Governments do it once though income tax and the other time through tax on savings. It is therefore entirely natural to expect the money flight from countries that practice excessive and/or double taxation to jurisdictions that don't. If the money earned in one country is invested in other parts of the world, the sole culprit for that is government, because of its unfavorable business conditions, and not because hard working citizens that want to save their money and/or invest it in places where they will get much better returns for their investments. That is not criminal but simply common sense.

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