When you go see The Big Short, and you should go soon, it’s important to remember that the full title of the book on which the film is based is The Big Short: Inside the Doomsday Machine. The film utilizes an all-star cast and a number of celebrity cameos to tell, in refreshing clarity and humor, how the subprime mortgage crisis led to a financial crisis that crippled the entire world economy in 2008—a dark topic to say the least. Unfortunately, the film does not go one step further to explaining how to prevent the next financial crisis and that’s a shame.
For those of you unfamiliar with the film or book, it follows the simultaneous stories of the handful of investors who were able to figure out the subprime mortgage crisis was coming and bet big on it. Their stories are depicted by an outstanding (albeit decidedly male and pasty white) cast including Christian Bale, Steve Carell, Brad Pitt, and Ryan Gosling.
Professional movie critics have done a solid job reviewing the cinematic value of the film (overall very positive) so I’ll stick to the substance of the film- the financial crisis. On this front, Director Adam McKay does a major public service using celebrity star power and the simplest terms possible to bring to life an incredibly complicated topic.
Perhaps the largest failing of the film is the tone it leaves on, which might be best summed up by New York Times film critic, A.O. Scott, who wrote, “This is a terrifically enjoyable movie that leaves you in a state of rage, nausea and despair.”
Or as my friend put it leaving the theater, “I knew it was messed up, but I didn’t really understand how messed up it really was. That movie was terrifying.”
The film missed a major opportunity to drive home just how much we know about how to prevent the next financial crisis. Had McKay decided to wade into the political waters of prescribing public policy to fix our casino capitalist system of Wall Street greed, here’s a few solutions he might have pushed:
- Break up the banks. All of the major financial institutions that contributed to the 2008 crash (that still exist) are larger today than they were then. If they’re too big to fail (or to jail) they are too big to exist and should be broken up.
- Tax Wall Street. A small levy on financial transactions, referred to as the Robin Hood Tax, would cut down on the nefarious and unproductive behavior on Wall Street, like high speed trading—the topic of Michael Lewis’ latest book Flash Boys. It would also raise significant revenue for much needed public programs.
- Make banking boring. The high stakes gambling that constitutes modern finance does not contribute any meaningful value to the real economy. While everyone acknowledges there’s a valuable role for banking in the economy, there’s no reason it should be anything other than the boring entity it was from the 1940s to the 1970s.
In just 130 minutes, The Big Short crams in a bunch of incredibly important public education on modern finance into an interesting and surprisingly comical film. Rather than despair, viewers should head straight from the theaters to their representatives’ offices to call for reform so we won’t be back to see The Big Short 2.
Josh Hoxie tracks the debate over the estate tax and other grand divide-related concerns for the Institute for Policy Studies Program on Inequality and the Common Good.