“Boom Bust Boom” chastises economists, with some help from songs and puppets
The documentary film, directed by Terry Jones, criticises economists' lack of foresight in the mid-2000s
By S.K.
TERRY JONES, of Monty Python fame, knows a thing or two about group-think. In “The Life of Brian”, one of the comedy group’s films in which the protagonist is mistaken for the messiah, the frustrated hero yells to a worshipful crowd: “you’re all different”. They dutifully respond in unison with: “yes, we are all different”. One dissident pipes up with “I’m not”, but is shushed.
In the run-up to the financial crisis, the market was the messiah, and according to a new film by Mr Jones, economists were very naughty boys. “Boom Bust Boom”, which is available on streaming services and will be screened in cinemas across America and Britain, explores what went wrong in the run-up to the crash. One could reasonably ask whether we need yet another documentary on the topic. But Mr Jones valiantly adds sparkle and songs, a roster of hot-shot economists, and even a cameo from John Cusack, an actor.
In “The Big Short”, Margot Robbie, an actress, held viewers’ attention by explaining sub-prime mortgages while partially submerged in a bubble bath. Mr Jones focuses on bubbles of the financial kind, with explanations delivered by (the slightly less alluring) Paul Krugman. In the run-up to the crisis, one interpretation of booming house prices was that it was a result of carefully calculating individuals. Another is that investors were being swept along with the crowd. Stephen Kinsella, an economist at the University of Limerick, explains that individuals were not making mistakes. As long as everyone believed that prices would rise, they did, and betting on the housing market seemed to make sense. But once the tide turned, it was a disaster.
Economists understand bubbles (not the Margot Robbie kind). But they failed to fight against the notion that this time was different. This is the central problem identified by the film-makers: the Achilles heel of capitalism is humans’ ability to forget the crises of the past. Hyman Minsky, an economist, emerges as a Cassandra figure within economics; he had been saying this decades ago. Sadly Mr Minsky passed away in 1996, but his son was on hand to explain the ideas to an animated version of his late father. Mr Minsky (senior) saw that financial and economic regulation goes in cycles. After a crisis regulations are tightened. But as time passes, people take the stabilised system for granted and weaken regulation, sowing the seeds for the next mega-crisis. In this way, our financial system is fundamentally unstable. The solution is therefore not to teach people out of their biases, but rather to set up the system to protect people from themselves.
The film-makers’ gripe stems from economists’ lack of foresight in the mid-2000s. They slam economists for favouring models for their elegance rather than their usefulness. Mr Krugman defends the use of models as “intuition pumps”, distilling elements of the real world to clarify important things going on. The problems arise when you start believing in the fairytale, and leave the pumps to blow bubbles of their own.
The film is closer to an educational documentary than a particularly witty or fresh take on the events leading up to the financial crisis. It darts from bashing sleepy central bankers to terrible economics teachers, with so many high-flying economists that it becomes a little overwhelming. Though there are some songs, anyone hoping for a “Book of Mormon” style take-down of economists will be disappointed.
And some of the film’s prescriptions are more sensible than others. Andy Haldane, chief economist at the Bank of England, mentions splitting customer-facing banking from the higher-octane stuff. Paul Mason’s question of why, if we can redesign cars, we can’t redesign the economic system, is less helpful. The call for economists to teach much more economic history and to connect economics to the real world is valid. Less constructively, Mr Cusack, suggests that economics students should pelt their professors with vegetables and rotten fruit if they continue to parrot the party line. “Maybe urinate on them. That’s what I would do.”
