by Joe Kernen
Try it this way: The Axiom’s “economy” is run on the principle that one supersmart computer can anticipate all the conceivable demands of hundreds of thousands of human consumers and satisfy them so well that those consumers get fat enough that they can barely move. This was the core myth of the twentieth century’s command economies (to say nothing of the dreams of Progressivism), whose history should remind even the producers of animated films that the traditional result of central planning is not overindulgence but famine. This wasn’t because the central planners lacked intelligence, digital or otherwise, but because they lacked information. If there are no competitors, the one remaining firm (or, as with true command economies, the government) gets no information about consumer demand in the form of the prices consumers are willing to pay.
Price mechanisms, or signals, are just another way of describing what happens when you shop for everything from detergent to houses: If you (and a thousand shoppers like you) choose to forgo the new-and-improved good-for-the-environment laundry soap at $10 a bottle in favor of the old-fashioned one at $5 a bottle, manufacturers lower the price or stop producing it at all. Sooner or later, supply and demand are brought into balance—a temporary balance, since shoppers have a tendency to change their minds. But when the soap manufacturer, like some 1955 Soviet economic planner, has to make decisions about what to make and how much to invest with no market information at all—well, if there is a lesson from the Soviet Union’s five-year plans, it is this: Consumers in such a system don’t get fat and lazy because all their needs are met.
And yet that is the world of WALL-E. Everyone on the Axiom—and, I guess, everyone on the earth they fled—lives in a world run by a computer that somehow meets all conceivable consumer demand without ever changing, without anyone working, without anyone ever even exhibiting the curiosity of a paramecium.
The overthrow of such a system is stirring, of course, even if its existence is unfathomable in any real-world economy. But once the humans onboard the Axiom do revolt and get rid of their computer rulers, their behavior is even weirder. For upon their return to Earth, what do they do?
They become farmers. Organic farmers, I suppose, though not of the most sophisticated variety. (The Axiom’s captain announces: “You kids are going to grow all kinds of plants. Vegetable plants. PIZZA plants!”) Not only that, but as the end credits roll, WALL-E’s creators offer up a recapitulation of human history, beginning with the return of the Axiom. The newly returned humans plant seeds. They rediscover fire. In a credit sequence that is an homage to the Egypt of, say 3000 BC, they discover wells. They learn how to cultivate wheat and grapes. Fish repopulate the oceans. Cities are rebuilt (using, of course, sustainable production materials and hand tools). The planet blooms. People lose weight. By the time the credits finish, humanity, which began the movie as spacefarers able to travel faster than the speed of light in an environment that had conquered starvation and disease, have finally progressed to, I think, the Middle Ages.
The natives of Pandora, the setting for James Cameron’s Avatar, have so little use for technology of any sort that they make the Axiom look like an advertisement for the wonders of progress; WALL-E, after all, at least holds out the hope that technology can serve human aspirations. Pandora’s Na’vi, not so much.
For readers who have been in a coma for the last two years, Avatar tells the story of a paraplegic Marine veteran, Jake Sully, who is recruited into a program intended to study the Pandoran natives—the blue-skinned, nine-foot-tall Na’vi—in order to improve the chances of negotiating mining rights. The object of those rights, named (don’t laugh) “unobtainium,”20 is vaguely but critically important for the continued survival of Earth, which, we are told, is on the brink of extinction because of some unnamed, but probably humancaused, environmental crisis. As the story begins, the humans’ “avatars”—Na’vi bodies that are able to host the consciousness of human operators—have not succeeded in persuading the technologically primitive Na’vi to permit the mining operation, but humanity has a plan B: Take the needed land by force, using a battalion of hightech mercenaries employed by the mining consortium and led by a colonel who closely resembles a half-starved pit bull, only less likable.
However, Jake (or more precisely, his avatar) goes native big time. Enchanted by the Na’vi ability to live in harmony with nature, and by a beautiful Na’vi princess, he leads his new people to an implausible victory over the rapacious miners, who are sent home to their dying planet. I mean, our dying planet.
The plot for the movie has no real surprises: Mining companies bad. Native Americans—oops, I mean Na’vi—good. Good defeats bad. It’s all been done before, a dozen times (though not with such admittedly spectacular technical skill). In an animated movie titled The Battle for Terra, for example, the last remnant of humanity—led by a violent general—attempts to destroy a harmless native population and colonize its planet but are foiled by a human who betrays his species in support of the technologically primitive locals. Or for that matter, take Kevin Costner’s Lieutenant Dunbar in Dances with Wolves, in which a U.S. cavalry officer leaves his own world for that of the Lakota Sioux. Even by comparison to its predecessors, however, the environmentalism that drives Avatar is especially pure, to the point that even the extinction of humanity seems an okay price to pay for the actual sin of despoiling Earth and the proposed sin of exploiting the mineral wealth of Pandora. One might think that the miners’ motives—saving their planet—might make a difference, but it doesn’t.
The really interesting thing about Avatar, however, is how it underlines the link, in popular culture, between hostility to free markets and a certain sort of environmentalism. Or more accurately, environmental romanticism.
Environmental romanticism is the belief that the natural world is just better than the human world (forgetting, for a moment, that humans are just as “natural” as rain forests). Nature is morally superior. It’s more spiritual. And it’s even better looking. Without Homo sapiens, the natural world would revert to a stable and unchanging perfection. If humans want to live in such a paradise, they have to be as inoffensive as possible. In fact, they have to be invisible.
Blake, whose ten-year-old heart has never found an animal or plant that it didn’t want to save, is especially vulnerable to this kind of romantic view of nature. Whether hanging around at our local nature preserve or supporting animal rights, she is incapable of seeing environmentalism in anything but a good light. In the movies set on Pandora (or on Terra or in the Wyoming Territory) that light shines on a conflict between nature and technology, and when that happens, you can bet any amount of money that the nature in question is going to be beautiful, and—so long as it isn’t attacked—beneficent. Avatar is simply the most successful version of this reliable theme, so successful that a sizable number of viewers were actually depressed after seeing the movie, repulsed by the world around them after seeing the incredibly beautiful and hospitable world of Pandora.
What makes Pandora so attractive, however, is not phosphorescent plants and beautiful “birds” (and gorgeous Na’vi princesses). What makes the Garden of Eden Edenic is that it doesn’t change.
Of all the characteristics of the paradises described by every culture, that’s the one constant. No one gets poorer or richer or older. In paradise—and as we learn at the end of Avatar, on Pandora—there’s not even a need for anyone to die. It’s like Peter Pan’s Neverland: adventures galore, but the good guys never die. All is in balance. In this way, as in so many others, it is the exact opposite of a free market, which is both powered and steered by those famous “prerennial gale of creative destruction.”
That destruction, of course, is what the Na’vi stand against, but there is another, more subtle, way in which Avatar is a perfect expression of economic muddleheadedness. And that is the reason for the story’s conflict: the fact that Earth has run out of so many critical resources that the only solution is mining the magic stuff—the unobtainium—out of Pandora.
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The most familiar theme in all of environmentalism is that we are always running out of stuff, usually the stuff most critical to industrial society. Environmentalists regularly discover shortages of everything from trees to biodiversity, but the most-repeated mantras have to do with fossil fuels. “Peak oil”—the idea that oil production has reached a peak, after which a decline is inevitable, which was first articulated by the geologist M. King Hubbert in the 1950s—has been followed, in rapid succession, by peak gold (a pretty impressive discovery, given the billions of ounces already in bars, Krugerrands, and wedding rings), peak lithium (a critical element in lithium-ion batteries), peak nitrogen, peak mercury, peak selenium, peak aluminum, peak phosphorus, peak copper, peak silver, and—wait for it—even peak helium, the second-most-abundant element in the universe.
This particular blind spot, of course, is why Paul Ehrlich lost that famous bet to Julian Simon back in 1990. But—as mentioned above—writing a $600 check didn’t stop the doomsaying professor from continuing to preach that just about every commodity on which civilization depends was in permanent and irreversible decline.
The idea of decline almost demands opposition to free markets; it’s a short leap from a belief in inevitable shortages to the idea that wealth acquisition is a zero-sum game—when someone gains, someone else must lose. Both are consequences of a belief that the pie is finite and every slice taken leaves one less for everyone else.
“Blake?”
“Yes, Dad?”
“How many slices of pizza do you want?”
“Two.”
“Scott? How many for you?”
“Two.”
With only three slices of pizza left, conflict loomed. We had passed the “peak pizza” point.
“Dad?”
“Yes, Blake?”
“I’ll have one slice and a bagel.”
Kernen nutritional habits aside,21 Blake illustrates a principle that somehow seems to elude environmentalists and moviemakers alike. And its elusiveness isn’t because it’s just been discovered (though I just did discover it, as part of writing this book); it’s been around since 1890, when the legendary economist Alfred Marshall first described it, “for purposes of convenience, as the Principle of Substitution.”
The substitution principle is actually fairly simple: The cost of producing anything can be divided into component parts that are combined in what economists (who can’t stand simplicity) call “inputs for production functions.” To maximize profits, or minimize cost, manufacturers constantly change the combination, substituting one input for another.
This is why we don’t run out of stuff, even when there’s a finite supply of it. It’s not just what we saw in chapter 3: that in a free market, a commodity that gets more difficult to find or expensive to produce (or that becomes more in demand) sees its price rise, which increases the incentive to find more of it. It’s that when the price rises enough, another commodity is substituted for it—a bagel for a slice of pizza, for example. Long before we run out of copper, we substitute fiber-optic cable for it. The Stone Age didn’t end because we ran out of stones.
The substitution principle is a key component of free markets and is therefore one of the most important of Schumpeter’s winds. To those who romanticize the unchanging features of paradise, whether on Earth or on Pandora, the wind is about as welcome as a forest fire, but as even environmentalists recognize, fires are as necessary for a healthy ecosystem as rain and sun.
The entertainment “industry” has a lot of practice contributing to America’s (and the world’s) economic illiteracy. So much practice, in fact, you might figure that hostility to free markets is practically a requirement for successful moviemaking. If you want either commercial or critical success, or just want to persuade a studio to bankroll your latest project, you just have to be demonizing big business.
Or maybe not. Though there aren’t very many movies and TV shows that depict business and free enterprise in a positive light, audiences and critics have flocked to those few that do. Martin Scorsese certainly made a hero out of Howard Hughes, fighting the crony capitalism that made PanAm a de facto government monopoly in The Aviator. The bookselling tycoon in You’ve Got Mail is wealthy, competitive, and sympathetic. (Well, he’s played by Tom Hanks, so of course he’s sympathetic.)
But those are movies aimed at adults. Exhibit A for the defense is one of Blake and Scott’s favorites: Tim Burton’s 2005 version of the Roald Dahl classic Charlie and the Chocolate Factory.
As the movie opens, Charlie Bucket is living in the most over-the-top poverty ever seen on-screen. His father is employed, if you can call it that, screwing the caps on toothpaste tubes by hand. His four grandparents spend their entire days in a single bed, complaining. Cabbage soup is all the family can afford to eat—and after Charlie’s dad loses his job to a machine, not even that.
So when, against all odds, Charlie wins a trip to the legendary Wonka chocolate factory, viewers will be forgiven if they expect the film to blame the enormously successful Willie Wonka for their troubles. But the movie does anything but. The movie’s star, Johnny Depp as the chocolate tycoon Willie Wonka, is practically an encyclopedia of neurotic tics—can’t bear to be touched, can’t even say the word “parent”—but it’s not too much to call him heroic. No Ayn Rand character better exemplifies the virtues of free-market capitalism. Wonka is the world’s greatest chocolatier because he is more creative—ice cream that won’t melt, a single candy that satisfies for an entire day—and harder working than his competitors. He is even more ruthless, though in a thoroughly honest way.
Most movie factories, ever since Charlie Chaplin’s Modern Times, have been spirit-crushing places. In fact, this has been true ever since Charles Dickens, whose factories’ machines are explicitly monstrous. Not Wonka’s. His factory is an amusement park, with machines that may not be entirely safe—Charlie’s companions on his trip discover that they bite—but are nothing if not fun. They are the perfect reflection of their creator’s genius, and there is no point at which his success is shown as anything but well deserved.
And Charlie’s dad, who lost his job at the toothpaste factory? Far from resenting the loss of the job he described as “hours long; pay terrible,” by the end of the movie he has taken on a job repairing the machines that replaced him. “Things,” we are told, “had never been better for the Bucket family.” Nor had they ever been better for the filmmakers. Despite the lack of cheap shots at free markets, Charlie and the Chocolate Factory was one of the biggest-grossing movies of the year; in inflation-adjusted dollars, it’s still one of the hundred most successful movies of all time.
Which just reminds me that I still don’t understand the reflexive hostility of the entertainment business to free markets and capitalism. Maybe the best explanation is that the writers, directors, and actors who produce our filmed entertainment are allowed (maybe even encouraged) to retain a child’s view of the world. Like ten-year-olds, they retain a belief in obvious heroes and villains, in perfection as a place where things don’t change (especially as the result of human action), and in happy endings.
Once again, just like Progressives.
CHAPTER 6
May 2010: America vs. Europe
On May 1, 2010—May Day—rioters armed with Molotov cocktails squared off against police in the streets of Athens. Their grievances were, by American standards, a little peculiar.
Ever since the 1880s, May 1 has been celebrated—if that’s the word—as International Workers’ Day. May Day (which I know has nothing to do with the distress signal, though maybe it should) has been uniting the workers of the world ever since the 1886 Haymarket Riot, a labor protest in which eight Chicago policemen were killed, and it has been a pretty rambunctious anniversary ever since, from the 1919 May Day riot in Cleveland, which ended with two dead and forty injured, to the Los Angeles “melee” of 2007 (twenty-nine marchers and a dozen police officers injured). In fact, the only places you can be sure that
a riot won’t occur on May Day are the few remaining traditional communist countries, where any temptation to get frisky in support of the proletarian cause is chilled out by battalions of tanks on parade.
Even so, Greece was, by May 2010, an extreme case. The simmering anger in Greece over the austerity measures needed to reform what was, at the time, the world’s most fragile economy, had boiled over. After a year of protests against (among other things) the privatization of state-owned companies, changes in the law to make it easier to both hire and fire employees, and a decrease in government spending, the Greeks had had enough.
Two weeks earlier, a big chunk of America had also had enough and had been taking to the streets with protests of their own. And though those Tax Day protests were uniformly peaceful, the level of anger in Washington DC’s Freedom Plaza on April 15 didn’t look any different from what was going on in the streets of Athens.
There was, however, one pretty obvious difference between the two. The Tea Party protesters in the United States were demonstrating in favor of exactly the same things that the Greeks were against. The signs on view at the American demonstrations were demanding more austerity and less government. It’s hard to imagine a bigger contrast between what we might call the European “street” and the American.
Now, I confess to a soft spot for the Tea Party activists. In fact, I sometimes feel the kind of proprietary feelings about the movement shared by people who saw the Beatles in Hamburg in 1962—or maybe more to the point, who were in the audience for Ronald Reagan’s “A Time for Choosing” speech in support of Barry Goldwater’s 1964 presidential campaign. You know, members of the there-at-thebeginning club. That’s because on Thursday, February 19, 2009, I was in my usual spot at the anchor desk for Squawk Box while our manic reporter, Rick Santelli, was doing a live feed from the Chicago Mercantile Exchange. The economic news was, even by the standards of 2009, crappy. The TARP bailout had been passed some months earlier. The Obama administration, evidently embarrassed that the Bush White House had become the biggest spendthrifts in American history (“overspending is what we do”), had passed the $800 billion stimulus bill a few weeks earlier, and the previous day, the president had announced his “Homeowner Affordability and Stability Plan.”