Getting It Wrong On “Gatsby”

Leonardo DiCaprio as Gatsby

The 2013 version of The Great Gatsby was recently released on DVD/Blu-ray. I haven’t seen the film yet, given that I’m pretty lukewarm toward Baz Luhrmann. (Moulin Rouge! was enjoyable enough, Romeo + Juliet had its moments, but Australia?) But when I heard a radio advertisement for the DVD last night, I was reminded of a Nick Gillespie article from the April 2013 issue of Reason entitled “The Great Gatsby‘s Creative Destruction.” Gillespie is, according to The Denver Post, “a true intellectual, who can, before finishing his lunch, discuss how “The Great Gatsby” might be written today, switch to a riff on free-market reasons for supporting a value-added tax, reference economic studies that detail the “self-correcting” tax distribution in European countries that have applied a VAT, chart from memory the nation’s deficit spending patterns since the Great Depression, and all while handling a pretend-I’m-interested discussion with a political candidate whose conversation is limited to repeating the phrase, “It’ll be a real dog-fight, in every sense of the word.”” Not bad for #18 on The Daily Beast‘s list “The Right’s Top 25 Journalists.” (He would cringe at being lumped on “the Right” given his strong libertarianism.) The fact that he has a Ph.D. in English literature probably helps with his analysis of The Great Gatsby. And it is an interesting one.

He begins,

Based on the trailers and ads made available so far, the new movie likely errs in the same fundamental way that the Redford version did. That is, it conceives of Gatsby ultimately as a grand love story between the title character and the object of his obsessive love, Daisy Buchanan. Given the barebones plot of the book, that’s understandable but regrettable, as those two are the least compelling characters in the novel. Despite occasional moments of darkness and depth, Daisy works hard and mostly succeeds at maintaining a superficial lightness. Gatsby, despite the whirl of excitement and mystery about him, is an empty suit. Even the novel’s adulatory narrator confesses that when he’s alone with Gatsby, “I found to my disappointment, that he had nothing to say.”

The reason that Gatsby (the novel, if not the character) still has plenty to say to us is that it captures the precise moment that modern America came into recognizable shape. It is about the move from countryside to metropolis, from unum to pluribus, from hierarchy to heterarchy in all aspects of cultural and economic life. It captures a world in which nothing is fixed in terms of status, fortune, and self-fashioning—and it narrates the anxieties by such freedom.

Gatsby…is not simply a story about class differences. It’s about the breakdown of class differences in the face of a modern economy based not on status and inherited position but on innovation and an ability to meet ever-changing consumer needs. Ultimately, Gatsby is the great American novel of the ways in which free markets (even, and perhaps especially, black markets) overturn established order and recreate the world through what Joseph Schumpeter called “creative destruction.”

Certainly one of the more novel takes on Gatsby I’ve read. The whole thing is worth reading.

The Slow Hunch: A More Perfect Union?

Nearly two years ago, I graduated from UNT with a BBA in Organizational Behavior & Human Resource Management. As part of my curriculum, I did an internship at a unionized freight company. I was required to write a research paper based on my experience and the company itself. Having dealt with grievances, discipline, and other administrative duties, I focused on the effect the union had the company’s operations. I posted an excerpt of that paper at The Slow Hunch (I left out the company specifics and focused on the overall economic effect). Even though I’ve become softer on unions and harder on management over the past couple years (despite the unsavory history of labor unions and their contribution to unemployment), I still think the post is worth a look. If anything, it is a good reminder of a point I’ve made before: true growth comes from capital investment, creation of wealth, technological advances, increased skill and education, and competition.

Pic from Mark Perry

 

Happy Labor Day!

Historian Thaddeus Russell, author of A Renegade History of the United States, has a 2009 Boston Globe article titled “The Truth About Labor Day.” To wet your appetite:

In 1884, when President Grover Cleveland signed the bill making Labor Day a national holiday on the first Monday in September, he and its sponsors intended it not as a celebration of leisure but as a promotion of the great American work ethic. Work, they believed, was the highest calling in life, and Labor Day was a reminder to get back to it. It was placed at the end of summer to declare an end to the season of indolence, and also to distance it from May Day, the spring event that had become a symbol of the radical labor movement.

The day most of us now spend in happy leisure was created to urge Americans to work more, not less. The holiday’s inventors would have been dismayed to see that Americans today would use it only to float in a pool, play putt-putt golf, or – even worse – to fantasize about a life in which they do nothing but play.

Labor Day, perhaps more than any other holiday, has always embodied a contradiction in American society, the deep gulf between the nation’s self-image and the way its people often behave. And to understand why is to get a clearer look at an important but little-understood piece of our own history: America’s long civil war over fun.

Check out the full piece and read more about this American contradiction.

The Dismal Science

The picture to the left was the cover of Ruskin on Himself and Things in General, a late 1800s collection of essay extracts by John Ruskin. The white, bearded, thin-faced Ruskin tramples his dark, broad-faced and flat-nosed enemy. In the slain man’s hand is a bag that reads “Wealth of Nations” and “L.S.D.” (not the drug, but the abbreviation for “pounds, shillings, and pence”). Next to him is a book titled “The Dismal Science.” How does the “dismal science” connect with this obvious racism? Most know that economics got its unfortunate nickname from Thomas Carlyle, who coined the phrase based on Malthus’ population doomsdaying. However, this well-known story is simply not true. As economists David Levy and Sandra Peart explain,

[Thomas] Carlyle’s target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus’s predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact—that economics assumed that people were basically all the same, and thus all entitled to liberty—that led Carlyle to label economics “the dismal science.”

Carlyle was not alone in denouncing economics for making its radical claims about the equality of all men. Others who joined him included Charles Dickens and John Ruskin. The connection was so well known throughout the 19th century, that even cartoonists could refer to it, knowing that their audience would get the reference.

 

Perhaps capitalism has more to do with emancipation than exploitation.

 

Five Economic Game Changers

The following comes from a new report out of the McKinsey Global Institute (McKinsey & Co.):

 

As shown above, the report identifies five major catalysts for economic growth:

  • Shale-gas and oil production
  • US trade competitiveness in knowledge-intensive goods
  • Big data analytics as a productivity tool
  • Increased investment in infrastructure, with a new emphasis on productivity
  • A more effective US system of talent development

Perhaps the US does not need to “get used to slower growth.” Perhaps we just need to know our options.

Deregulation and the Financial Crisis

The following chart comes from the Mercatus Center at George Mason University. It shows the increase in regulations from 1997 to 2008, deflating the claim that “deregulation” led to the financial crisis.

Growth of Financial Regulations

The researchers concluded,

Using the Mercatus Center at George Mason University’s RegData, we find that between 1997 and 2008 the number of financial regulatory restrictions in the Code of Federal Regulations (CFR) rose from approximately 40,286 restrictions to 47,494—an increase of 17.9 percent. Regulatory restrictions in Title 12 of the CFR—which regulates banking—increased 18.2 percent while the number of restrictions in Title 17—which regulates commodity futures and securities markets—increased 17.4 percent.

…Total regulatory restrictions pertaining to the financial services sector grew every year between 1999 and 2008, increasing 23 percent during this time. The Patriot Act, the Sarbanes-Oxley Act, and Regulation NMS all contributed to this growth. The repeal of parts of the Glass-Steagall Act via the Gramm-Leach-Bliley Act did not result in noticeable deregulation of the financial services sector. Nor did the Commodity Futures Modernization Act facilitate overall financial deregulation. Not even the Financial Services Regulatory Relief Act of 2006, legislation intended to decrease regulatory burdens on the financial industry, reversed the ever-growing burden of regulatory restrictions faced by the financial services sector in the years leading up to the financial crisis.

While “deregulation” may be a dirty word among some of the political elite and their supporters, the chart above and video below should cause one to give pause and reconsider the costs of heavy-handed regulations.

Race Relations: Global Edition

RealClearWorld has a recent post that should be instructive to Americans in the wake of the Trayvon Martin case and the racism claims that accompanied it. Though racism certainly exists in America (I’m willing to bet it will always exist everywhere to some extent), to obsessively focus of America’s past and present sins while ignoring the rest of the world is problematic. Here are a few points the RCW article makes:

  • A large number of Hungarian parents will not allow their children to be friends with Jews (46%), Africans (58%), or Roma/Gypsies (68%).
  • Italy’s first black government minister was openly compared to an orangutan by a senator and had bananas thrown at her by a citizen.
  • Dutch politicians exploit racial tensions to advance a particularly anti-Muslim, anti-immigrant agenda.
  • Mexican navy cadets were attacked by some 300 “soccer fans” on a Polish beach.
  • The neo-Nazi Golden Dawn party caught 7% of the Greek popular vote in June.
  • The National Front caught nearly 18% of the French vote in the April 2012 first-round presidential elections.
  • The Freedom Party in the Netherlands caused the government to collapse in April 2012.
  • Extremist parties were part of government coalitions in Italy, Switzerland, Austria until recently.
  • Similar parties are gaining momentum in Denmark, Sweden, and Finland and were met with electoral success in the 2009 European Parliament elections in Hungary, the UK, etc.

As the article concludes, “Perhaps those who continue to obsess over American race relations should try reading global news every once in a while.”

Tazelaar…Peter Tazelaar

My love of James Bond films knows no end. It has been a torrid affair since sixth grade. My excitement for Skyfall‘s release in November actually overshadowed my anxiety over the presidential election. Part of my adoration for Bond films is the mix of the absurd with the awesome.

One of the most pristine examples of this absurd awesomeness is found in Goldfinger. In the pre-titles sequence, Bond accomplishes a mission in a wet suit, only to remove the suit to reveal a crisp white tuxedo underneath (while I suggest watching the whole thing, this specific scene is at 2:13):

Silly? Unrealistic? You’d think. Except that it really happened in the Nazi-occupied Netherlands during World War II:

Peter Tazelaar

Peter Tazelaar was under orders from the exiled Dutch queen, Wilhelmina, to slip into the country to extract two fellow countrymen to join the government-in-exile in Britain.

He and his fellow secret agents – Eric Hazelhoff Roelfzema and Bob Van der Stok – had often spent time at the seaside resort of Scheveningen, near The Hague, and knew that the Palace hotel there had been taken over by the Germans as a headquarters, and that every Friday night they held large and boisterous parties there.

Their plan was simple but audacious – approach Scheveningen in darkness by boat, and take Mr Tazelaar into the surf by dinghy, from where he could scramble ashore. Once there, he would strip off his wetsuit, to reveal his evening clothes underneath, to enable him to pose as a partygoer and slip past the sentries.

…[J]ust after 4.30am on November 23 1941, after several false starts, Mr Tazelaar, Mr Hazelhoff Roelfzema, and another Dutchman, Chris Krediet, and Lieutenant Bob Goodfellow, disembarked from a British Motor Gun Boat into a small dinghy.

Once they neared the surf, Mr Hazelhoff Roelfzema and Mr Tazelaar slipped off the boat and waded onto the beach. Mr Hazelhoff Roelfzema then helped his comrade unzip his specially designed wetsuit to reveal his immaculate evening clothes.

Mr Hazelhoff Roelfzema then poured a generous measure of Hennessy XO – Mr Tazelaar’s favourite – from a hip flask over his friend, and returned to the dinghy. Reeking of brandy, Mr Tazelaar managed to stagger convincingly past the sentries stationed around the hotel.

Think twice the next time you scoff at a Bond movie. It just might be true to life.

 

Mad Skillz

Over at the American Enterprise Institute, James Pethokoukis has an excellent write-up on a new study by Steven Kaplan (University of Chicago Booth School of Business) and Joshua Rauh (Stanford Graduate School of Business) on income inequality and the “1% vs. 99%” war cry. The findings:

  • The increase in pay at the highest income levels has been broad-based, ranging from public and private company executives to pro athletes.
  • Instead of drastically rising, the afer-tax, after-transfer income share of the top 1% is about the same as it was in 1987-1988, 1996, and 2001 (most inequality alarmists cite pre-tax, pre-transfer income).
  • Top earners come less from inherited wealth (which dropped from 60 to 32% between 1982 and 2011) and more from modest households, access to education (the share of those with no college dropped from 17 to 5 percent, with college grads rising from 77 to 87% between ’82 and ’11), and placing their efforts in tech-based industries.

“We believe,” write Kaplan and Rauh,

that the US evidence on income and wealth shares for the top 1 percent is most consistent with a “superstar”-style explanation rooted in the importance of scale and skill-biased technological change. In particular, we interpret the fact that the top 1 percent is spread broadly across a variety of occupations as most consistent with an important role for skill-biased technological change and increased scale. These facts are less consistent with an argument that the gains to the top 1 percent are rooted in greater managerial power or changes in social norms about what managers should earn.

Though globalization “may have contributed to greater scale,” it “cannot drive the increase in inequality at the top levels given the breadth of the phenomenon across the occupations we study.” Funny enough, increasing globalization has actually decreased global inequality over the last few decades.

Xavier Sala-i-Martin, Maxim Pinkovskiy, 2010

So, maybe the superrich aren’t all Gordon Gekkos. Maybe they’ve just got mad skillz in the globalized economy.