My regular readers know that from time to time I see parallels between real life economics and the movies (see, for example, here and here). It's happening again. This time the movie is Strictly Ballroom.
At first glance, this is a chick flick in which an awkward plain jane named Fran (I don't think we ever learn her last name) manages to get the good-looking ballroom dance champion, Scott Hastings, to dance with her. She does this mainly by being bold and willing to take chances at an opportune moment. Her appeal to Scott is her willingness to dance steps that Scott has made up and to dance them at the Pan-Pacific Grand Prix Amateur Five-Dance Latin Championships, no less.
Unfortunately, there's a lot of pressure for Scott to conform to the formulaic steps prescribed by the Australian Dance Federation. His regular partner has abandoned him because he won't "dance the steps you're supposed to."
"Well, of course, you can dance any steps you like," says Australian Dance Federation president, Barry Fife. "But that doesn't mean you'll.....win."
It's a fun movie on many levels: romance, transformation, redemption. But it is also notable for the economics in it.
"Economics?" you say. "Maxine, I've seen the movie. There is nothing remotely related to economics in it."
Ah, but you would be wrong. The whole movie is about economics. Consider this exchange between Scott and ADF prez Fife:
Fife: "Where do you think we'd be if everyone went around making up their own steps?"
Scott: "Out of a job."
You see? It's a movie about rent-seeking. As long as the ADF maintains control of the steps that are danced and as long as its members control the steps that are taught and the judges that judge the competitions, they're guaranteed income for life. (As an aside, one of my grad school classmates, after seeing the movie, took to referring to his dissertation committee as the Australian Dance Federation. And, no, none of them were Australian or dancers.)
As the plot unfolds, we learn that Scott's parents, who were the reigning Australian champions 20 years earlier, confronted a fateful choice in their own dance careers. Scott's father, Doug, wanted to dance his own steps at the Pan-Pacifics, but Shirley was afraid that if they did they would never be able to teach, they had to conform in order to be sure of having an income later in life. As a result, she opts to dance with someone else, instead of Doug, and loses the competition anyway.
All this is revealed, just as Scott is about to take the dance floor at his own Pan Pacifics, having dumped Fran and returned to his previous partner who had refused to dance with him until he agreed to dance Federation steps. He's planning to conform and dance the ADF steps when we hear Doug say to Shirley: "You lost anyway, Shirley. You should have stuck by me."
And then, as Shirley shoves Scott out to the dance floor, Doug says to Scott: "We had the chance, but we were scared. We walked away." (And then, shouting) "WE LIVED OUR LIVES IN FEAR!" (Cue echo chamber on "fear.")
So why have I been thinking about Strictly Ballroom? Well, lots of reasons, I think. Not least is that I've been watching rent-seekers structuring finance and politics in ways that assure that they will continue to secure rents at the expense of more able, talented, and creative individuals. Individuals who, if they could retain those rents for themselves, could almost certainly put them to better use, investing in human capital, physical capital, preservation of environmental resources, and even just good old consumption. They would dance new steps, create new products, and make us all better off.
I hope some of you have noticed that I just used the same argument to motivate reining in investment banker compensation, bank fees, and lending practices, that is often used by so-called conservatives to argue for lower taxes. You see, rent-seekers' profits, are like a tax on us all. It is money that flows out of our pockets into their's with no commensurate return in benefits to us. The loss of income to rent seekers through higher prices, fees, and interest rates that they charge tends to impede the creativity, productivity, and economic advancement of the more able and innovative among us.
Another reason I've been thinking about the movie is the phrase, "we lived our lives in fear." We seem to be living in a fear-based world. We have gradually ceded individual liberties (think TSA for starters) out of fear. The Dems are afraid to allow tax cuts to expire because they could be accused of "raising taxes." We fear to tax the wealthiest, because they might work less. This last despite an impressive array of wealthy businessmen and women who say they should be and would like to be taxed more. We fear to act because we imagine the unintended consequences of our actions will somehow be worse than what now confronts us. We are afraid to provide health insurance to all Americans, for fear it will move us to excessive state control. If we allow gays to marry, some fear heterosexual marriage will...well, I'm not sure what they're afraid of, but they are afraid.
In the movie, Fran morphs from plain jane to beauty, but her strong suit is courage. "Vivir con miedo es como vivir a medias." she tells Scott as she persuades him to take a chance and dance with her. "A life lived in fear is a life half-lived." This is why his father's words, "We lived our lives in fear" resonate with him and inspire him to take the chance and do the right thing: dance his own steps with Fran at the Pan Pacifics even if he doesn't win.
One reason having ethical principles and living by them is important is that they guide us when our emotions are tending to over-ride sound judgement. Prudence tempered with compassion. Beneficence that preserves and enables autonomy for the least and last and those in the middle by those who are relatively better off. Duty and obligation that might require greater sacrifice by those who have benefitted most from the last 30 years of deregulation and socialized risk. Investment in education and infrastructure that benefits everyone. Anyone whose life or politics are guided by these principles would do well to stand by them now, rather than capitulate in hopes of "winning" next time.
But I think the primary reason the movie has been on my mind is Doug Hastings.
"You lost anyway, Shirley. You should have stuck by me."
I keep thinking the Democrats, including Mr. Obama, should pay attention to this. They lost anyway. They should have stuck by their principles and the change they originally promised, instead of becoming Republican light. I, for one, would rather lose because I stuck by something I believe in, than abandon my most deeply held ethical principles and lose anyway. Sometimes virtue is the only reward.
It's not too late. The Democrats and Mr. Obama could still decide to dance their own steps to their own tune. I wonder if they've forgotten how.