"Margin Call" Challenges Wall Street Ethics

I woke up this morning to Kenneth Turan's positive review on NPR of the just-released Hollywood drama, Margin Call, which is based on the collapse of the Wall Street firm Lehman Brothers in 2008. (Also see Turan's review for the LA Times and the HBO film Too Big to Fail.)

That radio story was quickly followed by my reading of A.O. Scott's glowing review in the New York Times. In light of both reviews, I was hoping to see this movie tonight (in violation of my usual policy of waiting until movies make it to the dollar theater or DVD). It's not often that I would willingly part with $9.00 for a movie; I have to be persuaded by multiple sources. Sadly, though, Margin Call isn't playing in our area yet.

That's a bit surprising, because you would think that the continuing Occupy Wall Street protests and the Academy Award winning documentary Inside Job would warrant a nationwide release. While Inside Job marshals enough evidence to outrage even the most indifferent citizen (see earlier posts), Margin Call is said to take a subtler approach. As in Kevin Spacey's portrait of Jack Abramoff in Casino Jack (another ripped-from-the headlines drama), we get to see real people making real choices in morally compromising situations. These are flesh-and-blood human beings--not crude caricatures like Oliver Stone's evil Gordon Gekko in the two Wall Street films.

A very telling exchange quoted in Turan's review is between Kevin Spacey's character and Jeremy Irons' character (the CEO):

Sam Rogers [Spacey]: And you're selling something that you know has no value?

John Tuld [Irons]: We are selling to willing buyers at the current, fair market price.

One lesson of this snippet? The winners are those who can get away with peddling junk; the losers are the ordinary suckers who aren't smart enough to see how the winners have gamed the system. Too bad for the losers: it's a free market. If they lost, it was because they got out of the game too late. They were "the last one holding the bag." They were the fools who bought the junk. Hey, it's a free market; they just failed to do their due diligence. The market punishes fools.

The real lesson: A free market economy full of unethical people like Irons' CEO is no longer a free market. It's a system that allows the slick, smart, greedy, and unethical to dupe unsuspecting, trusting people. Such a system is predatory and enslaving: the opposite of free. And saying this is not "class warfare." It's just describing Wall Street and the global financial system for what they have become: a group of people cloaking their knowing misdeeds in the rhetoric of the free market.

Pope Benedict XVI on Globalization

Another small summer project of mine was to read through Caritas in Veritate (Charity in Truth), an encyclical letter released last summer by the Vatican. Despite the abstract title, it is really all about globalization and human development, returning to themes first laid out by Pope Paul VI in his 1967 encyclical Populorum Progressio and by Pope John Paul II in a variety of settings. Ignatius Press has a nice hardbound volume of Caritas in Veritate, which I enjoyed reading a few weeks ago (much more fun than reading the Vatican website version).

I found a few key themes informing what the former Joseph Ratzinger (now Benedict XVI) and the Vatican think about globalization. Many of these are worth pondering (even if one might disagree with them). Here are some of my favorite passages and themes from the letter.

1. Globalization is unifying humanity and "to some degree" helping to advance the Kingdom.

Man's earthly activity, when inspired and sustained by charity, contributes to the building of the universal city of God, which is the goal of the history of the human family. In an increasingly globalized society, the common good and the effort to obtain it cannot fail to assume the dimensions of the whole human family, that is to say, the community of peoples and nations, in such a way as to shape the earthly city in unity and peace, rendering it to some degree an anticipation and a prefiguration of the undivided city of God (Paragraph 8, p. 16, emphasis in original).

"To some degree" is a key qualifier here; otherwise, I think we are in danger of rendering globalization as a kind of natural force, like gravity, that advances the Kingdom. I am suspicious of such claims, since they can baptize social or economic systems that might be quite harmful to the advancement of God's reign on earth (see my book).

This concern is addressed in paragraph 42, where "the breaking-down of borders is [seen as] not simply a material fact: it is also a cultural event both in its causes and its effects. If globalization is viewed from a deterministic standpoint, the criteria with which to evaluate and direct it are lost" (p. 85).

The solution, argues Benedict, is "to promote a person-based and community-oriented cultural process of worldwide integration that is open to transcendence" (p. 85), and "to steer the globalization of humanity in relational terms, in terms of communion and the sharing of goods" (p. 87). This latter process, he contends, will come through grasping the theological dimensions of globalization (a challenge that a number of Christian thinkers are undertaking).

2. The cultural dimension of globalization is important (paragraph 26).

Today the possibilities of interaction between cultures have increased significantly, giving rise to new openings for intercultural dialogue: a dialogue that, if it is to be effective, has to set out from a deep-seated knowledge of the specific identity of the various dialogue partners (p. 49).

3. The commercialization of cultural interaction threatens cultural flourishing (paragraph 26)

Benedict describes two dangers here: cultural eclecticism, which views cultures as "substantially equivalent" but separate blocs (shades of Samuel Huntington); and cultural leveling and "indiscriminate acceptance of types of conduct and lifestyles" (para. 26, p. 49). Similarly, chapter 10 of my book spends a few pages worrying about the shallowness of electronically mediated cultural communication, and about the clash of civilizations or global cultural hybridity.

4. Alternative business structures should be considered (paragraphs 38 to 41, also paragraph 46)

The Pope has put his teaching authority behind the efforts to build social responsibility into corporate structures, promoting what he calls "civilizing the economy" (para. 38, p. 76). Managers, he says, must not just focus on the interests of shareholders but on "all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference" (Para. 40, p. 79). This puts the Church squarely behind the Corporate Social Responsibility movement.

5. "Development" must focus on true human flourishing, which includes the environment and not just technological growth (paragraphs 43-77)

This was a particularly lucid passage on this, the central theme of the whole encyclical:

True development does not consist primarily in "doing". The key to development is a mind capable of thinking in technological terms and grasping the fully human meaning of human activities within the context of the holistic meaning of the individual's being. Even when we work through satellites or through remote electronic impulses, our actions always remain human, an expression of our responsible freedom (para.70, pp. 141-42).

And "development," of course, goes far beyond mere physical or material improvement. "There cannot be holistic development and universal common good unless people's spiritual and moral welfare is taken into account, considered in their totality as body and soul" (para. 76, p. 151).

Above all, says the Pope, development requires "Christians with their arms raised towards God in prayer, Christians moved by the knowledge that truth-filled love, caritas in veritate, from which authentic development proceeds, is not produced by us, but given to us" (para. 79, p. 155). That is, we can only receive "truth-filled love" as a gift--a gift which can give us the courage to keep working to help all peoples move toward the love of God (para. 78, p. 154).

All in all, this was an interesting restatement of John Paul II's views on globalization, with some updating to take account of the recent global financial meltdown, making this analysis quite timely. For those who care about thinking Christianly about globalization, this is worthy summer reading.

Nation Team Soccer Players Go Missing: Migration in the News

One of the aspects of globalization that I talk about briefly in the book (in chapter 9) is the fact that so many people are moving out of their countries of origin, whether as economic migrants seeking a better life or as political refugees fleeing from oppression.

A 2005 UN study estimated that approximately 191 million people were living outside or the country in which they were born. If all those people were herded together into one country, they would make up the sixth largest country in the world by population, behind Brazil and ahead of Pakistan.

The small state of Eritrea illustrates the problems when people want to leave their country. Recently 12 members of their national soccer team disappeared after playing a match in Kenya and losing 4-0. (If they had won, would they have felt better about staying?)

Migration is a serious and often overlooked aspect of globalization, which is the process of increasing interconnection between peoples. People are moving around all over the world, for all kinds of reasons. Let's hope these guys from Eritrea can be united with their families some day (if they ever turn up).

The Minnow and the Whales

You need to know three important facts about me: 1) I'm a huge fan of global soccer, 2) I'm eagerly awaiting next summer's World Cup competition, which I think is a fascinating example of globalization, and 3) My favorite Middle Eastern country is Bahrain (ever since our family got to live and work there for almost a year in 2004 and 2005). (By the way, Bahrain was the subject of an interesting New York Times story today, focusing on the village where we lived, called A'Ali.)

What's the point here?

Well, Bahrain is still in the running to qualify for the World Cup. All they have to do is beat New Zealand in their two-game, home-and-away series and they are in (albeit, by the back door). It's possible, since the international soccer association, FIFA, ranks Bahrain 64th in the world right now, whereas they rank New Zealand at 100. Now, these rankings don't mean a thing; the guys in red (Bahrain) will have to win on the field. But our family is unashamedly rooting for them like crazy.

We're cheering for Bahrain for two reasons. First, we watched them play back in 2004 and 2005 when they were trying to qualify for the 2006 Cup, and we had tons of fun doing it. We lived right across from the stadium where the national team played, where admission was free, so we'd stroll over and join the masses. If you've never been to a real international soccer match, where people play the drums and sing the entire game, then you've missed out on some real fun.

Secondly, Bahrain is officially the smallest nation still in the running for the Cup. I checked the standings over at the FIFA website and the NationMaster website and it looks like the small West African state of Gabon is the next smallest state in terms of population that could qualify. Gabon is ranked 151st in terms of population, with around 1.5 million people, while Bahrain is ranked 163rd, with just over 700,000.

To use the language of the global game, let's cheer for the little minnows that face the whales. New Zealand's population is just over 4 million, which makes them bigger than a minnow but smaller than a whale, more like a hoki. But if Bahrain gets past the Kiwis, they'll be facing some whales like Brazil (pop. 196,000,000) or the U.S. (pop. 303,000,000).

All power to the minnows.