Where I write a bit about a movie –old or new– that has to do with the economy…

Appearing near the end of a Depression and during a war that forced Americans to ration and live in their means, Sullivan’s Travels (1941) is a movie about whether Hollywood can genuinely portray suffering and hardship and whether it should. Ambitious director John Sullivan wants to make a movie about real people and their problems, instead of the light-hearted fare he has become recognized for. His credibility as a chronicler of the downtrodden challenged by his studio executive bosses — Sullivan is a well-healed prep school and Ivy League grad — he decides to go out into the world outside of Hollywood and experience destitution for himself.

The film is a funny and honest take on the theme of whether those removed from hardship can genuinely portray it through art. Supposedly, writer and director Preston Sturges, made the movie to go after those of his contemporaries who produced serious work about the depression that was heavy in a certain aesthetic (think the movie version of the Grapes of Wrath) and in a certain moralistic view of the goodness of frugality (think It’s a Wonderful Life). At the same time,  Sullivan’s Travels is greatly influenced by those movies (which I happen to like), and seems a bit in debt to them. The scenes of poverty, which include freight cars traveled by hobos and the travails of a chain gang, look similar to the aforementioned aesthetic.

Sullivan’s ultimate eagerness to return back to his life of wealth and ease after he gets into real trouble teaches him that sometimes people need to be transported from difficulty rather than reminded of it. Whatever your take is on that statement, it is a thoughtful movie, its theme perhaps best summed up by this line from Shakespeare’s As You Like It.

“I had rather have a fool to make me merry than experience to make me sad, and to travel for it too!”

Sullivan’s Travels (Photo credit: Night Hawk News)

It’s tax season again. Because taxes are such a dreaded event, we associate our government with one of the more miserable things we are forced to do over the course of the year. If you live in New York City, you see that, not only do you pay for Social Security and Medicare services that you increasingly hear you may never benefit from yourself when you get to be 65–but you also pay the second highest in state taxes and a hefty city tax.

It is a lot easier to comprehend the impact this has on your already too meager paycheck, much of which is allotted to pay rent in what is probably the most expensive city to live in of the whole country.

Harder to comprehend is the level of service you get as a New Yorker and the money it takes to keep it up. Thousands of garbage cans across the city are consistently emptied, sewers are maintained, trains are run at all hours of the day and night, water is treated, restaurants that you eat at are inspected for sanitation, public campaigns are waged to remind people to get flu shots and not drink too much soda.

We can be quick to focus on the times when these services fail us–when trains are delayed, when the post office line moves slowly, or when we hear about some restaurant inspector getting paid off. It is tempting to throw the baby out with the bath water at that point, to dismiss the entire government because of such instances. But most of the time, things work, and they work pretty well, considering we live in such a large city that basically requires, if our days are to run normally, that things run well and on time.

A world in which we will not or cannot pay for such services is a scary one. It will look a lot worse than a postal line that is not moving fast enough. It will look like untreated water, unemptied garbage and non-running trains. We are already seeing it in some parts of our country, like California’s Inland Empire.

So, as I bristle when I look at my W-2, I at least have to admit that I benefit from how those tax dollars are spent, as well. Sure, I could live in a part of the country where I am taxed less, but I would live a totally different life–one where I drive to a strip mall for dinner because my municipality does not care to pay for bus services, one where I do not see my neighbors, because my town does not care to build and maintain a park, one, where my entertainment is my plasma screen digital TV.

But I happen to think that, if a citizenry has a good government, they are better off when they are more highly taxed. A good government is not easy to maintain, and it needs agencies that audit other agencies in order to prevent graft and corruption. But such things can be done and have been done as long as people are willing to pony up, particularly those who benefit the most from this system. Currently, it does not seem to be the case.

In this excerpt from the Fareed Zakaria show on CNN – which otherwise features a surprisingly good group, with Eliot Spitzer, Naomi Klein and Stephen Dubner — former Bush speech writer David Frum somehow gets away with arguing that regulators should not overreact by setting stricter rules on financial instruments because such rules would stifle innovation.

It is pretty hard to believe that someone is still saying with a straight face that unregulated risky financial instruments like mortgage-backed securities were innovative. But Frum does, and  he reveals the speciousness of his assertion by basically  saying that technology innovations of the last decade prove that the private sector is creating innovative products all around. Frum does not tell us how developments like the smart phone and internet search technology have anything to do with banking “innovations,” and that is not the kind of precise question that is usually asked of a commentator on a cable television show.

Frum goes on to cite  interest-only loans as an example of innovation in the financial sector. Although it is very arguable that an interest-only loan represents anything more than an old-fashioned giant gamble on the part of borrower and lender alike , even if one accepts it is innovative, I do not see how financial regulation would prevent this product from being marketed. Regulation on such a loan, which would probably require measures like vetting a loan applicant’s ability to pay that loan and better disclosure of the risk of the product, would not fundamentally change the product itself. Of course, stricter regulation might cause more loan applicants to get rejected, resulting in less potential profit for the bank underwriters. But stricter regulation would prevent potential foreclosures and home loan defaults. David Frum’s assertion that regulation stifles innovation in this case does not really hold water. It leads me to wonder whether he knows what he is talking about, or if he does know, whether he cares, and how he still gets away with making this argument in the first place.

One thing that NYC-dwellers who I know often find themselves deploring about the city is that they feel it turns them into a worse person: the competition for jobs, emphasis on appearance and abundance of stores, advertisements and restaurants that encourage us to have the best, not to mention a morning commute that can turn the best of us into pushy types.

Because these values, on a smaller scale, come along with the pursuit of wealth across the nation, it may not be a huge surprise that as people lose money, they might become nicer, more appreciative of what they have and who they have–family, friends loved ones.

So says the NYTimes today in a trend article about how Americans are changing their activities as a result of the recession and its impact on their pocketbook. Also, a writer to Andrew Sullivan says this about how it saved his marriage after it nearly fell apart:

We have basically stopped spending money on non-essentials, and we may soon have to shut off the Internet. But, as the saying goes, we still have each other, and in a way that we might not have if not for the economy cratering. The recession has taken away everything, but it has also given me, indirectly, so much more.

So obviously, lack of money causes a lot of stress on relationships too. Both having and losing money is stressful, in different ways. Realizing other things are more important, though, whether it comes from attaining financial stability or confronting instability, is a valuable lesson.

It is maybe a cliche at this point that China is ascending to a world power. In the latest article on that subject, Paul Krugman bemoans the country’s trade policies. Many end-of-decade articles pointed out that while the U.S. and other developed nations had basically zero growth on their nations’ stock indexes, and what I think is an even more dismal decline in salary, the markets in the “BRIC” nations–Brazil, Russia, India and China–grew explosively. There is no way this kind of growth will sustain itself–it never does, historically–but for the time being, I think it is important to take a certain perspective toward the growth of the Chinese economy in particular, as a lay consumer.

Although our economy is arguably abysmal right now and China’s is growing, I think Americans still enjoy standards of living the likes of which the Chinese or most other nations do not know. We have larger houses, more cars and did have more disposable income. Unlike millions of other people, we were, for many years, able to buy things on credit without proving that we could pay it back anytime soon. The current growth of China and decline of America is in some ways a leveling, where the Chinese move closer to what we have in this country just as we lose it.

This is not to say that I think what is happening is deserved. It is more that we should appreciate that for many years we had very favorable lending policies, could buy electronics and retail items for cheap (in large part, because of China) and could drive cars and live in homes that have great environmental and monetary costs (because of these lending policies), which most other people in this world could not do. We were not encouraged to live within our means, either. I think this way of life was egged on by an unfortunate mentality.

That is the Wal-Mart mentality–I’m as guilty of it as the next guy–of believing you should be able to get quality for cheap in areas like domestic services, infrastructure, schools. When they invariably do not see quality, many Americans immediately resort to blaming the local government or state governments or schools and insisting that they be deprived yet more money, and a vicious cycle of spending cuts continues.

Governments are not totally innocent–dishonest politicians have brought on massive tax cuts and freezes (see California, Colorado) and then people wonder why we have more congestion, worse public transportation, struggling schools and greater college and graduate school loans to shoulder. The answer is because we do not pay for quality. Quality–from health care to education to infrastructure–costs money and must be maintained. It is of course a question of priorities as to whether we want quality in these areas and whether we can pay for it all, but I hope in 2010 the American spoiled-ness that thinks we should get everything for less (see Wal-Mart) dissolves as our new economic reality becomes more clear.

My wishlist for 2010 is a total re-prioritization in this economy that would probably look un-American, or at least, un-American circa 1980-2009. This would mean…

Increase revenue from upper-income people, those who are still doing well by this economy, by…

• Raising taxes on the very wealthy. More tax brackets, so that millionaires and billionaires pay a greater percentage of their income to the IRS than people who make around 300K per year.
• As a corollary: greater enforcement of tax evaders (Fortunately, this has already begun).
• For the love of god, tax ibankers’ bonuses, as they are doing in Europe.

Spend to create jobs, improve infrastructure and maintain public services.

• Use this money to create jobs in areas that improve infrastructure and invest in American economies of the future.
• Also use money to help out states, which are having a terrible time balancing their budget and keeping basic social service programs.

Our leaders need to challenge us to overcome the selfish economic mantras of the ’80s-’00s. That will not be easy.

This is the time of year when the rut starts to kick in. The days get shorter–so painfully short that you feel around 7 p.m. as if it has been night forever, even though there are still many hours to go before bed. If you’re working, you are governed by 9-to-5 or 12-to-8 or 4-to-12 or whatever your schedule might be. If you are unemployed, you are governed by the unresponded to job queries that you have remitted into the ether and if you are in school, you are governed by exams and papers. At this time of year, it can be easy to feel like a bit of a prisoner.

I started to probe my rut a little bit more tonight rather than just let it set in as usual, and I realized, around the time I was walking through the warmly lit stalls of Union Square’s holiday market, that I was in the consumer’s rut. The consumer’s rut is the one that asks-what do I still not have? It dreams up the bigger apartment, the nicer clothes, the cooler life, and it pits those in the face of a grey reality. It must find what is cool now, only to reject it a few months later. It does not savor, it throws out. It is always looking for a better band, clothes store, bar or dessert and is always looking to reject the current favorite.

Because we are surrounded by advertisements that constantly tell us we do not have what we want, we feel this way and enter the rut. When I feel it most is when I’m shopping around the holidays. I think it is because I used to associate holiday shopping with cheer, whereas now I just associate it with debt, often useless crap and an unsustainable lifestyle.

The countervailing force that encourages us to try to appreciate what we have and make the most of it is much weaker, but it is important to channel, especially when faced with people exhorting us not to be happy with what material items we have.

I have met many people who, aware of how vociferously the credit card industry targets young people, do not get credit cards to avoid deep debt and high interest rates, which is very reasonable thinking. Instead, these people make purchases with cash or a debit card. Still, I think credit cards are superior to debit cards for a few reasons:

#1 If an identity thief gets a hold of your debit card account information, s/he can withdraw your money immediately. If the same thing happens with a credit card, you can dispute the charge with your credit card company.

#2 Some credit cards offer points with spending-usually for things like airline miles, gas, or even money-while debit cards do not. (I currently use Charles Schwab’s 2 percent cash-back Visa, which, according to an August NYTimes article, is one of the best cash-back cards around).

#3 You start building a credit rating with a credit card, which is important for big transactions you may make later, such as renting an apartment, buying a car, or buying a home.

So for these reasons, it’s a good idea to get a credit card, just as long as you pay your monthly balance before the interest rate kicks in and don’t spend over your limits. Banks are raising the interest rates on their credit cards to the high teens and twenties. Best to avoid that altogether by paying your bill on time.

There is very little explicit incentive in this country to save money. What used to be a nation of savers, one that embraced a so-called Protestant ethic of saving for later, is now a nation that is encouraged to accept balance transfer offers, new lines of credit and minimum monthly payments. I grew up in a household that generally rejected the new American way of spending, which is not always easy in an environment where most people do not have financial scruples. And I am not always the most restrained spender. But I have picked up a few good financial practices that might be helpful to others and that I will try to share periodically here.

The economy has me reading about what exactly constituted the New Deal and its signature program the Works Progress Administration in Nick Taylor’s American Made: The Enduring Legacy of the WPA (When FDR Put the Nation to Work).

Before this, I finished the sprawling late-’90s novel Man in Full by Tom Wolfe, which depicts the fall of a grandiose real estate developer in Atlanta. Lately, I have found that reading things from the late ’90s evokes an almost foolishly  optimistic and unaware time, and this book’s depiction of a developer’s gluttony and false sense of self is more cheerful than grim. It is still compelling to read about the seeds of the kind of avarice we are today accustomed to from the latest news reports on investment banks profiting from the foreclosure crisis .

I also just began Kitty Kelley’s biography of Frank Sinatra, His Way, which gives the exhaustive, warts-and-all account that she is known for. I picked up the book after watching the somewhat vapid musical High Society, which Sinatra starred in opposite Grace Kelley and Bing Crosby. Frank’s marriage to first wife Nancy is straight out of Mad Men (well, Mad Men, more likely was inspired by marriages like theirs). He is a consistent philanderer who is rarely home, and she is a jealous wife who nonetheless acquiesces to her role and wants above all else to prevent Frank from divorcing her. It is the kind of dispiriting story that is best read without attachment to either person.

But back to the New Deal book. As Taylor says on his website, “The WPA symbolized an impulse of government that before the 2008 election was under severe attack. But that impulse toward generosity and human dignity is poised to make a comeback.”

American Made describes a program that was arrived at not only because the unemployment rate was 25 percent when Franklin Delano Roosevelt entered office in March of 1933 but also because he and the chief administrators of the program made no bones about the fact that the government would create a comprehensive jobs program. There was no love lost between them and those who FDR referred to as “economic royalists.”

Though it had its share of inefficiencies and infighting, the good of the New Deal and Works Progress Administration seems to far outweigh the flaws. It left the nation with national facilities, bridges, parks, schools, art and civic buildings that have sustained us since. Although I’m pessimistic a similar program will be enacted soon, what with the prevailing skepticism of powerful people toward the government’s role in job creation, convincing arguments have been made that no one else will.

Right now, the Obama administration seems to be averse to political risk. As Paul Krugman says in a recent blog post about Obama’s administration:

[T]hey have to propose new initiatives that might not pass, and be prepared to run against the do-nothing Republicans if the initiatives fail.

Now consider what FDR said during the 1932 election, as quoted in American Made:

The country needs and unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.

Like many people, I hope to see President Obama, his administration and a Democratic Congress achieve reform of financial regulations and health insurance, but I think it is truly preposterous of anyone to suggest Obama has not done much or for people to get their panties in a bunch over him winning the Nobel Peace Prize. As my friend said, it’s as if he awarded it to himself.

It’s also worth recounting how much has changed since George W. Bush was president. Remember when George W. Bush was president. Remember what that was like??

A few things that would not have happened one year ago:

Proposed rules to limit greenhouse gases from industrial plants would not have been introduced.

A federal “no-match” rule that threatened employers with prosecution if they continued to employ a person with inconsistencies between their social security and employment records would not have been rescinded.

California would not be allowed to enforce stricter standards for greenhouse gas emissions after the EPA grants it a waiver of preemption under the Clean Air Act. (California had fought the Bush administration EPA on this for years).

The EPA would not take a closer look at mining permits as part of a stricter review of surface mining projects to ensure that they comply with the Clean Water Act.

(Seriously, just do a google news search of “EPA” to see how much has changed in the past nine months).

Rich people who put their money overseas to evade taxes would not be faced with the threat of prosecution if they did not own up and pay fines, providing the U.S. government with an untold amount of revenue.

One could not walk through Bedford-Stuyvesant in Brooklyn and see photos of the sitting president of the United States in nearly every store.

The president of the United States would not have even been a contender for the Nobel Peace Prize.

There are probably many other “administrative” decisions, rules and regulations that have been changed since January 20, 2009, most that we do not even realize, and whose impact will at least initially go little noticed. However, the good kind of change is one that incrementally betters our lives rather than jolts us suddenly. That is change we can believe in.