12/02/2010 02:35 pm ET | Updated May 25, 2011

Why Inside Job Falls Short

A new film on the financial debacle of 2008 has arrived to great acclaim. Inside Job, directed by Charles Ferguson, presents the corporate version of what went wrong. I spent two years coordinating research for Michael Moore's documentary film, Capitalism: A Love Story, that investigated the systemic roots of the Great Recession. One of these two films presents a truncated analysis, limited by the filmmaker's ideological preferences, and the other faces reality, painful as it is. If you want to believe that a few good men (and, maybe, a woman) can make everything all right, go see Inside Job and have your faith confirmed -- with a healthy dash of righteous anger at the crooks and spoilers. If you dare to look in the eye of a repulsive, festering monster, one that must be put down before it consumes all of us, see Michael's film.

Inside Job has been lauded by the New York Times as "meticulous and infuriating," portraying "a betrayal of public trust and collective values," and documenting "crime without punishment." Another Times reviewer writing from Cannes, gushed that the film tells "a complex story exceedingly well and with a great deal of unalloyed anger.... [It] lays out its essential argument, cogently and convincingly, that the 2008 meltdown was avoidable." Times columnist Frank Rich says, Inside Job, "has it right."

Inside Job does not have it right. Yes, Ferguson presents some facts; yes, his anger and outrage are palpable; yes, he would like someone to do something about it. But Ferguson's failing is critical. He doesn't even name, much less discuss, our economic system. The result is his film diverts the viewers' attention in the wrong direction.

Over the past 156 years for which the National Bureau of Economic Research provides numbers, the United States has suffered 33 official economic collapses, 22 since 1900, an average of one every 5 years. The economic euphemism for this is "the business cycle." There can be no doubt that recurring cycles of boom and bust, inflation and recession, are built into our economic system. If they are avoidable, then why haven't we avoided them? Ferguson's film attempts to finesse the business cycle problem by stating at the beginning of "Part I -- How We Got Here" that there was not a single "financial" crisis in the 40 years after the Great Depression. This sleight of hand allows Ferguson to focus on his theme that the financial industry simply got out of hand in the 1980s and needs to be reined in. We just time travel back to the 1930s, grab their financial regulations, and everything will be fine.

While there may have been no financial panics between 1938 and the savings and loan crisis of the mid-1980s, there were nine official economic collapses (recessions). Two of these collapses (1973-1975 and 1981-1982) were among the seven longest lasting recessions of the 20th century, with official annual unemployment rates reaching 8.5 percent and 9.7 percent. The only way to avoid this roller coaster of suffering is to build a new economic system, and this is the last thing Charles Ferguson would desire.

It is no secret why Ferguson might not want to examine the United States' long and horrific pattern of economic crises. Simply take a look at the Inside Job film website where it proudly announces Charles Ferguson's allegiance to the corporate economy that brings us "the business cycle." He has served as a consultant to major corporations like Apple, Xerox, Motorola, Intel, and Texas Instruments. He founded his own software development company, Vermeer Technologies, which he sold to Microsoft in 1996. Ferguson has also devoted time "frequently consulting to U.S. government agencies including the White House staff, the Defense Department, and the U.S. Trade Representative." Having devoted his life to the corporate states of America, Ferguson has every reason to overlook the capitalist forest in his "meticulous and infuriating" search for excessively greedy, corrupt, and incompetent individual players.

Ferguson's film presents a now familiar litany of bad moves: financial deregulation, S&L crisis, Gramm-Leach-Bliley Act, Commodity Futures Modernization Act; and bad guys: Charles Keating, Alan Greenspan, Phil Gramm, Hank Paulson (Goldman Sachs), Dick Fuld (Lehman Bros.), Angelo Mozilo (Countrywide), Robert Rubin (Citigroup), and Larry Summers, to name just a few. Also, the economics profession as a whole comes in for severe criticism for selling out to the financial industry. The solution Ferguson offers is, next time, just listen to the good folks who warned us; people like regulator Brooksley Born, IMF chief economist Raghuram Rajan, Professor Nouriel Roubini, billionaire George Soros, former New York State Attorney General Elliot Spitzer, and author Charles Morris.

In spite of Ferguson's deep connection to the corporate habitat, a reviewer from Detroit, praised his film for "leaving you at least with a sense that the filmmaker set out to paint a full picture of the crisis, and not some loon trying to make a radical political statement." A Macleans reviewer called Ferguson "the best teacher you never had" in contrast to that "blue-collar class clown" Michael Moore. This is like calling a stump preacher the best teacher capable of presenting the full picture of the failings of fundamentalist Christianity.

Yet, in the same way that Inside Job never uses the word "capitalism," most reviews of Ferguson's movie never mention Capitalism: A Love Story. Moore's 2009 film not only dissects the current crisis but reveals the endless round of human suffering caused by "the business cycle" and explains what Ferguson hides: the systemic origin of economic crises. Ferguson directs his viewers' wrath at a few bad apples, not at removing the diseased tree that keeps putting bad apples out there, decade after decade. All we need to do, according to Ferguson, is prosecute the criminals and reenact reasonable financial regulations. But somehow Ferguson and naïve movie reviewers all fail to consider not so much that we've been there and done that but what it means that we've been there and done that. No one asks the obvious question, how many more times do we have to go through this? Maybe, just maybe, you don't save the hens by letting them run loose and locking up one or two foxes -- then acting surprised when a few more foxes show up. You've got to build a new, fox-proof henhouse.

The United States government has had 156 years to get the regulations just right and put an end to the cycle of economic breakdown, and nearly 75 years since John Maynard Keynes definitively showed how to do it, yet recessions continue to occur -- and they are getting worse. Show trials of a few corporate criminals do nothing to stop an economic system that breeds corporate crime. At the conclusion of his film, Ferguson mentions that it seems like the huge financial corporations have taken over the government. We should fight back, he says, and then the movie just ends. But what are we fighting against and what are we fighting for? All you can deduce from Ferguson's movie is we need to get back to our 1930s regulatory framework. Let's say, somehow, we accomplish that feat. Based on the past record, we can be sure that forty years later we will have experienced eight or nine additional, and increasingly severe, economic collapses, not to mention at least one new and improved version of financial panic.

As Americans, our lives now depend upon the understanding that our "collective values" were not betrayed by Wall Street. The values that the rulers of the corporate states of America share are what got us into this mess: free markets, maximum profits, economic inequality, individual wealth over social/environmental costs, endless consumerism, and bigger is better. Anyone who dares criticize those values is quickly termed a "loon" or "clown." If real change is to happen, it's not enough to be "mad as hell"; the anger must be directed at the root of the problem and only Capitalism: A Love Story shows what that is.