In 2009, some people with ties to the financial industry asked British documentary filmmaker David Sington if he would make a feature-length film about the cause of the financial collapse.
He had not done freelance in a decade. His own production company was focused on making science documentaries for television. In 2007, he won the Sundance Film Festival Audience Award for “In the Shadow of the Moon” about space travel in the 1960s.
But since he needed money because of the financial crisis he agreed.
“I said, ‘So what really did happen?’ And they said, ‘You have to find out.'”
It was like signing on for “Mission Impossible,” Sington said.
“It was bloody hard.”
But soon he found the seemingly incomprehensible world of finance had parallels with the seemingly incomprehensible field of particle physics. Once he was able to draw comparisons, he said everything fell into place.
What he ended up creating changed his own view of politics. A self-proclaimed conservative, Sington said he discovered a flaw in the accepted wisdom regarding government regulation of the markets.
He named the film “The Flaw” after a famous quote from former Federal Reserve Chairman Alan Greenspan admitting he had been wrong.
The flaw
Sington said he started out thinking he was going to make a movie about derivatives. It took months to learn the basics of how banks worked. But the deeper he got, the more things didn’t add up.
Because of who his financial backers were, Sington had many contacts in the world of finance and they were his first interviews. When he asked them what happened, they explained the process. But when he pressed them for the reason, they stared back with blank looks.
“They didn’t fully understand it themselves,” he said.
“The Flaw” concludes that the reasons for the financial collapse stem from increasingly unequal distribution of wealth.
Americans are uncomfortable with blaming the rich for their wealth. It’s unpatriotic to discuss the imbalanced distribution of wealth, he said. But even though everyone has heard the rich have gotten richer and the poor have gotten poorer over the last 80 years, the actual statistics were disturbing, he said.
Trickle down economics says that as the rich get richer, they spend more and the middle and lower classes benefit. But that hasn’t been happening, he said.
As the American economy has grown, the portion of the pie distributed among the wealthiest has gotten bigger while the portion of the pie shared by the bottom 90 percent of wage earners has shrunk. In the 1960s, that piece was two-thirds. Today it is only 50 percent, he said.
“And the ‘trickle down’ hasn’t been money; it’s been real estate,” he said.
In other words, as the rich got richer, they put their money into assets instead of goods. Products we consume are goods. A healthy economy is based on the manufacture and consumption of goods. Assets are things we only buy in order to sell, he said. As the rich put their bigger paychecks into assets, it caused an inflation of values bubbles.
When the rich bought more real estate, it raised the prices for everyone.
As middle-class people were forced to borrow more money to buy middle-tier homes, more of their household budgets went toward housing. They relied on credit cards to pay for everything else, he said.
The crisis came when average homeowners developed worse credit scores and did not see increased wages.
Middle-class homeowners were victims of the bubble, not participating perpetrators, he said.
“Half of homes are in danger of being underwater (on their mortgages) half of America didn’t lose their moral compass,” he said. “It was a most extraordinary change.”
Who is to blame?
Sington said his film is not partisan. The words “Democrat” and “Republican” never appear. Nor has his research made him anti-capitalist or anti-free markets.
For humor, the film uses propaganda films about capitalism from the 1950s shown to American soldiers engaged in the Cold War. It isn’t satire or snarky; it’s for irony and nostalgia. Our current economy is based on borrowing, not production. We live in a different America from when those films were made, he said.
He said “The Flaw” has made him look at his previous Sundance film, “In the Shadow of the Moon,” differently because America today could not send a man to the moon.
He anticipates the money that banks are currently sitting on will be invested in China where production and consumerism still reign.
The system is broken, Sington said, and government must fix it.
Although it is not in the film, Sington’s own opinion is that governments should tax the rich, and channel the money into technology development. Government has always driven the development of technology (Internet, GPS, cellular phones), and technological innovation has always driven healthy economies.
Government should force a change in emphasis from investing in credit markets to energy markets, for example.
Impact
Sington said he’d like his film to be used in two ways. The first is to influence decision-makers so they can more intelligently discuss what has happened to the American economy. Second, he would like it used in schools so America’s youth have a better understanding of where we are as a country.
When asked by a Sundance staffer how he would summarize his movie with one word, he said, “America.”
Screenings
Jan. 22, noon at Holiday Village Cinema
Jan. 25, 3 p.m. at Yarrow Hotel
Jan. 27, 6 p.m. at Temple Theater
Jan. 28, 9 a.m. at Holiday Village Cinema
Jan. 29, 12:45 p.m. at Broadway Centre Cinema in Salt Lake City