What happened to the dream? Rob talks with David Smick about his new film and the inspiration for the project.
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Transcript
Rob Johnson (00:00:09):
Welcome to economics and beyond. I'm Rob Johnson, president of the Institute for New Economic Thinking.
Rob Johnson (00:00:36):
I'm here today with a long time friend David SM Smith, and David and I are here to talk about an extraordinary project that he's just realized his film is called America's Burning. And in the tumultuous election season where the world is in distress, where the confidence in every institution in America is diminished, David has stepped forward to, as I, how do I say, I am the son of a physician to diagnose and find remedies for that which is haunting us. Dave, thanks for joining me.
David Smick (00:01:18):
Rob. It's great to be with you.
Rob Johnson (00:01:21):
Yeah, we've been buddies since, I think it was 1984.
David Smick (00:01:27):
Yeah, we were both three years old then. Now we're
Rob Johnson (00:01:31):
That's right. And we're almost going to be 21, so maybe we can get a little champagne to celebrate your movie.
David Smick (00:01:39):
I was once in Texas at a dinner party and somebody said they were turning 75, and I said, oh really? I said, I'm turning 40 soon. And the woman, the woman looked at me and she said, you're 40. Well, you lived a hard life son. I said, that's a good line. I'll take that line. That's pretty funny.
Rob Johnson (00:02:02):
Well, coming to your film, you talk about a hard life. You've had a very successful life in married many dimensions, and yet I think some of the hardness of growing up in Baltimore may have played a role in inspiring you to dig deep and examine what's happening to the United States of America. But why don't you tell me where did this come from?
David Smick (00:02:24):
My background is for the last 37 years is in the financial markets. I have a company that advises mostly hedge fund traders and global macro policy. My first client was George Soros as you know, and then that I had Goldman Sachs, JP Morgan, a lot of international clients and everything was fine. It's ironic that I'm in that role as a financial advisor since I grew up in a heavily blue collar neighborhood in Baltimore, or as we call Baltimore. And my next door neighbor just drove a cement truck and my best friend's father was a plumber and he today is a plumber. It's, I grew up in a working class environment and somehow I chalk it up to the American dream, but I managed to make it to a significant advisor on the Wall Street stage. So the question is how did I end up doing a movie?
David Smick (00:03:37):
Well, I had done several New York Times bestselling books. One was called The World Is Curve, which kind of anticipated the financial crisis, but books are limited in terms of the outreach, the people you can read. There was only certain number of people will read a book about nonfiction subjects. And so I thought about this idea of a film because I looked at the discussion about today's hate and division and why we hate each other, why we're so divided. We contempt, we can't even stand and talk to each other in some cases. And I looked at that and I looked at the discussion of could we enter civil war? Even that has been rolling around and I began to think that the reason I'm hearing for why we're so divided or not satisfied, I mean some of 'em are relative, some of 'em are relevant, excuse me. But I said the reason that I looked around and I said I think the large part of our, not the only part, but a large part of our reason for our division is economic. And it's the shrinking of the middle class and the breakdown dying of the American dream. The whole issue of social mobility, which has, if you look at the last 40 years is a 40 years I've lived through professionally, these have been the greatest years of our life. I mean, financially, I mean we've all experienced that.
David Smick (00:05:19):
The markets have just been explosive. If you look at 1980, the Dow Jones Industrial average one from 800, suddenly between that point and now a 3800% return, if you look at wages, 16% according to the St. Louis Fed adjusted for inflation. So you have the people that I grew up with who are feeling cut out because during this incredible bull market, if you didn't own stocks, you weren't invited to the party. And so about half the country wasn't part of this explosive stock market rebound. And it just dawned on me that that's a problem. People are angry and they're angry in some ways because they feel alone, they feel cut off and they don't want somebody dropping the check from the helicopter. They want the American dream back. They want that. And they know that the us, they may not phrase it this way, but once they had the highest rate of social mobility in the industrialized world, and now we're near the bottom. And so if you don't believe people sit around and talk about, oh, our democracy is at jeopardy, well, it is in jeopardy. And the biggest risk to our democracy is the death of the American dream. Because if you don't believe, if you're a blue collar worker and you don't believe that your child or your grandchild is going to have a shot at getting ahead, forget it. You're not going to fight for American democracy. You're not going to care. You're going to say, what's it done for me?
Rob Johnson (00:07:18):
Well, China is not a democracy, but there was an old parable that a country does not undergo revolution because how would pack impacts you? It undergoes revolution when your children and grandchildren have no future, and that your responsibility for the people you love is what drives you to that edge. And I think at this juncture, when you look at how much college education costs, when you look at the idea that you might be a junior having paid almost a hundred thousand dollars a year and now they're going to bring in AI and replace you, there's a whole lot of fear not very far from the surface.
David Smick (00:08:08):
Yeah, and I would say, go ahead.
Rob Johnson (00:08:12):
I was going to say, and the faith in compensation for bad outcomes or surprises or innovations that displace you, nobody has much confidence in that either.
David Smick (00:08:25):
Yeah, I am convinced that capitalism needs to be restructured, needs to be fixed. I'm not of the mentality, this is not the Bernie Sanders. Let's indict the system, throw it out. The reason is the system's too powerful. The money corruption is just not going to happen. But I think we can make changes and I think that with the elite powers of be, you cannot have a system where large parts of the population are cut out of the party. And I think that that's a big part of this film. I did the film because I felt this kind of sense that all the people that I grew up with have been cut adrift. It's like a velvet rope society, a brains and money has cut them off from society. So I think our leaders in Washington, both parties have completely botched this. They've ignored the sense of opportunity of this American dream concept that it would apply to everyone, not just to the elite affluent kids who already have an edge to get into the Ivy League. So they're going to I'm talking about everyone.
Rob Johnson (00:10:05):
Yep. Well, it's like the famous movie from last year holdover where Paul Giamatti is a professor who had dropped out of college, but he's a professor at a prep school and he shepherds the children who have to stay on campus during the Christmas holiday, but he ends up getting into entanglements with the wealthy parents, not because the children aren't getting good grades or learning from him, but he steps up to the difference between a quality education and what you might call plutocratic purchase of admission to college or admission.
David Smick (00:10:46):
We had a screening and we had several screenings in Hollywood of the film and the writer of that film, the holdovers was there and he came up to me afterwards and he said, your script and my script are almost parallel. He said, I sat there, watched your film. I was shocked. He said, it's parallel, by the way I should mention the film is executive produced by two Academy Award winners, Barry Levinson and Michael Douglas. And Michael Douglas is the narrator of the film, but they are not doing this for compensation, they're not doing this passively. Both of 'em were heavily involved and particularly giving me advice. Michael Douglas just spent a week doing immediate to promote the film. We had our opening in New York, our premier in New York.
David Smick (00:11:47):
People ask me, why are they doing this? These guys can do anything. And you ask them, they're worried about their kids, they're worried about the graduates, but there's also a big part of the film that deals with the hatred and the division and how do you respond to contempt? And a big part of the answer was provided in the film by the Dalai Lama. He said, if you feel contempt for someone, try to fake that you actually like them. And he said, it's part of the human brain that that's the way to our recovery is to. And so there is a certain Arthur Brooks in the film calls it a revolution of the heart that says, as a country we have to, or as you say in the film, and you provide some of the remarkable insights that this film offers, that there's a spiritual democracy. And the spiritual democracy is based on the belief that what's really important is the common good.
David Smick (00:13:04):
It it's not material possessions, but I think Leon Panum makes a point in the film where Obama's defense secretary, he says to Tocqueville, when he came to visit the United States, he was shocked that because people in the US cared about each other in a way that they didn't see in Europe. And so that's the spirit that we once had a spirit of community. And I think that's a part of it. Part coming back to economic sanity is going to be a huge element. You cannot have, think about this, a 3800% return for one crowd and a 16% wage gain for that. You can argue, well, that's a good point for the liberals or that's a point for conservative that is not liberal or conservative. That's just common sense. How can you have a democracy with that kind of a situation? It's a structurally a problem.
David Smick (00:14:17):
So the question I say is since we're not going to beat the system, we can say we can, I mean we have two presidents, one, Donald Trump and Joe Biden who both promised to eliminate the carried interest, egregious carried interests loophole for the private equity industry. And they both said, that's got to go. That's outrageous. In other words, you can be even on three dry cleaning units under a corporate sub chapter C, and you're going to pay a much higher tax rate than one of the big private equity outfits on Wall Street. It's insane. They should all pay the same. But we have this situation where we're not going to beat them. What we need to do is figure a way that we can invite a working class to join a financial party. And I think there are a number of things you could do, but to me the most important thing is to education.
David Smick (00:15:28):
I think every child should not be allowed to graduate from high school without taking a course in money. I used to say finance, but actually money where they learn about money, they learn about how the system works, they learn about the miracle of financial compounding. They learn about saving and investing. So they're part of this. The second thing is I think every child at birth should be given a stock account. I call it baby bonds, but it's an account that's invested mostly in stock index funds. You could have six options or buffet can pick one, you could have others pick. And the public then has, so the child has the option of having a piece of a stake in the future of the country and you give each child a $10,000 loan payable with interest in 50 or 60 years for that point, given the miracle of financial compounding, these people will be millionaires.
David Smick (00:16:29):
And particularly if they can add to that fund as they start to see it grow and they start to realize that they can be part of this system, if you can't bring them in, then they have no future. Because as you point out, ai, other technological breakthroughs are going to no doubt eliminate jobs. And so you're going to end up with a population that's living on a guaranteed income, but they're not happy. They have no sense of, they'll themselves in the mirror and they say, I don't really feel good about myself. I used to feel good. I provided a service or I made a product and now I don't. And I think that's where we're going. We need to figure a way that they can say, okay, we are part of this system. I also think we've got to save the middle class. One way to do that is to take part of the carried interests of the wealthy private equity giveaway and say, look, if you give up part of that, not the whole thing, it's just part of it. We can beef up the earned income credit, but things like the, we can provide a safety net. So middle class families, working class families don't slip down below that. And that's what's happening now. Nobody notices. Oh
Rob Johnson (00:18:04):
Yeah, well, how would I say it feels like the echoes of l Frank Boom's novel,
Rob Johnson (00:18:11):
The Wizard of Oz, everybody went to the city, everybody went to finance, whatever, and then they say there's no place like home and they want to be back in their roots. But right now, everybody's being, whatchu might called shaken up or fearful or displaced by things changing. And of course, even this past year or so when SVB Bank is bailed out, the echoes of the great financial crisis where the two big to fail banks were all protected and all kinds of people were not. And there is a great deal of suspicion about who the government is working for these days. And you can see that in the Gallup polls about all the different institutions, whether it's related to healthcare or the Federal Reserve or the Senate, the Supreme Court, the house, the president, the media, everything's dropped off like 20%.
David Smick (00:19:12):
Yeah. James Carve, who's in our film, James Carve calls it Washington's become a racket. He said, everybody's bought. He's very blunt and direct about it. But when you look at and see the kind of influence that companies have today in terms of writing their own legislation, in terms of setting up protective mechanisms to keep competitors out, I mean you say, why isn't there more opportunity as a result for the average person? And we used to be, the old adage was 30 years ago or 25% of the economy would rise up and achieve to that top 25%. And then above that there would be a 5% winners at the top. Now that 5% is 1%. And you say, why? But if you don't have the same opportunity, I mean, I say in the film in the sixties, we had from a standpoint of productivity and efficiency in the economy, we had a Ferrari economy in the seventies and eighties or the eighties and nineties, we had more like a Porsche economy and now we have a segue economy.
David Smick (00:20:36):
It, it's not to blame any candidate or this has been coming on for a long time, but we don't get the kind of productivity increases unless we're measuring productivity. That's a disturbing fact when you look at the low productivity, why, and you can't ignore the fact when you're not having the productivity that you want because the system is bought. And just look at, when you have both parties brag. They brag and they say, oh, look what we've done. We just got one of our big hot shots to give us 20 million as if there's no strings attached to that. The string is always, how do we keep a competitor down? And we always look at Bill Gates, this geeky young Bill Gates with his Seattle firm, Microsoft, and you say, wow, he topples IBM, mighty IBM. Could that happen today? Probably not because the lobbyists would be completely different 30 years later.
David Smick (00:21:49):
They would be in a much more sophisticated, much more control. I think in the film, the former head of Google says, the public would be shocked, shocked to know the degree to which corporations write legislation affecting them in Washington. Even foreign governments through the lawyers write legislation. And it's insane. And I think everybody kind of knows that, but people are afraid to do it because if you're a member of Congress, you say, I spend 70% of my time raising money from these sources to keep my seat. There's something wrong with that system. I have spent 70% of my time. Or if you're in the house, I spend two days a week in Washington where they jam all the legislation into a short period of time. Then I go home and it's all fundraising. And it's just insane that we have a system that doesn't allow these people to do productive work throughout the week to work five days like every other American.
David Smick (00:23:04):
But I think that there's a corruption, I call it a legal corruption in Washington that is killing the American dream. It's killing it. And I know in the tech world, people, they're very bright. They get out of a Stanford or one of the other MIT, and they have an idea for a company and the whole thrust of their starting out, they don't expect to build the company. They want a billion dollar buyout because if the company looks, it's a brilliant idea and it looks like a threat and they start to set it up, they want to be able to sell it to one of the big guys, the big tech firms who will buy it, give the guy a million bucks, kill it and kill the startup because it's a threat. And so, I mean hundreds of these companies that we could have an even more powerful tech sector if we weren't allowing these guys to destroy the incentive by using the mass liquidity in today's economy, this ocean of liquidity where they can come in and distort the market using their wealth to eliminate the competitive forces that could to topple 'em.
David Smick (00:24:39):
And I think that's a real public, there's Stan Druckenmiller ran Soros for years. He says, both parties in America both have given up on capitalism. They've got crony capitalism, a lot of corporate welfare. They'll do anything they needed to feather their beds. And we all know it's happening. I mean, the idea that you can run for office and you can become a member of the leadership and suddenly you go from very low net worth to, you're worth a hundred million dollars. Or in some cases you go from you're worth a hundred thousand dollars because you have a condo and that suddenly you're worth 20 million. That's bizarre. And yet that continues. So anyway,
Rob Johnson (00:25:31):
And when you're outside, there's this parable in economic theory that you have what's called your desires, your preferences, and that becomes your demand. And then the market serves you. But the problem is what you have as preferences or desires is affected by fear. And what you become afraid of is what you see coming downstream. And so do you, as somebody once said, I really like Dante and I really like Shakespeare and I really like Homer, but I studied business administration and accounting because I got to get a job. The whole nature of what we are doing is not the market serving our desires. There's a feedback loop. Our desires are reflected by the structure and the fears and the danger of poverty or being left behind or what have you. And so as this becomes more extreme, as the despair grows, there's a danger to the, and I always cite my friend and gentleman, I admire a great deal who wrote a book called His name's Martin Wolf at the ft, and he wrote a book about the rise of capitalist threats to capitalist democracy where I'm going to have to come back with the title, but the Crisis of Democratic Capitalism.
Rob Johnson (00:27:11):
And when I read that book, what I said is, just like in your movie, if left and right are fighting, if things disintegrative, people are talking about a civil war in the country, then the whole system is disintegrating and the despair that emerges from that can essentially destroy the prosperity of the powerful as well. And at some level, people are sort of saying, when they're playing these plutocratic games that you've been describing, why don't they, like you said, on the super subsidies they're getting, why don't they cut a little bit to the side to make sure everybody's educated or everybody has healthcare diminish the fear, diminish the divisiveness, diminish the danger of an authoritarian breakdown in our society.
David Smick (00:28:04):
Yeah, it is amazing that there isn't a sense of a long-term strategy. I mean, the way I call it, if you have the middle class fading, there are two words to describe a system where the upper class elites live side by side with the lower class, with the middle class gone, two works, banana Republic and Banana Republics aren't good places to do business. Now, you would think that our corporate leadership would realize, and our financial leadership and all the big Wall Street bankers, brilliant people, you and I have worked with them, but you would think they would say it's in our long-term interest to give up something, not a whole lot, but give up something so that we can nurture the middle class. So that's our customer base, and we think our customer base is just the elites, but ultimately these people, if it's an open system, will rise up and become that top tier, some of them, but they're like, they have no strategy and Congress isn't providing a strategy to them for them. So it's very, very disillusioning in that sense that we are. But anyway, go ahead.
Rob Johnson (00:29:32):
One episode in my life, I was at Davos and I was going to the dinner parties and hearing some very wealthy and powerful people expressing their fear and their despair. And when I came back from Davos, I mentioned this and they said, have you read Douglas Rushkoff's new book? It's called The Survival of the Richest. And it was about how these people didn't know how to heal things even though they were the powerful, that things were in such a discord that they were essentially building their own bomb shelters and their own airstrips and thinking of basically in escape Hatch sheep farm in the event of disintegration
David Smick (00:30:18):
In New Zealand, get into the southern oceans below there so that if there's a meteor nuclear strike,
Rob Johnson (00:30:25):
I know, but I found that haunting the idea that the powerful, the billionaires can't imagine how to, well,
David Smick (00:30:34):
They can imagine
Rob Johnson (00:30:35):
The ship, but get everybody going.
David Smick (00:30:37):
Yeah, they can anticipate the future danger because that's what they do for a living. But to come up with reforms that prevent it, either they don't do it or they don't care, but it is very, very disillusioned when you think about where we're going. On the other hand, my film, it was just at Tribeca and we just had a New York premiere, the general consensus, people were surprised because the title sounds ominous, America's Burning. But it's quite hopeful the parts of the film because for this reason, and as Larry Summers, the former treasury secretary says in the film, America has a history, a very impressive history of resilience. And we've come back from a lot of, we screwed a lot of things up, but we've come back from our mistakes and we are probably going to do it again. And we are extraordinary history of technological leadership.
David Smick (00:31:47):
Unless we screw that, we'll probably be our strong suit. And so we have a lot to be encouraged about if we could figure a way to stop hating each other. And I think that's, it's disconcerting. I'm on the whole question of, you talked about elites and there's this notion that the elites created the conditions for this 40 years of prosperity, this amazing 40 years. But I kind of look at it a little differently since you and I both live through this. You can tell me if you agree with me, but I think a lot of the prosperity that came about, nobody expected it, or at least they didn't expect it in the same dimension that it came. No one expected that In 1981, a guy named Paul Volcker as fed chairman would take hyperinflation and break the back of it with a very short but nasty recession, but break the back of hyperinflation so that you were going from in some cases double digit inflation down to initially five, but I mean essentially the much lower inflation environment. And that was very good for stocks, very good for the financial markets. Nobody really expected the Soviet Union to collapse, which created a defense premium. Nobody said it seemed farfetched a little bit like, oh, we're going to defeat inflation very quickly, nobody thought, gee, bill Clinton, this guy from Arkansas is going to be president and he's going to have extraordinarily high productivity growth.
David Smick (00:33:53):
You can say some of the economists might have predicted, but no one said, here's the sure thing. And surpluses, nobody expected that. And nobody expected that you were going to have a change in technology where you could push a button and move money across the world like that. And so when you did that, you ended up with suddenly a global financial market instantly or almost overnight. And that the liquidity of this market, but a lot of it would pour into US fixed income, particularly as many of our trading partners that were new, particularly China, India, and they came on board where they had to recycle their dollar savings, they recycled it into US assets. Well, no one said, my God, we're going to have unnaturally low interest rates. And in this giant ocean of liquidity that is rewards, it's like a beauty contest. The least ugly contestant in the beauty contest is going to get the rewards in the form of a huge infusion of savings that's going to lower their interest rates in our case.
David Smick (00:35:28):
And I don't think people sat there and predicted that. So my view is that we got into a situation and if you happen to have the money or you happen to have a stock portfolio, you made huge gains during this period. And as I said before, but it wasn't like this was, no one expected a 3800% increase in the Dow over 40 years, but it happened. And I think that's where we have to have a little humility, particularly among financial elites to say, we were given this gift. Now we worked hard and we worked 12 hours, 14 hours a day. But the reality is if we didn't have these conditions, if we had had hyperinflation that just continued, and if we didn't have a global financial market, we had much more of a domestic continuation of domestic thing and all the other developments, we would not be in the, we'd not be in this position we're in today.
David Smick (00:36:36):
So have some humility that you won the lottery, you worked hard and you won the lottery, but that these were unusual times. And so can we really leave half the country out of the party? Now, I will add this. My film offers answers, but it's not the only answer. And I am, I could be completely wrong about things, but I think we have to have some answers. And when people ask me, what is your film? Really? It's not a traditional documentary. I tell 'em with a protagonist and you have the two evil, three evil figures, the hero, it's much more of an intellectual statement, a thought piece that says we need to have a national conversation about where we want the country to go. And that to me is the average person you should look at this documentary is as more of a national calling that we are having this election coming up in November, and we, during this lead up to the election, it's very clear we have a number of problems.
David Smick (00:38:10):
Let's call the problems X, Y, and Z. And we're going into an election in which one of two people on January 20th is going to be president of the United States, and it doesn't matter who those people are, we're still going to have X, Y, and Z. And that's why I decided this film should say, look, you want to watch the ins, ins and outs of the presidential election fund. Let's dig deep. Let's go down and discover the roots of what our problems are. What are the root causes of why we hate each other? Why do we feel that half the country, particularly the blue collar of the working class, half feels cut, Arif, they feel neglected, they're full of anxiety. We need to get down and discover that. And that's the nature of this film as opposed to we don't get into tit for tat about who's up, who's down. It's really down to this is what we need to be concentrating on now and after the election because this is a survival or democracy. We have a lot of threats to our democracy. I certainly, like you recognize Trump as a threat when you're talking retribution and all the rest. But I'm thinking, Lord, long term I'm thinking, look, let's reverse it and look at it from 30,000 feet. Where's this country going?
David Smick (00:39:46):
My prediction we're going to be, we're going to have a second industrial revolution. That's the druckenmiller theory. A lot of other people buy this that we're going to have this revolution that is going to be so extraordinary. It's probably begun. It's just not measured properly. But if we move in that way, these problems that I've outlined of half the country feeling neglected are going to intensify and the people are going to say, what's in it for me when I have to struggle just for groceries? And my brother-in-Law who works at a bank and lives in Palm Beach just had his house go up about $3 million in value in the last year. And who's working at JP Morgan? So I mean, at some point you have to say this is not just an age old quality argument about equity issues, about there's a bigger issue about saving the kind of system, constitutional democracy, constitutional system that we all value.
Rob Johnson (00:41:01):
Well, there's a famous Sausalito, California Jungian therapist, psychologist named Edward Jamalski, and he wrote a book called Love is Letting Go of Fear. And the idea, and I'm not talking about romantic love here, the idea of being a kindred spirit with your fellow citizens being part of America involves addressing those fears. And whether it's globalization where the powerful can keep their money offshore or where your job gets put under pressure because it moves through a multinational company to elsewhere, whether it's climate issues, people are very concerned about the au safety of where they live in many different parts of the planet. Now, whether you are talking about the stability of finance, we had, one of the reasons people didn't see the big up that you talked about was they were scared in 2008 and oh nine with the Lehman Crisis
David Smick (00:42:11):
87
Rob Johnson (00:42:13):
And 87 stock market crash. You're right before that. And before that, the savings and loan crisis, right at roughly the same time. So everybody felt like they were on a bumpy road and then all of a sudden it smoothed out and took off. But you've got now, as we've talked about, the great potential of AI and technology applied to the medical industry, but everybody's afraid for their jobs in those sectors and are they going to be replaced by computers, et cetera. So there's a lot of what you might call structural fear, whether it's globalization or climate or technology or finance. And then I mean, looking at the global south, the size of the African continent is enormous. If we don't address climate change in the equatorial region, subsistence farming will be burned out. Then what are you going to do with a billion and a half people? These what you might call scenarios of angst are very real. And going back to Jean Kowski, unless we can get rid of the fear, the love, the unity, the spiritual democracy will not blossom.
David Smick (00:43:30):
I also think I agree with you entirely, and I think that that fear causes the working class, the middle class to they got nothing to lose. So they'll pick a candidate who they normally wouldn't support. And I look at a lot of Trump's vote is a vote out of fear. It's a little bit like no one cares about us. So he may be completely inappropriate for the presidency, the guy who was highly impulsive, not thoughtful, and all the other, you can just turn on TV and you can catalog all his deficiencies. But I wonder why are people voting for this guy? So you start talking to them and you know what they say, we understand all that. We understand all the faults, but he
Rob Johnson (00:44:31):
Acknowledges their despair. Yeah, he does step forward and say thing's a mess and I'm here to fix it.
David Smick (00:44:38):
Yeah, there's a guy in the film, Hawk Newsom who appears in film, black Lives Matter, and Hawk is a friend of mine. We go back a number of years, and so when I'm in New York, we had dinner and I always learned something from him about what's going on, particularly in the Bronx, in the black community, in the Bronx, as he says, I am not a black activist. I can just tell you what black folk are thinking, sitting around the kitchen table. So four months ago he said, what's happening in the Bronx Hawk? And he said, you'd be shocked. This was before all this came out. He said, black males thinking voting for Trump. I said, that sounds ridiculous. I said, that's absurd. He said, I think it is. But he said, what they tell me is this, Trump will the only guy out there, he said, the Republicans, they have no use for the Democrats.
David Smick (00:45:42):
They think just use him every four years. This is black males, not black females who are very loyal to Democratic party, but black males. And he said they want to vote, they're considering voting for Trump because he's the only guy there who will stick it to the man. So it's kind of a testosterone macho thing, but it's something that is powerful because as you say, the fear is enormous. And so you want a guy who will go and stick it to some big corporation if they want to take your job and send it to Mexico and not have. So it is an interesting development that I think the ruling elites in our country have missed, which is the frustration. And that's part of this film's mission, is the frustration of the middle class and working classes is real. And when we ignore it, we could lose control of the politics.
David Smick (00:46:43):
I mean, we could have people say, there's a film series called Babylon, Berlin, I don't know if you've ever seen it, but it used to be on Netflix. I think they're coming out with a new updated version. But it's about essentially a guy, a police investigator, investigates a murder. He's in Cologne, investigates a murder in Berlin in 1929. And it's fascinating because in investigating murder, you see Berlin, which was then the cultural leader of Europe at different levels, both at the bottom among the elites, and then the middle class. And Beverly and Berlin is scary because you see Germany, you see the Weimar Republic, which then still was in control having no answers. There's fear of the future. They were coming out of a depression, but they had no answers. They were not providing that kind of stability, that kind of feeling of we're going to come out of this.
David Smick (00:48:03):
And at the time in 29, the brown shirts, the Hitler's party had maybe 3% support. And the socialist, the communist Party had a much larger sense of support. And it's just amazing as you're watching this film, which is a fictional film, but within three years by 32, Hitler was running everything. And fear, as you point out, just the general working class, fear that, and it wouldn't have been hard to see that Hitler was inappropriate as a monster. But people do strange things when they're fearful, particularly if you are fearful because you don't think your kids are going to have a future or they're going to be starved to death or whatever the element is.
Rob Johnson (00:48:56):
Well, when you talk about fear, I also want to introduce the fear that politicians have that if they don't get money, they're not going to survive in office.
David Smick (00:49:09):
Well, one of the surprising things about this film is we talk about how both parties have rigged the system of fundraising where if you are as a political party, whether Republican or Democrat, you can raise 335 times the amount allowed as an independent candidate. I mean, they have rigged the system against any independent candidate. So you have these two parties, that kind of posture as if, but they take the complicated issues and of great nuance and they simplify 'em into jargon that can be used as one-liners in this campaign of raising huge amounts, going 98% negative and just slamming, slamming, slamming as opposed to. So it's hard for an independent to come in and say, unless it's a Bloomberg who is unfortunately an independent without a personality, but to come in and fight this system. I mean, it's probably one of the two or three things in this film that elites express the most surprise, that they have no idea how much the system is rigged by both parties, by colluding, by both parties to keep out competition, which is insane.
David Smick (00:50:47):
Look at when I think a famous line in the film is by Ken Lone, the founder of the Home Depot, and he says he holds his hand up like in dismay, look to his face. He says, the most qualified people in America don't run for public office. And this is followed up by a statement by David Ignatius of the Washington Post, a good friend of mine and David agreed to be interviewed and David said, he said, we can blame. You can blame the politicians, but ultimately the blame goes to the voters because we're given an opportunity to demand policies that eliminate dirty money, that eliminate manipulation of the party system. We can just become, what do he calls a lazy citizenry that we don't put enough in there. We don't run, we don't show up at school board meetings. We don't do unless it's certain narrow issues. We don't are lazy and we don't have a commitment to the country.
David Smick (00:52:09):
To me, it really comes down to whether, and I say this at the end of the film, whether you put party before country, and in my view, I think we put everything before country. I mean, I think I go back and I look at John F. Kennedy saying, that's not what your country can do for you. That's what you can do for your country. It's so prophetic because it's almost like Kennedy could see where we were going that we were becoming, what I say in the film is the cult of the self. We are enamored of our individual needs. We don't care about community, we don't care about the common good, and it's just shocking. And you can see that in order to get out of this rock, we're going to need a very dynamic leader who can communicate that we're all in this together. If we're not in this together, we're screwed. And being in this together means that you have to sacrifice if you're making 10 billion a year, but you're in this, I mean it's an attitude. It's an attitude that this is not just a playing field where you win and you're not part of the team.
David Smick (00:53:48):
I think that when people see the film, that's why at the end of it they say, yeah, parts of it scare the crap out of me because you talk about a civil war. If there was a civil war, it's not going to be what the movies talk about in the Civil War, which is a bunch of people beating each other up in the streets shooting at each other. It's going to be an economic civil war between governors and what each state, the red states use their power and their ability to affect supply. And the blue states use their power most as financial. And if we have that, it's rather frightening where we're heading. We're going to have to make some profound decisions about what do we want America to be? And that's the game right now.
David Smick (00:54:44):
If you go to Washington right now and you went around and said, what are you fixated on? What are you thinking about right now? You know what? They would say something about whether Trump says something stupid or Biden decides to get in or out and it's all fine, I just wish that it wasn't a hundred percent. And when I turned on the TV and looked at the news, I wish there'd be like 10 or 20% that would say, here's the long-term game plan. We need to decide how we can fix certain problems so that we can have a stable democracy. And I think we don't have that right now. By the way, if you look back at the founders of the country, and you look at John Adams, he wrote a famous letter and he said that he was worried about the survival of a government, that he helped create the United States government because he said, the way we structured a constitutional democracy is it requires a certain amount of virtue.
David Smick (00:56:04):
And by virtue it means, I think that back then moral kind of grounding. And in other words, if you can just lie and lie and lie and then have your media cheerleaders spread the lies, eventually the system doesn't survive. And that was what he worried about because the media back then, both parties had their media cheerleaders, but his argument was you get mob rule. And at that point it's all over. And I think that's a good warning for Americans. I think everybody had to read this letter because he said in pretty clear terms, here's the threat. We're going to lie to each other and we're going to lie over and over again. And one side's going to say That's outrageous lies. And then some of their more extreme elements will say, well, let's lie back. And it just gets to a point where there is no virtue in the system. And I think I argue in the film that is a huge, huge threat to the
Rob Johnson (00:57:12):
It is. But what I would say in conclusion is that you have taken your time and you have moved away from all the elites in finance and politics that have been your, I would say, your environment and you stepped forward given your consciousness of your upbringing and understanding of the instability where we are. And you have done, I'm going to read you a quote from Muhammad Ali, he who is not courageous enough to take risk will accomplish nothing in life. And when I see your film, I see an individual who is being constructive, and I see, I want to congratulate you for that. Ali's most famous poem is considered many years the shortest poem in the world. Me. We have a pendulum between me and we and you are pushing the pendulum towards we.
David Smick (00:58:23):
Well thank you towards
Rob Johnson (00:58:25):
That spiritual democracy. And you are setting an excellent example for elite people who care about the future, not the bag of money that their child can take to an island, but the community of our children and grandchildren who want to have what we used to believe was the future of America.
David Smick (00:58:51):
It's funny, Michael Douglas, he's been extraordinarily helpful on this film and he's been asked recently, so you could do all kinds of things. Why did you pick this project out? But here you are. He flies in from Europe to do our New York premier does a lot of press. People have seen him all over talking about this film. And he said, why am I helping Dave? Why I'm helping him is my brother. He said, I'm a Democrat. My brother's on the other side. And he said, we don't speak. It's insane. We don't speak. And even though we have differences, it's like we have the differences. And I would argue that if you read the writings of George Carlin, the comedian of 30 years ago, you'd be stunned how much he pegged what's happening now. He said, there are a lot of people who are making a lot of money, gaining a lot of power, keeping us divided so that brothers don't speak.
David Smick (01:00:16):
And that's why he said, look, I want to address this. He said, but when you get down to a personal matter, yeah, this is not right. I mean, we can have disagreements and all the rest. This is not right. And if you are a Democrat, listen to this and you or a Republican listening to this, you have to decide which part of the American economy you're on. Are you part of the 80% that hasn't lost its mind over just such intense hatred for the other side that you just want spit every time you think or you, you're part of that side that says, I could never, I don't care what my brother says, he's on that side. I'll never be forgiven. And it's that kind of mentality and people need to decide. I think there's an 80% of American people, and that's why I'm an optimist that are saying, look, I may not agree with everything the other side is, but I agree.
David Smick (01:01:30):
We need to sit down and we need to talk. And if we can sit down and talk, we probably find common ground. And if you look at instead, what are our political system, as George Carlin says, what do all the money interests do? They want us to concentrate on our differences, not on things that we can agree on. We just saw the president of the United States earlier in his administration pass an infrastructure bill with Republican help. They should be championing that not as a Biden victory or Republican victory. They should a bipartisan victory. Then if we can do this, we can do another dozen and maybe save the country. And that's kind of where I'm coming from. And I think that it really goes down to are you part of that 20% of haters that just you're so consumed with it, either you're making money off it or gaining power off it, or you are a pawn of people who are getting money and power versus the other 80% who don't watch cable news, they don't watch. All they know is they want to get the news somewhere and they say, yeah, I don't agree with this, this, but that doesn't mean they're evil. And I will sit down with them and tell 'em why I don't agree and see if there's any common ground. And I think that's the first step.
Rob Johnson (01:02:58):
Well, what I would say is I've watched, and our audience can tune in online, Michael Douglas who his friend Shep Gordon, when I described what I'm about to tell you, he wrote me an email and said, yes, he's a special person. Michael Douglas went on Colbert show and the two of you did Morning Joe together. And then he went on with Whoopi Goldberg and the view and the energy that his presence and your presence created among these people in the media, it was almost like a wake up call seeing their enthusiasm because you were illuminating what might be called unconscious angst. And these people joined the energy very quickly. And I saw that at the screening last night, which I attended. And I want to congratulate
David Smick (01:03:59):
You. Thank you very
Rob Johnson (01:04:01):
Much for moving in the place
David Smick (01:04:05):
Where we
Rob Johnson (01:04:05):
All need the medicine. This you can say America's burning, but I would call this movie American Medicine.
David Smick (01:04:13):
Yeah, well, that's a good title. When you do a movie, it's collaborative. And so I had a long list of titles. You provided some others, a lot of friends provided titles and there long list. And most of 'em at the top three quarters of the way down or 80% of the way down maybe were very clever, but very abstract. And then at the bottom, they had these divid ones like America's Burning, but it wasn't clever, probably overstated. So I took it to Barry Levinson Academy Award winner. He's the executive producer of our film. And I said, what do you think of these? And he said, well, Dave, have you ever seen the movie called Dangerous Marine Life along the Cape Cod coast? So no, I don't think I missed that one. He said, well, they call that movie Jaws.
David Smick (01:05:22):
He said, people don't remember abstract titles, they remember concrete titles. And he said, he said, don't let people tell you, oh, that's too scary. Or if you talk about dangers from a civil war, it's too scary. He said, I'll tell you why. He said, when Martin Scorsese was doing the movie, they had a screening of about 300 people, and 2020 5% of the people walked out in the first 10, 15 minutes said this was outrageous. It's way too violent. This is one of the big earners of all time, one of the movies that remembered when people say, name a dozen Louis, they missed it. And he said, we live in trouble times, so if your movie outlines this, there's no reason to back off. He said, but what's great about your film is it's optimistic. It shows there is a way out of this. It doesn't say I have the exact way, but it says, here's a way others will add to it, maybe subtract from it. But it is the way, and that's kind of the mentality that we've had on this thing. And you're exactly right. Michael Douglas is one of the great heroes. He really, I don't think if he ever came to Washington, I think he would just be too nice a guy because he's such a genuine guy. He's just not a good liar, and he's really a terrific person, terrific human being.
Rob Johnson (01:07:01):
Well, I think we ought to conclude here, but once again, I want to congratulate you do. Dylan had a song called It's All right, ma, I'm Only Bleeding. And he said, darkness at the break of noon Shadows, even the Silver Spoon, the handmade blade, the child's balloon eclipses both the sun and Moon to understand too soon. There's no sense in trying pointed threats. They bluff with scorn, suicides, remark, or torn from the fool's gold mouthpiece. The hollow horn plays wasted words proves to warrant that he not busy being born is busy dying. David, I stink. Having known you for years, you're living a second life now and you're busy being born. You're not busy dying. And I want to thank you for the example that you set for all of us, and I want everybody to see America's burning.
David Smick (01:07:58):
Great. Thank you very much.
Rob Johnson (01:08:00):
Thank you.
And check out more from the Institute for New Economic thinking@ineteconomics.org.