Netflix Christmas Movies, and Their Appalling Economics

Netflix Christmas Movies, and Their Appalling Economics
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Like many parents this time of year, I find myself streaming Christmas movies with themes of redemption, familial and romantic love, generosity and occasionally religion; but with plots driven by economics. Classic Christmas movies teach sound lessons, but modern versions often fail.

The number one Netflix suggestion was A Christmas Prince: Royal Wedding, the sequel to last year's surprise hit with appealing performances by Rose McIver and Honor Kneafsey, but few other virtues. The new King of Aldovia initiated massive infrastructure stimulus spending that brought the country near bankruptcy; with inflation, unemployment and a nationwide strike.

The King reacts with baffled gloom. But his plucky fiancee from Brooklyn and her wheelchair-bound-princess partner dig deeper. Successful infrastructure stimulus employs slack economic capacity in projects that encourage private investment and expansion. The King's plan was implemented during good times and appears to have diverted resources from superior private sector projects, hence the unemployment. It did inspire not confidence among lenders, business leaders nor workers; hence the credit problems and inflation. None of this should be a surprise. Top-down five-year-plans and great-leaps-forward intended to "modernize" economies (as opposed to respond to specific problems) are always disastrous. More modest and careful infrastructure spending has some arguable successes, but is no slam-dunk. No one should be baffled when the classic problems arise. A wise solution for Aldovia would be to meet with the disapproving lenders, business leaders and workers to redesign the stimulus.

The fairy-tale alternative assumes a villain. Our heroine discovers three contractors are owned by a Monaco-based holding company controlled by an Aldovian nobleman. How this caused the stimulus to fail is never explained, nor why this is a crime (the ownership is discovered from official filings). But it is enough for the Queen-to-be to assault the villain with a deadly weapon, the dowager Queen to throw him in a dungeon and the King to seize his assets and give them away to workers as Christmas bonuses—all without due process. This will worsen the investor and business confidence problems and exacerbate inflation. It may calm workers for Christmas, but as it does nothing to replace the jobs the stimulus destroyed, it won't lead to lasting labor peace. Failed government planning leading to more violent plans rather than investigation and correction is the classic road to serfdom.

Economics aside, it's disturbing to find xenophobia and scapegoating in a family Christmas movie. In classic tales, characters like Scrooge and George Bailey gain happiness through enlightenment and redemption—they don't discover their problems are caused by villains to be punished; nor that the solution is to steal money from villains. Those latter plots belong in cynical, amoral, violent summer blockbusters.

Netflix number two selection, Desperately Seeking Santa, treats a south Boston neighborhood facing closure of a mall that will cost jobs and construction of a mixed-use skyscraper that will disrupt existing businesses.

Economics is essentially about trade-offs and projects cannot be evaluated only on their disadvantages. We could describe both projects in opposite terms. Closing the mall will open opportunities for local businesses (no doubt many businesses were shuttered when the mall opened), and new construction will create jobs. It's hard to be simultaneously against both disinvestment and investment. Of course there may be reasons that either or both decisions are bad, and certainly they will be bad from some people's points of view. But they are not self-evidently evil, they do not require villains. Moreover the movie clearly shows there is an excess of shopping malls due to growth in on-line shopping, and a shortage of high-quality office and residential properties. Some retail workers somewhere are going to lose their jobs as a result, and some properties somewhere are going to be developed. Stopping these things in one place only means they happen somewhere else.

Xenophobia here is local. The manager of the mall is taunted for being an outsider, which she angrily refutes by claiming neighborhood birth. The scapegoat is a local official who approved the construction project in exchange for a condo--and a condo in North Carolina rather than south Botston. Instead of exposing the bribe in the interests of honesty and good government, the manager blackmails property owners to underwrite mall losses and leave the skyscraper property undeveloped. It's unlikely stealing from criminals will work better in south Boston than in Aldovia.

Fortunately the third film on Netflix's list has more intelligence and goodwill. The Christmas Switch concerns a three-card monte conman who cheats people out of Christmas money. None of the movies I am discussing have much budget, but this one is so cheap it's claustrophobic. All outdoor scenes are shot in alleys, indoor ones in hallways. The toy store Santa drawing enormous crowds is put in a stairwell.

A supernatural bearded guy named Nick looks like Ben Bernanke. He creates money by magic and induces the conman to use his skills to lose at three-card monte. In that game, as in some dubious dealings in mortgages prior to 2008, the victim and conman think they are cheating the other. The satiric parallel is between quantitative easing while making banks give money back to troubled borrowers versus a conman redeeming himself by using magically created money to lose at his game. It's certainly not clear that the world is improved by helping three-card monte bettors trying to double their Christmas present funds through fraud, paid for with newly printed bills.

Bank bailouts are not the only targets of this gentle comedy. A ruthless-femme-fatale hedge fund manager improbably works at a toy store. She chortles evilly at her cynical schemes, but is so deluded that she ends up doing everything right. The menacing thugs are also so stupid they do good. The lovable toy store Santa lectures kids that “there are only so many elves” to make toys, so wanting Christmas presents deprives others. A euphoric mother thanks the store owner for teaching her child “the true meaning of Christmas,” and then proceeds to buy enthusiastically. Christmas is skipped over. The conman rejects honesty, but cons for love instead of money. No one is demonized for foreign birth or foreign ownership, or anything else. The movie shifts expectations as rapidly as a three-card monte dealer and has no answers in the end, nor any villains, just appreciation for human silliness.

Popular Christmas movies capture the economic insecurities and myths of their times, and our times are not looking good. There is too little tolerance, too little logic, too much faith that money is the solution to problems and that stealing from foreign villains is the way to get it. Fortunately, a few good movies still get made, and there are always the classics.

Aaron Brown is the author of many books, including The Poker Face of Wall Street.  He's a long-time risk manager in the hedge fund space.  

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