Wonks meet everyday Joes to explain the 2008 global economic crisis in writer-director David Sington’s intelligent “The Flaw.” Going out of its way to make economic theory and practice digestible (and viewable) to lay audiences, this U.K.-produced doc about a very American problem doesn’t introduce new ideas, but manages to consolidate the complex capitalist engine that generated the credit-based crisis that nearly undid the global financial system. Despite a visual design with theatrical ambitions, doc will land primarily with cable outlets and vid buyers after a respectable fest tour.
The titular “Flaw” proves a bit tricky for the film to define: Economic historian George Cooper sees it as “a crisis of economic theory,” economist Joseph Stiglitz terms it “a total failure of markets” and former Fed chairman Alan Greenspan (at his now-famed House testimony hearing) explained it as “a flaw in the functioning model of how the world works.”
One of Sington’s primary talking heads is Yale economist Robert Shiller, famed for constructing the world’s first index to track U.S. home prices since the 1890s. Prior to 2008, Shiller was a fairly lonely voice warning of an impending real estate bubble driven by grossly inflated home prices and the mortgage-based securities the bubble spawned.
Valuably, the film considers Shiller’s explanation of the efficient market hypothesis. As Shiller and others here cogently explain, such efficiencies allowfor the market as a whole to determine the proper price for a good or asset, letting supply and demand function sanely. Where efficiency breaks down is among more speculative commodities and assets, like real estate, where price inflation can rise out of control. Cooper draws parallels between a similar bubble in the late 1920s preceding the stock market crash that launched the Great Depression.
Sington spends a large chunk of the film’s midsection on America’s growing income inequality — generally low in the prosperous 1950s with its burgeoning middle-class, and now at high levels not seen since the 1920s.
“The Flaw” intersperses the academics and historians with homeowners (such as former New York Times economic reporter Ed Andrews) whose mortgages and debt borrowing landed them in the financial soup. It also allows the film to personalize the highly complex system of collateralized debt obligations, begun as mere mortgages and then spun into high-risk, high-return securities by Wall Street-based investment banks. These securities, the film argues, exposed the flaw in a capitalist system increasingly dominated by the financial sector rather than by more traditional sectors that produce goods and services.
The ideas and points are made entertaining by Sington’s and ace editor David Fairhead’s ironical use of goofy, rarely seen, decades-old American cartoons educating the public on business, real estate and capitalism’s promise. The effect is less to make anti-capitalist jokes than to make the era of middle-class glory seem so distant. Lensing in Gotham locales is heavy on the fish-eye lens; music is so-so.