Steve Bannon, the chief adviser to President Donald Trump, is probably the most influential person in the Trump administration besides Trump himself.
But I find it hard to get a handle on Bannon’s thinking, since he shuns the limelight, and hasn’t written any books or magazine articles I could get hold of,
His 2010 documentary film, Generation Zero, is probably as good a guide to his thinking as anything else.
It is well done and, despite being 90 minutes long, held my interest—at least until the last 10 minutes of so, which consists of restatements of the main points.
Generation Zero is an analysis of the roots and consequences of the 2008 financial crisis, which Bannon rightly blames on crony capitalism, the unholy alliance of Wall Street and Washington that began in the 1990s.
But if you look at the film’s action items, what he really does—knowingly or unknowingly—is to protect Wall Street by diverting the public’s attention from what’s really needed, which is criminal prosecution of financial fraud and the break-up of “too big to fail” institutions.
Bannon presents himself as an enemy of corrupt politicians and financiers. But there is nothing he advocates in the film or otherwise that threatens the power of either.
Generation Zero draws on a book, The Fourth Turning by William Strauss and Neil Howe, who claim there is a cycle in American politics based on the succession of generations. Each cycle consists of four turnings—(1) a heroic response to a crisis, (2) a new cultural or religious awakening, (3) an unraveling and (4) a crisis.
The film begins with the offstage voice of a woman demanding to know why hundreds of billions of dollars were spent to bail out the big banks when that money could have been used to help her and other Americans in distress, and an onscreen man, evidently a politician, saying the catastrophe was so great and so mind-boggling that he was helpless to do anything about it.
Then comes the first segment – “The Awakening, 1966-1986”. Viewers are offered a contrast between the disciplined, purpose-driven personnel in the Apollo program, which led to the successful Moon landings in 1969, and the generation devoted to sex, drugs and rock-and-roll, culminating in the Woodstock music festival the same year.
We are told that the Woodstock generation moved into Wall Street and caused the financial collapse. Evidently we’re supposed to believe that Alan Greenspan, Robert Rubin and Hank Paulson are all former hippies.
What’s ironic is that the narration of much of the movie is conducted by the hypocritical Newt Gingrich, who is the personification of the stereotypical greedy, self-indulgent Baby Boomer. He dodged the draft, cheated on his wife and, as Speaker of the House, initiated the “pay to play” system in which congressional committee assignments and chairmanships depended on how much money the person raised for the Republican Party.
The second segment – “The Unraveling, 1987-2007”, which runs from the 23rd to the 55th minute – is the best part of the film. It shows how bank bailouts, starting with the Mexican financial crisis of 1994-1995, led financiers to believe that no matter how recklessly they gambled with other people’s money, the government would always be behind them in the end.
Bankers and financiers took bigger and riskier gambles with other people’s money, leading to the crisis of 2008 and the possible crash of the whole financial system.
Bannon rightly blames the Clinton administration for starting this cycle. But he throws in a couple of red herrings. The crash was not caused by the Community Reinvestment Act nor by affirmative action for unqualified African-American buyers. Nor was it caused by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Home Mortgage Association (Freddie Mac).
What should have been done, according to the movie, was to have let the bankruptcy process take its course.
The problem with that is that business bankruptcy is a different thing from individual bankruptcy. An individual bankruptcy is something that nobody wants to go through. But a business bankruptcy can be a tool by which an individual can escape the consequences of his own actions.
As an example, Donald Trump’s Atlantic City casino businesses went bankrupt four times, but Trump himself did not suffer consequences. The consequences of this decision fell on his employees, suppliers and investors.
The movie touches on this point by mentioning how the big Wall Street firms going from partnerships, in which each of the partners was personally responsible for the debts of all the others, to public limited liability corporations, in which executives assumed no personal responsibility at all. This was a big and bad change, all right. But the movie doesn’t follow up on this insight.
When a big business goes bankrupt these days, the employees lose their jobs, the creditors are stuck with unpaid bills, and investors lose their investments, but the executives who were responsible for it all don’t have to give back any of their big salaries and bonuses. I agree with Bannon that failed businesses should be allowed to die, but this is hardly enough.
What’s needed is prosecution of financial fraud, personal civil liability for gross negligence in financial management, restoration of limitations on what banks can do with government-insured deposits and the breakup of companies that are so big that their failure actually would jeopardize the economy.
The final segment of the movie, “The Crisis, 2008 – [ ]”, is an abrupt change of subject. We forget about Wall Street and crony capitalism. The real problem, it seems, is the federal budget deficit, which can only be fixed by drastic cuts in spending.
The only specific programs mentioned as examples of government over-spending are Social Security and Medicare. Military spending is not mentioned. Tax increases are ruled out. It is we the people, not the crony capitalists, who are called on to sacrifice.
One aspect of The Fourth Turning that is not discussed in the movie is that all previous crises supposedly were resolved by war—internal, external or both. Does this mean the current crisis will be resolved by war? Steve Bannon thinks so. I’ll write about this in a future post.
The Fourth Turning. A web site that explains Strauss and Howe’s theory in detail.
What’s Next for Steve Bannon and the Crisis in American Life by David Kaiser, a historian interviewed for Generation Zero, in TIME.
Steve Bannon harnessed the spirit of revolt that the Democrats gave up by Thomas Frank for The Guardian.
Inside Job by Charles Ferguson. A much better documentary on the 2008 financial crisis than Bannon’s.