Michael Moore vs. Thomas Sowell: A Hate Story - by Chanda Chisala

The filmmaker falls for a common economic misunderstanding about who creates value.

Michael Moore is not a hypocrite. He may just be sincerely misguided.

Yes, he has made millions of dollars from his documentaries which attack the profit motive of the capitalist system, and this does indeed look like the most embarrassing irony for him. But when you understand him, or at least when you understand his misunderstanding of capitalism, you will see that he is not in fact consciously contradicting himself. He is merely a victim of a common but very subtle economic fallacy that has afflicted societies since ancient times.

In his many books on economics and sociology, the economics historian Thomas Sowell of the Hoover Institution has identified this fallacy that consistently occurs in all societies that have had to deal with what are called “middleman minorities” - small groups of people within a nation that tend to make their money from certain middleman occupations (retailing, money-lending, distribution, etc). The Jews in Europe, the Chinese in South East Asia, the Ibos in Nigeria,  the Armenians in the Ottomon Empire, the Indian Gujaratis in East Africa, and many other groups, were all middleman minorities in these regions.

These groups also happened to be hated in these communities, especially in times when the rest of the society was not doing so well economically. In explaining why they were despised so much, Sowell blames this most persistent of ancient economic fallacies: the idea that such people do not ‘make’ anything.

Everyone can see them build growing fortunes, but they can also see that they are not manufacturing any tangible thing. They simply transport goods from one point to another or they just charge interest on the money they lend, and so on.

What happens next in these societies follows a well-established script. Some charismatic individuals, usually from the elite class, start affirming the sentiments of the poor majority by telling them that the reason they are poor is in fact because of the same “parasitic” activities of these “greedy” minorities who contribute nothing to the economy.

Michael Moore betrayed his own susceptibility to this fallacy when he appeared on Fox News Channel’s Hannity Show to promote his latest documentary, ‘Capitalism: a love story.’

“I am not against capitalism,” Michael Moore confessed to Hannity, “I’m against what it has become…we don’t make things any more, Sean … We just make money off money now.”

This economic fallacy is so subtle that even the  oft-sharp Hannity conceded this point to his guest, with some grudging reservations of course.

Writes Sowell in Black Rednecks, White Liberals (Are Jews Generic?):

”… the seeming conjuring of wealth out of thin air, apparently by ‘overcharging’ others or making them pay more money than was lent, has been seen as a parasitic activity, rather than a contribution to the well-being of the community. Suspicions are aroused in an occupation where an income is generated, in Frederich Hayek’s words, ‘out of nothing’…”

The modern “middleman minority” of America and other Western nations are simply those companies that appear not to make anything while accruing big profits to themselves: the insurance companies, the banks, and large retailers with big distribution networks (and their executives, of course). It is not a coincidence that these are the kinds of companies vilified by Michael Moore in ‘Capitalism: a love story.’

Michael Moore never attacks the multibillion dollar Hollywood film industry, for example, because in his mind, these do at least make something. So, they contribute something “real” to the economy instead of just moving things around or charging money on money.

In truth, as Sowell explains, the middlemen do actually make a crucial contribution to the economy. Facts show that whenever they have been suppressed or chased from any community, the economies of those societies have suffered immediately.  It is worth quoting the exact words of Sowell again:

“The real measure of an economic function, however, is not its plausibility to observes but, rather, what happens to a society in its absence. Some countries had disastrous famines, not from a lack of food, but from a lack of distribution of food…In other economies, both production and consumption suffer from a lack of credit. More to the point, mass expulsions of supposedly ‘parasitic’ middleman minorities have created shortages, higher prices, and rising interest rates, in a number of countries and a number of periods of history.”

Luckily for Michael Moore, the elites in the White House are more likely to watch his films for economic analysis than to read Dr. Sowell’s incisive books.  But as George Santayana famously warned, those who cannot learn from history are doomed to repeat it.