Last night when Jim Cramer was scheduled to appear on The Daily Show with Jon Stewart I expected the typical “conclusion” to a week long rivalry involving Stewart. He’s a comic, he’s nice, he’ll give Cramer a chance to say his piece, get in a few zingers and everyone will end up getting along great. Instead Stewart moved up from mere comic newsguy to actually voicing the frustration and anger that many Americans have for how the financial system works. Cramer, for his part, mixed humility and good humor well, but couldn’t really respond to Stewart’s constant on the mark shots. This was no typical light weight comic interview, this was a masterpiece. WATCH IT: click here for the interview.
Two points stand out. First, in response to Cramer’s statement that he is doing his best to out unfair manipulation of the market, Stewart shows him a number of clips that find Cramer bragging about such manipulation, and saying that all investors should do it — it’s fun and makes money. Cramer avoids directly responding, but the message is clear: Cramer is a hypocrite. And, of course, Stewart’s point is not that it’s just Cramer, but that CNBC and in general the world of business punditry is to blame. They masqueraded as journalists looking out for the average person and their money, but instead were in bed with the big shots, and cheer leading a market that they should have realized was a bubble out of sync with fundamental weaknesses in the economy. In short, popular financial news has been a scam.
Perhaps more impressive was the fact that Stewart nailed Cramer — and most of the world of Wall Street and high finance — with the charge that insiders were making deals and money, manipulating the markets in order to profit from the 401K money that average folk invested. There were two classes of investors — us normal citizens who simply tried to figure out safe and secure investment strategies, and the financial insiders, who could manipulate things for their advantage. Those who should have been warning us were actually in bed with the insiders.
None of this is news, to be sure. I recall back in early 2000 getting an e-mail from someone who knew people “on the inside” informing me that the word was to get out of stocks, a major crash was coming. That was three months before the Nasdaq hit its high of 5011 (with Cramer predicting it would continue on to maybe 8000 by the end of the year) and then crashed to ultimately down around 1000. While average folk were watching CNBC and the now defunct CNN-FN, and hearing of a market that could see the Dow boom to 30,000 or even 100,000 in a few years, the insiders understood what was coming, and most of them probably found safe havens for their money.
Meanwhile, the aftermath of 9-11 led to cheap credit and another boom, this one fed by dual bubbles of higher property values and an again rising stock market. The insiders used this to feed themselves massive bonuses (we’re just seeing the tip of the iceberg now). Some, like Bernie Madoff were obviously and consciously scamming average folk, but many — probably Cramer included — thought it was a game with no losers. The market would keep going up, so average investors would still see their 401K values increase and their net worth skyrocket (average household net worth it hit a high in early 2007, but has gone down about 30% since then), and the insiders could continue to skim off the top and use inside information and manipulative strategies to enhance their profits. Everybody wins!
The right wing/libertarian sector of the political class had a role in this too. As long as their mantra of deregulation and “let the markets operate” seemed to be embraced, they had motive to see the ever rising stock market and “wealth effect” as something permanent and natural. It fit their ideology. To be sure, more intelligent libertarians understood what was happening (such as Peter Schiff, who was the subject of a video I linked to earlier this week in another blog post about Stewart, who has had one of his best weeks, in my opinion). He’s a member of the so-called “Austrian school,” which builds on the work of Austrian economist Friedrich Hayek. I have great respect for the Austrian school, even if I do not embrace their approach completely, because they recognize a couple of basic facts: they look at the fundamentals (consumption and production), and understand the reason why markets work better than planned economies (diffuse information). Schiff is currently warning about inflation, which is a warning that should be taken seriously. But most free marketeers of the recent GOP era were not really all that well versed in economics. The Rush Limbaugh crowd and the blogosphere simply thought a few simple ideological tidbits were enough, and read the apparent prosperity of recent years as proof they were right — the Arthur Laffers and Ben Steins of the punditry class.
So how did we get here, to a point where a comedian with what he calls a “fake news show” seems to be in the forefront of calling out the class of pundits and so-called journalists that helped mislead public opinion for years? Why is Jon Stewart the populist hero confronting the Cramers of the world? Why is it that the Cramers, Laffers and Steins continue their punditry with a shrug and an excuse that they can’t get everything right, with the news shows still inviting them and treating them with respect? Is it corporate big media taking care of its own? Is it that the establishment class hasn’t yet come to grips with the reality of how wrong the conventional wisdom had been?
It’s probably the latter, and probably no surprise that it is satire and comedy that first unmasks the outlandishness of how people are thinking and operating. Throughout history satire has had the impact of showing reality for what it is, even going back to Roman satirists like Juvenal, Horace, Lucilius, Ennius, and Perseus, many of whom saw the weakening of Rome at a time when it appeared Rome was at a pinnacle. Comedy and satire are an effort to expose hypocrisy and make fun of both the elite and everyday practices. As such, comedy is perhaps one of the most powerful tools of social criticism. It is less likely to caught up in defending an ideological orthodoxy or fighting a political war. It’s not part of the game, at its best it is outside the game, observing and searching for things to ridicule and mock.
Comedy and satire do not need to protect their own theories and interests. When Joe Scarborough mocked Stewart by saying he was “cherry picking eight years of quotes in order to get laughs,” Stewart could reply, “of course, that’s what we do!” This means they are less inhibited by bias and a stake in the game than most pundits and politicians. Social critics in academia or the world of philosophy (I’d put myself in that class) try to do the same thing, but we’re not every effective. We’re not entertaining. By trying to be academic and explore the various perspectives, we can’t simply cut to the chase the way Stewart can in his interview with Cramer.
To those who are appalled that most Americans get their news from Stewart or Colbert, the good news is that perhaps at this time of crisis Stewart and Colbert are the best observers of our conditions, and serving a real important function during this time of “crisis and transformation.” I’m sure they wouldn’t agree — the fact they don’t want that kind of role is one reason they’re able to fulfill it — but it seems almost undeniable. While the politicians were in ideological fights over Iraq in 2005, Stewart’s “Mess O’Potamia” early on caught the contradictions, hubris, and obvious errors of the White House long before it really became public conventional wisdom.
Satire has throughout history played this kind of role, often under appreciated, ridiculed and disdained by the public and the ruling class. In Russia, for instance, political satire has been essentially banned if it goes after the government, they know how powerful it is. Comedy, like art, plays a profound role in the social and political development of a polity, even if seems on the margins or trivial. But last night Jon Stewart not only engaged in satire, but spoke for the country in confronting Jim Cramer, symbolically a proxy for the financial elites and insiders. In my opinion this was an important and historic episode in how this country is dealing with the financial crisis. It’s not just Stewart that deserves praise, it’s the practice of satire and comedy. Satire is more powerful than punditry, and usually more honest.