American Hustle: Unreal and Real
By David Henderson
WARNING: MULTIPLE SPOILERS AHEAD
I saw the movie, American Hustle, on Friday night and liked it a lot. I liked the pace and I especially liked the integration with 1970s music, one of my favorite decades for pop music.
I did, though, find one of the key economic ideas in the movie highly implausible. Irving Rosenfeld, played by Christian Bale, and Sydney Prosser, played by Amy Adams, run a loan scam operation called London Associates. In return for a large non-refundable fee upfront, they promise to get large loans for people. We are led to believe that they rarely, maybe never, get those loans. But they keep bringing in customers and make enough money to have a nice office and to finance a nice apartment.
See the problem? They have a fixed address and they keep scamming people and yet the word doesn’t seem to get out. Not only that, but also the people who are scammed apparently never feel upset enough about it to do anything. The only way they are brought down is by an FBI agent.
On the other hand, there was one aspect of the movie that I found illuminating because it did seem real. In one scene, Rosenfeld realizes he is potentially in a pile of trouble because he is put in a position where he needs to scam the Mafia (this is the price he must pay for the FBI agent, Richie DiMaso, to let him and Sydney off). DiMaso explains to Rosenfeld that he really is in trouble with the Mafia–that the Mafia will be looking for blood and he, Rosenfeld, will be the victim. Why him and not DiMaso or the major of Camden, one of the other characters involved in the scam? Because, explains DiMaso, the Mafia would never go after someone in the FBI or a politician.
DiMaso doesn’t explain further–but he doesn’t need to. The Mafia would be crazy to go after an FBI agent, because the rest of the FBI would retaliate. The Mafia would be almost as crazy to go after a politician because the politician is in a position to retaliate.
As I said above, this seems real. It also implicitly illustrates a key difference between economic power and political power. Economic power can mean monopoly or monopsony power. More usually, though, people use the term “economic power” simply to refer to wealth. But those with economic power, whether it means wealth or monopoly power, can’t, solely because of that power, force you to do anything. At worst, they can withhold options. But even a low-level FBI agent or a mayor of a small city, can unleash a large amount of force on people.