Planet Money - Planet Money Movie Club: It's a Wonderful Life

Episode Date: January 11, 2023

Welcome to the Planet Money Movie Club, a regular series from Planet Money+ in which we watch an economics-related movie and discuss! On today's episode, Kenny Malone, Wailin Wong, and Willa Rubin talk about Frank Capra's 1946 classic 'It's A Wonderful Life.' They discuss CPI adjustments, how a copyright lapse helped make the film more popular, and what exactly a 'Building and Loan' is.Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoneyLearn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money, from NPR. Remember how horrible first period history class was? Ugh, 8.27am, fluorescent lights, a shamble into class, but wait, what is this at the front of the classroom? But wait, what is this at the front of the classroom? It's the television cart. Substitute Teacher Day, movie for class, the best. Well, hello and welcome to Planet Money. I am not a substitute teacher, I'm Kenny Malone, but this is our version of School Movie Day.

Because today we're going to share a very film-centric bonus episode from Planet Money Plus. Now, Planet Money Plus is a way to get access to regular episodes of our show sponsor-free, to support NPR, and also to get bonus episodes twice a month. Bonus episodes like this one that you're about to hear today, part of our Planet Money Movie Club. Now, if you're a Planet Money Plus listener, you may have already heard this, but we are so excited to share it with the rest of the class. So I guess, you know, imagine me now inserting a videocassette into a VCR. I thought about doing a Jimmy Stewart impression here. Here with another edition of the Planet Money Plus Movie Club.

It's more Dr. Evil than Jimmy Stewart. Anyway, here we are with another edition of the Planet Money Plus Movie Club, where we watch a movie related to finance or the economy, and then we talk about it. And there is an argument to be made that our latest pick is the most economy-y movie. More on that in a bit. But we are talking, of course, about the 1946 classic, It's a Wonderful Life. Merry Christmas, you wonderful old building and lawn!

That movie, of course, stars Jimmy Stewart. It's directed by Frank Capra. It's a Wonderful Life is a movie released 76 years ago with some economic themes that still really do ring true today. And joining me to talk about all of this is Indicator host Waylon Wong. Hi, Waylon. Hee-haw. Oh, that's good. You didn't do the hand gesture.

Is it like thumb on the nose? It's on the ear. It's on the ear. Thumb on the ear. So like thumb against my headphones waving. Yep, that's right. Also joining us here, Planet Money producer Willa Rubin. Hello, Willa.

Hi. I don't have as exciting of a greeting as you, Waylon. I got to go first, so I had the advantage. So, you know, this movie is on our radar because it was just the Christmas season. But I will say I mostly wanted to do this because I came across a recent 2016 paper in the American Economist Journal that surveyed economics instructors and asked the question, what movies do you use in class? And would you like to guess what the number one movie was? Anyone? Mary Poppins. Wrong. It's a Wonderful Life. Do you want to hear a piece of supporting anecdata about this?

Sure, fire. I just talked to an economist this morning who told me that when he was in school at the University of Chicago, Douglas Diamond, who just won the Nobel, shared it with Ben Bernanke, taught It's a Wonderful Life. Oh, no way.

So he watched it in that class. I suspect it was being taught and watched for its famous scene regarding bank runs. We're going to get to that in a bit. But let me just ask both of you, what was your experience with this movie? Had you each seen this before? Willow, why don't you start? I think I'd never actually seen it from start to finish. It was one of those movies where maybe around the holidays, I'd be with my family, we'd flick on the TV and then watch 20 minutes of it. And it was really interesting and delightful to watch it now in its entirety. It was a very different viewing experience from watching a random 20-minute segment from somewhere in the middle of it. Have to imagine that the beginning with angels helps explain a lot if you haven't seen the beginning before.

It was very clarifying. Clarence-ifying. Clarence-ifying. Oh, jinx. There it is. Oh, there you go. Waylon, how about you? So I saw this movie a lot when I was little because in high school, my really good friend

got obsessed with it. And she kept inviting everyone over to watch this movie. And I used to spend a lot of time at her house. So I think I watched it many, many times in high school. And then I forgot all about it. And so it was awesome to watch it again. It hits very different as an adult, I will say. It reads a lot darker, a lot grimmer.

Yeah, totally. It reads a lot darker, a lot grimmer. Yeah. Yeah, a lot darker. Now, one of our goals here is to give you, dear Planet Money Plus listeners, the tools to explain as much economics about this movie to your family as possible. Dare we say annoy them with all of your economic takes over the two hour and what, a 10 minute runtime of this film. And, you know, I think we have to start with the most obvious thing that we're going to need to talk about,

which is of course, this famous bank run scene. Don't look now, but there's something funny going on over there at the bank, George. I've never really seen one, but that's got all the earmarks of being a run. All right, so just to sum this scene up, we're in a time period that's around the Great Depression, and our protagonist, George Bailey, played by Jimmy Stewart,

he's in charge of a bank-like association called Building and Loan. And the town is kind of crashing economically, and suddenly a crowd of customers shows up at George's Building and Loan, and all at once they're asking to take their cash out of the entity. My husband hasn't worked in over a year, and I need money. How am I going to live until the bank opens? I got doctor bills to pay. I need cash. I can't keep my kids on tape! And George Bailey has to explain, functionally, fractional reserve banking to them.

You're thinking of this place all wrong, as if I had the money back in a safe. The money's not here. Well, your money's in Joe's house. That's right next to them. Now, here's the thing that I think we should talk about first, Waylon. This is not a bank. It's a confusing entity called Building and Loan. And I gather that you have been looking into what is going on here. Like, what is this place? Why is it even connected to housing? Like, what's happening here? Yes.

So I ended up doing a lot of reading about this because watching it as a grown-up and now watching it as a grown-up who covers economics for a living, there were certain phrases that came up in that scene. Of course, yes. And certain things that characters are saying where I was like, this is a weird way to talk about a bank. Yeah. And so one thing that happens is George says to one of the customers, sign here and you'll get your money in 60 days.

60 days? Well, that's what you agreed to when you bought your shares. Come, come. And I thought to myself, well, so there's something else going on here, right? Like the deposits are not fully liquid.

Right. And, you know, Potter comes in with this offer. I may lose a fortune, but I am willing to guarantee your people too. Just tell them to bring their shares over here

and I will pay 50 cents on the dollar. And then that's where I got really confused because I was like, so they own a piece of the building and loan? I was like, what is even happening? So what I found out was this is a structure that originated in Britain called like a building and loan association because it really was almost like a mutual aid association

where people would basically pay in, they would have shares, and those shares would have a value. And then they would basically pledge their shares in order to get a loan. And the amount they could borrow corresponded to the value of their shares, right? So people would have different amounts. Oh, that is very convoluted. Why would you want to do this? So, I mean, I think it was a way for people to get money to be able to invest in a home. And so this is obviously like a very different time in banking. And it was before the birth of the modern mortgage lending industry that we have. So this was a way for a community to be able to basically fund each other's home building. And so

the really interesting thing I found out was that in these associations, you would have to take turns taking out the loan. It's like, it wouldn't be that like everyone could take out their money at the same time. Right. Because that's like a bank run, because that's basically what's happening on screen. Exactly. So it needs to be more orderly than that. So there were different methods devised of how you would decide who got to take out the next loan. But I thought it was really fascinating because it reminds me of, I don't know if you've heard of savings clubs that they have in certain parts of India and immigrant communities here in the U.S. where you just have a community of people who all pay into a pot.

And it has just very mutual aid. We're all taking care of each other. You know, we're all in this together kind of solidarity feel that, you know, really underscores what happens in this movie, right? Like not just in this scene when George is like appealing to everyone's good nature to be like, your money went to support your neighbor. So we all have to support each other now. But then also, you know, what happens at the end when everyone just basically donates money to George because of Uncle Billy's stupid mistake. We should talk about the fiduciary irresponsibility of leaving someone like Uncle Billy in charge. I cannot handle Uncle Billy. But we won't. We don't have time for it.

Okay. We don't have time for it. I won't get derailed. I won't get derailed. But I'm very mad. Let it, I'm going to be on the record as saying I'm really mad at Uncle Billy. Well, after the break, we have the economic story of how It's a Wonderful Life became a classic. And also, economics speed round. Coming up. Now, part of what we're going to do here is just because this whole bank run thing and the entity is such a key part of why this movie is taught, we have to address it.

But we really want to make sure you have enough ammunition to annoy your family with econ before and after the bank run as well. So we've each been doing a little bit extra research here. And Willa, I gather that you have now learned a little bit about the sort of meta-economics here about this movie in the marketplace. So basically, there's this infamous story at this point about the broader history of It's a Wonderful Life. Basically, this movie came out in the 1940s. Frank Capra was a really famous director at the time. And the movie, when it came out, it got like five Oscar nominations. was a really famous director at the time. And the movie, when it came out,

it got like five Oscar nominations. Like critics were really into it, but it did not do great financially. It was like kind of a flop. Flop, dare we say? Flop? I don't know. Dare we say? I mean, it fell like half a million dollars short

of breaking even on its budget, which was like, you know, if you were going to plug that into my favorite thing on the internet, which is the Consumer Price Index. Oh, no, you're spoiling one of my econ things here. Oh, I'm so sorry. No, no, it's okay.

It's okay. Teaser, teaser, CPI calculator ahead. What is sort of fascinating about this movie is that it comes out in the 40s. It doesn't get, you know, great commercial success for a while, but then it hits its stride almost like 25 to 30 years later, 1974. That is the year when the film's initial copyright term expires. Copyright trivia. I love a copyright story. This is good. Yes. So basically, It's a Wonderful Life was owned by a company

called Republic Pictures. And movies that were made before the year 1964, every 28 years, they needed to be recertified as getting copyright. Got to do your copyright maintenance. Yeah. That's the deal. Yep. For whatever reason, sounds like it was likely some kind of a clerical error. And Uncle Billy in the old Republic film office. I was going to say, someone had a string kind of around their finger being like, remember to renew your copyright in 28 years. It was a little bit of an Uncle Billy moment. But what winds up happening is that the movie's copyright doesn't get renewed and so it's a wonderful life enters the public domain for a while and this meant that tv stations especially like independent ones and public broadcasters they had all these empty slots on the calendar

between thanksgiving and new year's and they're looking for movies to play on TV. And some rights-free movies would be pretty nice. Exactly. And holiday-themed, too. Although you could make an argument that, like, it's a wonderful life. Yes, Christmas is a big part of it. Holidays are a big part of it.

It's only, like, a tiny little bit. I think that's what surprises a lot of people, right? But what this ultimately meant was that during the 70s and 80s, this movie was on like nonstop for, you know, a two odd month period of time. You know, even Frank Capra, the director, at one point he was reported as telling the Wall Street Journal, he was like, his exact quote was, this film has a life of its own now. And I can look at it like I had nothing to do with it. How would you describe

that life, Frank Capra? What adjective would you use? Relevant, long tail. I'm making no money off of it. I don't know. But there's a fun little coda to this tale. So Republic Pictures, they had failed to renew their copyright on the movie, but It's a Wonderful Life was in fact based on a short story. And Republic Pictures did have the copyright on that short story. And so in the 90s, Republic Pictures was able to like claw back the movie rights by basically saying, hey, so since we still own that short story and the movie is a derivative work of that short story, therefore we still own the movie. And in their case, this worked. And just to catch us up to today, there have been like an unbelievable number of acquisitions and licensing deals. The Paramount Company now has distribution rights,

and NBC now has its own rights to show It's a Wonderful Life on TV. Okay, Willa, thank you so much. That is a deep dive on how It's a Wonderful Life came to our faces and our eyeballs. Anytime. After the break, did It's a Wonderful Life predict one of the most famous Planet Money episodes ever? Find out, coming up. So I couldn't pick one thing to talk

about, so I've got like a rapid fire little econ list that I picked up from this movie. Are you ready? You ready for this? We'll do a little rapid fire. I love it. Yeah. Let's do it. Number one, tiny little scene during World War II.

Then came a war. Where we see, you know, several of the women in this movie, including Mary, aka Donna Reed, working for charitable organizations, doing things like handing out donuts. Ma Bailey and Mrs. Hatch joined the Red Cross and sold. Super deep Easter egg for Planet Money listeners. There is a famous episode of Planet Money about the Red Cross and donuts and giving them away for free,

in which the Red Cross says that one of the big mistakes in its 140-year history is the way it handled free donuts or not free donuts. I would just suggest you go listen to that, but donuts, that's a big thing. Number two, one of my favorite things to do in an old movie is throw any money amounts from that movie into this calculator that the Bureau of Labor Statistics has online. So just a couple right here. You know, George in like 1919 wishes for a million dollars. Wish I had a million dollars. Hot dog!

So that is around $18 million today. Wow. Hot dog. Hot dog. And then 1938-ish, George gets this offer from evil Mr. Potter to, you know, like, go work for him. I'm offering you a three-year contract

at $20,000 a year starting today. Is it a deal or isn't it? $20,000 a year is like $420,000 now. Well, Mr. Planner, I know I ought to jump at the chance, but I just... So George is giving up a lot of money to be a good person, like huge opportunity costs to be a good person by not taking that money.

And then, of course, my big one, soybean plastics. You remember George's friend Sam and the weird soybean plastic subplot? Yeah. And then he ended up becoming super rich because of the war. He was making all the plastic. Sam called it early. He knew. He knew plastics were going to be the next big thing. Although sort of George was the one that knew plastics were going to be the next big thing. And then tells Sam at Martini's bar. Do you remember that night in Martini's bar when you told me you'd read someplace about making plastics out of soybeans? Uh, yeah, yeah, yeah, soybeans, yeah. Well, listen, Dad snapped up the idea and he's going to build a factory outside of Rochester.

And then Sam takes it and runs with it. Soybean plastic is, I don't think it's a joke here. It's hard for me to tell. But like around this time, the Ford company had made famously a soybean plastic version of its car that instead of steel was using a bunch of plastic. It was like half the weight or something. It was much lighter. They functionally abandoned that effort because of the war. But like, I think it's not a joke in the 40s.

Plastic is hugely important. It's a big driver during World War II to replace things that are in short supply. But then by the 60s, when The Graduate comes out... Just one word. Plastics is a joke. Plastics. Exactly how do you mean? There's a great future in plastics.

Within 20 years, it becomes kind of a punchline, which I find totally fascinating. It's this hugely, hugely important part of the economy and then becomes a punchline just within 20 years. I offered to let George in on the ground floor in plastics and he turned me down cold. Oh, now don't rub it in. I'm not rubbing it in. Well, I guess we better run along. Any other takes? Any other non-economic stuff you want to mention or economic stuff? Well, here's a fun fact that I learned from my film nerd husband

who was watching this movie next to me. In the scene at Martini's near the end when George is really, really sad and he's crying and he's praying, you know, at the bar. That's a pretty famous scene. Yeah. Originally, that was a long shot. He's crying and he's praying, you know, at the bar. That's a pretty famous scene. Show me the way. How about the end of my rope? Originally, that was a long shot. But in the movie itself, you're actually super zoomed in on Jimmy Stewart's face.

And it's because he started crying during that scene and no one was expecting him to cry. But he spontaneously started crying during that scene. And so they wanted to really play up his emotion and capture it. And so Frank Capra had to go in and manually zoom in in post-production. And so according to my husband, if you look at that scene, it's a little bit grainier than the rest of the film because they had to manually zoom in. That's fascinating. Why are you drinking so much, my friend? Please go home, Mr. Bailey. This is Christmas Eve.

A couple of notes I had In addition to The Jimmy Stewart yelling that I like is at the end I don't really like it when he yells at people Although I do think it does make George Bailey complicated But he's the smushiest face person I've ever He like smushes his face against people And when he kisses people, it's all very smushy

It's very smushy I found it hard to watch in the 4K transfer because it was extra smushy. Pretty hard to unsee all the smush. Imagine if it were 4D. I don't. Then your own face would be smushed. My own face would be smushed. I also, Donna Reed wears this like half baseball cap through the movie.

I'm obsessed with that. That is a freaking like iconic. It's so good. I couldn't stop staring at it. Those need to come back. Yeah. Like what is that? I was saying, I told, I turned to my husband and I said, I am immediately getting online and looking for that hat. And then I was like, this would be such a great Halloween costume. You get like that hat with the brim sticking straight up and she wears a little kerchief and she's got like the sweater. And I was like, this is Halloween 2023. It's a whole look. It's totally a whole look. It's's got like the sweater. And I was like, this is Halloween 2023. It's a whole look.

It's totally a whole look. It's a whole look. Yes. And I think what I'd like to close with here is something beautiful, thematic, and directly quoted from the economics journal paper that kind of inspired this whole thing. Here we go. Quote, in the end, George Bailey is saved from jail by the generosity of his friends. George Bailey is saved from jail by the generosity of his friends.

Here I am, George. Merry Christmas. The climactic scene shows the town of Bedford Falls crowding into the Bailey home to help George as they repay the sacrifices George has made throughout the movie. I wouldn't have a roof over my head if it wasn't for you, George. By helping them achieve their dreams of homeownership and treating them fairly, George finds that his rate of return far exceeds his expectations. Indeed, George has a wonderful life. Oh, that's so nice. Beautifully said. All right. Well, we hope, listener, that you can bring some of this economic background to your next viewing with your family. And look, two hours and 10 minutes is a lot of time to kill.

And I think there's a lot of dead time in the movie. So fill it with these facts. Be your own pop-up video. How dare you say there's dead time in the movie? Not a wasted frame. Not a wasted frame, I would say. And if you need more, I got a whole thing on J.P. Morgan and how Henry Potter is a J.P. Morgan analog.

We can get back to that. Oh, will you email that to me? Sure. I have to write it first. I just had bullet points. But yeah. All right. We can get back to that. Oh, will you email that to me? Sure. I have to write it first. I just had bullet points. But yeah. All right. Just call me.

All right. Waylon, Willa, thank you so much for chatting. It was a blast. Thank you so much. This was super fun. And let me just say a very, very special thank you to the listeners who have subscribed to Planet Money Plus and have given us the space to make these less typical Planet Money episodes, these bonus episodes. We really love doing this, and your support truly does make a difference

and helps keep NPR going. If you're not a Planet Money Plus listener and you're interested, we're going to include some information about how you can become one of those listeners in the episode notes. We would love to have you over in our weird little Planet Money clubhouse. This episode was produced by Brent Bachman. It was engineered by Kweisi Lee. notes, we would love to have you over in our weird little Planet Money clubhouse. This episode was produced by Brent Bachman. It was engineered by Kweisi Lee. It was edited by Jess Jang with help from Keith Romer and fact-checked by Sierra Juarez. Jess Jang is also Planet Money's acting executive producer. I'm Kenny Malone. This is NPR. Thanks for listening.

NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.