One of the more interesting films about the 2008 financial collapse was Margin Call. The scene that stands out for me was the late night conference room meeting where the head market analyst explained to management how the firm was collapsing. He used the metaphor of music slowing.
Upon hearing the news, the CEO played by Jeremy Irons replied, “ I’m here for one reason and one reason alone. I’m here to guess what the music might do a week, a month, a year from now. That’s it. Nothing more. And standing here tonight, I’m afraid that I don’t hear – a – thing. Just . . . silence.”
This scene came to mind as I recently read the book Detroit: An American Autopsy. Written by Charlie LeDuff, a Pulitzer Prize winning reporter and native of Detroit, this book reveals the mismanagement, corruption, racial politics and corporate greed that brought down one of America’s richest cities.
Leaning neither Left nor Right, LeDuff gives us the facts of what happens when the music stops for a city. Businesses close, residents flee the city, tax revenue drops, basic services stop, crime skyrockets, the city burns at night and bodies pile up unclaimed in the morgue. All the while, corrupt politicians steal what little tax revenue remains.
Predicting when the music will stop before it happens always beats reporting about the chaos after it happens. Unfortunately, politicians are terrible at predicting when the music will stop. The financial collapse of 2008 proves that.
During a recent sub-committee hearing, I witnessed an exchange between our Treasurer and the head of the investment commission that invests the funds for the state retirement system. The catalyst for the exchange was a question about the high fees being paid by the funds as compared to the low earned investment returns. The question was legitimate. Unfortunately, the exchange devolved into a shouting match between the two and the question remained unanswered. As I watched the vitriol, I could hear the music slowing.
Another example of political adagio was when I heard the idea to use a magical money tree to fund much-needed infrastructure repair. No one should assume that the Legislature could be disciplined enough to commit for a decade an unknown amount of revenue that may or may not actual materialize. The idea was a deflection, not a solution.
Watching Margin Call and reading Detroit: An American Autopsy reminds me that South Carolina Legislators and our Governor would be wise to solve these major unfunded liability issues – our $29 billion underfunded road system and our underperforming and $18 billion underfunded state retirement system – before our music stops.