Creative destruction is a concept in which evolutionary natural selection is applied to economics. Resources are necessarily scarce, so human progress advances only when outdated technology, businesses and jobs are encouraged to die off swiftly so that workers and capital can be reallocated to more efficient and innovative tasks. This dry yet important theory seems an unlikely premise for an engrossing romantic comedy from Hollywood, yet that’s what you’ll get if you run out to your video store to rent "Other People’s Money."
Danny DeVito plays Larry "the Liquidator" Garfield, a corporate raider who targets New England Wire & Cable Corporation, an obsolete, money-wasting parent firm of an otherwise profitable collection of subsidiaries. Protecting this publicly traded company from Garfield, and arguing that businesses should be about community and family, is CEO Andrew "Jorgy" Jorgenson, played by Gregory Peck. Kate Sullivan, Jorgenson’s stepdaughter played by Penelope Ann Miller, is a lawyer deployed to help ward off Garfield. Her hard-nosed competitive character provides Garfield’s main foil and his love interest.
Garfield’s aggressiveness is not portrayed as sinister; the ethically questionable business behavior comes instead mostly from Sullivan and Jorgenson. The typical Hollywood mischaracterization of the dishonest businessman is delightfully absent.
Garfield first offers Jorgenson a peaceful takeover by demonstrating that the unprofitable parent is harming the profitable subsidiaries and depressing the stock price. He argues that killing the cancerous wire division is necessary to protect the other companies and do right by the shareholders. Jorgenson denounces the Garfield offer as suicide for the employees and the town where the wire plant is located. He elects to side with their interests instead of the other stockholders who are his partners. Jorgenson and his employees control just 30 percent of the stock in this disputed enterprise.
Ms. Sullivan offers to resolve the standoff by offering Garfield "greenmail," a bribe to make him stop. Garfield indignantly refuses the offer. "Why so upset?" says Sullivan. "It’s not illegal."
"It’s immoral!" rages Garfield. "A distinction that has no relevance for lawyers, but it matters to me!"
He ticks off the financial winners if he takes the bribe: him, her, Jorgenson and the plant employees. "Sounds pretty good to me," replies Sullivan.
But Garfield sticks up for the stockholders who would be victimized by continued wasting of their money if he sells out. Sullivan mocks him as a do-gooder for this, but Garfield compares himself to Robin Hood: "I take from the rich, and give to the middle class. Well… the upper-middle class."
Conversely, despite an obligation to the shareholders — his partners — Jorgenson’s moral compass never wavers from the people who work for his wire plant and the town they live in. These themes humorously bounce off one another until the film’s climax, where the stockholders — the "other people" — attend the annual shareholders’ meeting to decide who should control New England Wire & Cable. Jorgenson and Garfield square off, each giving an eloquent speech summarizing their vision of the company.
Jorgenson thunders a Norman Rockwell theme about family and community and a company being worth more than the price of its stock. He accuses Garfield of playing God with other people’s money, though this sin has been clearly established as his own.
Garfield jumps on this point, telling the partners that their stock price is one-sixth of a decade earlier, while the town’s tax rate and employee compensation had doubled in the same period. If the company is a family, he asks, why did the town and employees so eagerly bleed its owners?
He then describes what creative destruction means to them: Cable and wire is a dying industry, succumbing to innovations like fiber optics. Therefore, they should sell to him for a nice profit and put their money where it can be used more productively, create jobs, be a service to a community and: "God forbid, even make a few bucks for yourselves."
Garfield wins his fight but is distraught because his days of wooing Ms. Sullivan are at an end. Yet, another economics lesson provides an unlikely source for a typical happy Hollywood ending. Ms. Sullivan discovers that Garfield’s obsolete wire division can be profitable making airbags for automobiles. While it rarely happens so cleanly in real life, the underlying lesson is valid: there are more winners than losers when capital and labor are put to their highest and best use. And God forbid, it might even make you smile!
The script of the Jorgenson speech and a video of the Garfield speech from this film may be viewed online at www.americanrhetoric.com or by following the attached links: Jorgenson’s Speech, Garfield’s Speech.
Kenneth M. Braun is a policy analyst specializing in fiscal and budgetary issues for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.