I recently saw the documentary Inside Job and it taught me a valuable lesson: films dealing with Wall Street should not include Bachman-Turner Overdrive’s song “Taking Care of Business.” It’s not clever and ironic; it’s lazy and annoying. Activist filmmakers everywhere: you can do better. The film also offers some non-musical insights:

1. The compensation a CEO receives is determined by a corporation’s board of directors. CEOs usually exert significant control over who sits on a board of directors, meaning in some cases a CEO essentially hires the people who determine how much he’s paid. The result? Stanley O’Neal “leading” Merril Lynch to a $2.3 billion quarterly loss (plus $8.4 million in fines from the government), then leaving with $161 million for his troubles.

2. $8.4 million in fines? Really? They’re flinging around hundreds of millions like they’re pocket change and the government thinks $8.4 million is supposed to scare them straight? What’s next, suspending their library privileges?

3. It has been argued that if we seek to limit executive pay in any fashion, good CEOs will “stop CEOing.” After learning about O’Neal and other CEOs just like him, I am willing to take this risk.

4. I remember discovering in Macroeconomics 101 that free markets require participants who are well-informed and rational. Today nobody knows what the hell is going on — witness credit rating agencies becoming little more than rubber stamps for toxic assets, which makes sense because they’re paid by the sellers of those toxic assets and those firms don’t wish to be told, “Hey, everything you’re peddling is crap; here’s my invoice!” — while basic human nature has shown time and time again that faced with, “This is a safe course of action that will allow you and your company to pocket respectable amounts of money year after year” versus “This is kind of insane if you stop to think about it and there must be some kind of law forbidding it, but it’ll score you an ass-load of loot right now!“, most people will pick the latter (particularly if they’re really coked up, as Wall Street workers so often tend to be — this article chronicles how snort peaked in the 80s, fell off for a bit, then surged again as we entered the new millennium).

The punchline is that people from both sides of the political spectrum should agree that what happens on Wall Street is no longer the capitalism Milton Friedman championed. Capitalism is supposed to offer lavish rewards for those who work hard and successfully take risks and innovate…but if you screw up it should crush you like a bug. (Invisible hand of the market and all that.) There aren’t supposed to be companies deemed too big to fail. Inside Job makes clear that every President since Reagan has gone out of his way to protect Wall Street (which is particularly pathetic in Obama’s case, since his bailout efforts have earned him nothing but contempt from the people he saved). If the bailout hadn’t occurred, I think the fallout would have been devastating for the entire economy…but it’s worth wondering if by stepping in when it did, the government didn’t save the day, but just delayed the disaster a few more years. Not that I blame them. Being the leader who decides, “We will experience pain now for a brighter tomorrow…a brighter tomorrow that, incidentally, will occur long after I have been endlessly mocked and voted out of office” requires something that goes beyond courage into the realm of masochism.

And here’s where this piece ties back in to part one of this extended rant: with government willing to rescue Wall Street and Wall Street able to pump larger and larger amounts of money they don’t even have to acknowledge is theirs into the electoral process, there’s no reason for CEOs and their board of directors to stop lavishing bonuses on themselves while their companies tank. And seeing the massive salaries received by people who otherwise appear to be total cretins, it makes sense for America’s best and brightest to decide, “I wanna design derivatives too!” One incredibly grim moment in Inside Job occurs when a spokesman for the Chinese government notes that something has gone wrong when a financial engineer can make 100 times more than an actual engineer, and there’s more value in empty dreams than, say, building a bridge or something else with a practical use.

And so more and more people who could have contributed to the world get involved in shadier and shadier dealings with bigger and bigger government handouts — not usually outright bailouts, of course, as the public’s mad about those, but a tax credit here and a subsidy there — and Wall Street plunks more and more money in the political process allowing this gross inefficiency to grow and grow until finally, like a clot in the circulatory system that eventually reaches the brain, all goes to black.

Now for the good news: while earlier I mocked Wall Streeters for their love of coke — also whores, whom Wall Street firms are famous for billing as “research projects” or other equally awesome euphemisms — that’s changing. No, a recent article notes that increasing numbers of Masters of the Universe have recognized that blow is a highly damaging and addictive substance (also, it’s often overpriced). Accordingly, many have switched over to pot…meaning that the next time our economy melts down, it should be much mellower.

Mr. Sean goes to Washington appears each Thursday.

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