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Wall Street Wolves - Lesson in Economics

The Wolf of Wall Street movie


Moviegoers during the "holy-days" saw The Wolf of Wall Street expecting to see that greed does not pay. Instead, they witnessed a ribald stock broker garnering obscene riches and in the end gets what amounts to a slap on the hand considering how many lives and dreams he stole. He continues to earn a living selling promises of riches most of the paying audience will never realize.

Leonardo DiCaprio nominated for Best Actor in The Wolf of Wall Street
Photo by Jason Merritt/Getty Images

There is no moral of the story to this movie the critics hail as a surprisingly funny tale of financial fraud and nominated for best picture. To the sense and sensibility of many others, the movie is nothing but excessive debauchery glamorizing crime and the criminals.

But there are economic lessons to be learned. Belfort (DiCaprio)'s early mentor gives him true economic facts. Nothing and no one can accurately predict market movement, up, down or sideways. The lesson is that if a broker guarantees a positive return on any investment, it could only be a lie or fraud. The market cannot be reduced to elegant algorithms because it is affected by too many factors including psychological whims. The mentor also confesses that they do not make or build a product, only promises of paper wealth while they collect hard cash in the form of fees and commissions. So if a pitchman promises wealth in the backdrop of a mansion, a foreign sports car, $2,000 suit, and $10,000 watch, guess who gets rich in the transaction.

Wall Street is the gear in the wheel of capitalism and if allowed to function properly, it greases the economy to greater heights. But if unregulated and left to its own device, and ordinary investors allow themselves to be tempted with quick wealth, then the gap between the rich and poor will continue to widen. Greed is too strong a motivation.