Julia and I watched It's a Wonderful Life last night after seeing a Daily Show segment (starting at 3:30) where John Hodgeman describes the movie as a "classic left wing propaganda piece" and says that the protagonist Baily:

almost destroys his home town by extending risky mortgages to people unworthy of credit, and at the end the only thing that saves him is a huge public bailout.

Jon Stewart looks like he wants to object to this but can't argue on the facts. So I was curious whether this was a fair characterization. After watching the movie, I would say it isn't. While Baily does extend mortgages to poor people, it's much less risky for him than for a traditional bank. He knows them personally, knows their social environment, and can evaluate their credit riskiness on many more factors. He may also get higher repayment rates if people feel a personal debt to him and think he's doing good things with the money. This doesn't even matter, though, because it's not people defaulting on mortgages that's the problem: what threatens to destroy the Savings and Loan is that his uncle lost an envelope with $8K in cash. (This would be about $90K today.)

There were other things about the movie that I'm not so sure about, though. The people of Bedford Falls were able to raise three and a half times Baily's yearly salary [1] on Christmas Eve, a time when people are generally at their lowest in cash reserves? Throughout the movie people were portrayed as poor but getting by, and they have that kind of money saved? Being evening the banks are closed, so they must have it stored in cash in their houses.

I also thought some of the claims about what life would have been like in Bedford Falls Pottersville if Baily had never been born were over the top. Among them:

• The town has been renamed after the villain.
• His favorite bar is much rougher.
• The druggist he worked for as a kid went to jail for poisoning someone and now is a panhandler.
• Nick has a New York accent.
• The town is full of neon, jazz music, dancing girls, bars, and clubs.
• His taxi-driver friend lives in a shack and his wife and kids left him.
• The house they live in is abandoned.
• His mother runs a boarding house.
• His uncle went to the insane asylum when the Savings and Loan shut down.
• His brother drowned as a child.
• The transport full of people his brother saved in the war all died instead.
• His wife is an old maid librarian with poor vision.

You can trace most (New York accent? Poor vision?) of these back to things Baily did: without the Savings an Loan, Potter took over; without him to refuse to deliver the medicine, the druggist went to jail. But his wife was going to marry Sam Wainwright, a businessman with bright prospects, until he got in the way. And George wasn't the only kid who tried to save Harry when he fell through the ice; you could see them all running to help him immediately.

This sequence seemed to be acting as if everything you do would not happen without you. George saved Harry, so if George had never been born no one would have saved Harry. George married Mary, so no one would have. He may have had an unusually large impact by keeping the Savings and Loan running, preventing Potter from taking over the whole town, but the movie overstates his impact. Worse, the reason he doesn't kill himself is that he sees what an effect he's had on the people around him by looking at the world in which he'd never existed. If he had instead, more realistically, seen a world not much changed in which other people had replaced him at most of the things he does, possibly doing better than him, it probably wouldn't have convinced him not to suicide. The reality is that if we'd never been born, the world would, on balance, be about the same.

(I did like the movie, and I enjoyed watching it.)

[1] His salary is quoted as $45/month, of $2.3K/year. The money raised is supposed to cover the $8K that his uncle lost.