Economic trends are inordinately erratic and display a tendency to react to the smallest stimulus. Unfortunately, the patterns manifested by these trends is all we have to predict the trajectory of the economic system. Going by the book, we have a predominant set of indices that are used to portray an economy’s state of affairs, overriding among them being the GDP, GNP, unemployment rate, inflation rate, rate of interest, consumer price index, etc. However, that’s not even the half of it, as there are a prodigious number of accurate indicators that are undermined by economic planners and analysts. Who thought James Bond would be one of them?
We all know who James Bond is. His reputation as an international man of mystery, a guru of gadgets and espionage thrills, and as the one licensed to kill, precedes him. Since its creation in 1953 by Ian Fleming, the character has etched itself into pop culture and earned itself a spot on the Mount Rushmore of Hollywood. But that’s not the end of its legacy- turns out that it has established one of the most unusual precedents in the economic history of the US.
When Casino Royale was first published in 1953, the US economy was greatly compromised. The US war spending had helped add $236 billion to the debt. It was a 1048% increase, the largest percentage increase to debt for any President. A recession also sprouted, owing to the demobilisation following the Korean war, and the unemployment levels reached their loftiest at 6.1% in 1954. The same could not be said for Bond, as the book became one of the hottest on the shelves. People started loving the persona of Bond: a dashing agent with seemingly limitless resources and abilities, and he unknowingly became a ridiculously accurate economic barometer.
The first on-screen adaptation of Bond came with the release of Dr No in 1962. The times were good, as the economy was exalted as a result of the post the Second World War expansion. President Kennedy had introduced various reforms to revive the economy from the 1960-61 recession. These comprised an increase in the minimum wage for a larger pool of workers, an increase in unemployment compensation plus increased aid to children of unemployed workers, increased social security benefits, emergency relief for feed grain farmers, area redevelopment, vocational training for displaced workers, federal funding for home building and slum eradication and tax cuts. Overseas investment also rose. The film was conferred with critical acclaim, but came up short in commercial success, and is ranked as one of the least earning Bond movies. Still, the film had a significance of its own, as it formed the bedrock for the dazzling success of future installments. What no one seemed to notice was that the success of Bond films and the state of economic well-being were displaying a nebulously accurate disagreement.
The trail of years that followed were not kind to America. President John F Kennedy, the man pivotal in uplifting the economy and perpetuating its growth, had been assassinated. The country’s economy was facing the corroding effects of the Vietnam War, the most famous highlight of which was ‘The Great Botch’ of 1966. The botch involved miscalculation of the war cost by the Defense Department under President Johnson’s administration. The budget was underestimated by a staggering 100%, which squandered the steady income and employment growth rate achieved post the Second World War. The budget deficit also escalated at an alarming rate, hitting the $23 billion mark in 1968.
The film franchise, on the other hand, unveiled to the world its most popular antagonist - a fat, decadent psychopath who covers everything in gold and is literally trying to steal all of America’s money - Auric Goldfinger. Thunderball (1965), Goldfinger (1964), and You Only Live Twice (1967) were massive commercial blockbusters, grossing a whopping total of $1.5 billion. Actor Sean Connery got the biggest piece of the pie, as he received a great push towards a legendary career, accompanied by a big fat pay-cheque. The decade ended with a shift in the scales of power, as Richard Nixon took the reigns in 1969.
The 70’s witnessed an oscillatory trend for Bond cinema, displaying perfectly negative parallelism to what the economy was enduring. When Diamonds Are Forever hit the screens in 1971, the US was witnessing a decline in its economic power, and the economy was pegging away to recover from the 1970 recession.
President Nixon fought the recession by turning the American dollar into a fiat currency, as a result of which the dollar was devalued and millions of foreigners holding dollars, including Arab oil barons with tens of millions of petro-dollars, saw the value of dollars slashed. He also imposed wage and price controls. As you can guess now, the movie was average. It made decent money and was fairly appreciated, but it was no Goldfinger.
With the arrival of 1973, the economy stumbled deeper into the trenches. The USA was facing the severest recession since the Second World War, with the rate of inflation at a deplorable 8.8% in the fourth quarter. The Organisation of Petroleum Exporting Countries (OPEC) was blamed for quadrupling oil prices, but that was just the tip of the iceberg. President Nixon’s price controls kept prices too high, reducing demand, while wage controls made salaries too high and forced businesses to lay off workers. Additionally, Nixon took the United States off the gold standard in response to a run on the gold held at Fort Knox, which led to inflation. The price of gold skyrocketed to $120 an ounce while the dollar’s value plummeted. Negative GDP growth of 2.1% was also observed in the third quarter.
Roger Moore’s Live and Let Die came during the same year, and by now it shouldn’t be a surprise that it was the highest-grossing Bond movie of the 70’s.
Next came time for another turn of tables, with the release of The Man with the Golden Gun in December 1974. Owing to its late release, its primary collection period was the year 1975, the same year American economy began emerging from recession. An upturn in GDP and industrial output was evident, alongside the dwindling rate of inflation (from 10.4% in 1974 to 6.5 % in 1975). The volume of shares traded on the New York stock exchange also rose from 3.5 to 4.7 billion shares. The Man with the Golden Gun is still considered to be the most flawed and pointless addition to the Bond universe, loathed by critics and the audience alike.
The climax for the 70’s economy came with another capricious change in economic trends, displayed by cascading economic growth. Inflation and unemployment were up again, and the economic system was slithering into another recession. The timing could not have been better for The Spy Who Loved Me (1977) and Moonraker (1979), as both of them grossed a stupendous $1.3 billion combined.
As the year 1981 rolled in, the recession boomeranged back to plague the economy. The Regan government caused this recession by raising interest rates to curb inflation, which undesirably reduced business spending. The Iranian oil embargo added fuel to the fire, as it reduced US oil supplies, which drove up the prices. GDP growth was negative for the whole year, the worst being the second quarter at a negative 8.0%. Unemployment rose to 10.8% in November and December 1982, the highest level in any modern recession. President Reagan lowered the tax rate and boosted the defense budget, helping to end the recession. Summing it up, the economy was toiling to fend off the unemployment and inflationary outbreaks. The commercial struggle of For Your Eyes Only (1983) epitomised a more complicated one going on in the economy. However, the film is the best Bond portrayal of the 1980’s.
The remaining decade was all Reagan-show, as he painted a masterpiece on the economic canvas. The first step was signing the Economic Recovery Tax Act of 1981, which brought reductions in individual income tax rates, the expensing of depreciable property, incentives for small businesses and incentives for savings. So began the Reagan Recovery. A few years later, the Tax Reform Act of 1986 brought the lowest individual and corporate income tax rates of any major industrialised country in the world.
The numbers tell the story. Over the eight years of the Reagan Administration:
• 20 million new jobs were created. Employment of African-Americans rose by more than 25% between 1982 and 1988, and more than half of the new jobs created went to women.
• Inflation dropped from 13.5% in 1980 to 4.1% by 1988.
• Unemployment fell from 7.6% to 5.5%.
• Net worth of families earning between $20,000 and $50,000 annually grew by 27%.
• Real gross national product rose by 26%.
• The prime interest rate was slashed by more than half, from an unprecedented 21.5% in January 1981 to 10% in August 1988.
• Growth in government spending plummeted from 10% in 1982 to just over 1% in 1987. With inflation factored in, federal spending actually went down in 1987– the first time that had happened in well over a decade.
As the economy boomed, Bond got tanked again, facing consecutive low earning entries in the series. The decade leached away Bond’s persona as the charismatic spy who could always get the job done and turned him into a goofy, lethargic and confused man.
Fast forward to 1995, the economy was recovering from the recession of 1990-91 and was turning increasingly healthy in performance as the 1990’s progressed. The fall of the Soviet Union and Eastern European communism in the late 1980’s opened up trade opportunities across the world. Technological developments brought a wide range of new, more efficient electronic products, and innovations in telecommunications and computer networking spawned a vast computer hardware and software industry. This, in turn, revolutionised the way many other industries operated. The growth rate and corporate earnings rose rapidly. A combination of desirable inflation, unemployment, and corporate profits sent the stock market surging. Moreover, the Dow Jones Industrial Average, which had stood at just 1,000 in the late 1970’s, hit the 11,000 mark in 1999, adding substantially to the wealth of many - though not all - Americans.
An idiosyncrasy of the final decade of the century was the increasing speculation in online websites, also known as the ‘dot-com bubble’. People were rapidly dumping cash in online domains. Capital from venture capitalists was also easy to raise, as investment banks profited from the Initial Public Offers (IPOs). A combination of rapidly increasing stock prices in the quaternary sector of the economy and confidence that the companies would turn future profits created an environment in which many investors were willing to overlook traditional metrics, such as the price-earnings ratio, and base confidence on technological advancements, which ultimately led to a stock market bubble.
Similar was the case with Bond movies. Almost all of the previous Bond films had an average budget of about $30 million. So 1989’s License to Kill, which is still the worst-performing entry of the entire franchise, wound up earning almost four times its budget. Though 1999’s Tomorrow Never Dies grossed way more, producers had dumped over $110 million into it and funneled even more cash into the next two installments. Such a large investment in movies led to the formation of an investment bubble of its own. However, filmmakers’ bulletproof investment bubble burst, just like all the dot-coms of the 90’s.
The decade changed, but the story didn’t. Bond made millions whenever inflation and unemployment got the better of the economy. Be it Quantum of Solace (2008) and the financial crisis 2007-08 or Skyfall (2012) and the global economic crisis 2012, it’s always the same. Higher the severity of the crisis, the more dollars Bond films rake in.
When the phenomenon first got noticed, it was spurned as a mere case of coincidences. Till today, no one has been able to decipher the reason behind this absurd correlation. In my opinion, one aspect of it can be identified as what is known as the ‘butter popcorn effect’, which is an unconventional economic indicator. The rationale behind it is that during the initial stages of a recession, people show a greater inclination towards entertainment, as they want to escape the hardships of the real world. As this pushes more people into cinema halls, the sale of butter popcorn also increases. For instance, the box office posted one of its biggest years during the 2009 recession, before plateauing as markets eased. Still, there is no solid explanation about why Bond films fail during economic expansion.
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