by James C. Henderson

Arbitrage is the simultaneous buying and selling of securities, currency, or commodities in various markets to exploit slight differences between acquisition cost and market value. It is all about relative value. The term has another meaning from the late Middle English. Arbitrage here is defined as the exercise of individual judgment. Arbitrage is also a motion picture starring Richard Gere, one that is a fascinating glimpse into the world of high-risk finance and the society it has helped create.

Richard Gere plays Robert Miller, a man on the verge of selling his highly successful arbitrage firm to a competitor named James Mayfield for a profit. The sale has an urgency attached to it, veiled in secrecy. As the film opens, Miller is about to turn sixty-years-old, and we are lead to speculate he is selling his firm because he is retiring to enjoy his success, having reached the pinnacle of his career. He has everything a man could want: a beautiful wife, played by Susan Sarandon, and a beautiful family—a son and a daughter who is the chief investigative officer at his firm and several grandchildren. They are portrayed as a generous and loving family at a birthday party held for their patriarch, Gere. In a scene shot in golden tones lavishly lit by candlelight, everyone is smiles and gratitude, but an undercurrent of tension pulls at this perfect depiction of family life among the oligarchy because it is too perfect, and because we know that families in film are only happy to be pulled apart by crisis, betrayal, tragedy, and lies—all of which happen to the Miller family over the course of the movie.

Richard Gere plays the silver-haired and suave, silk-suited Robert Miller with the perfect ease and grace that we’d expect comes with financial success. It is an ease and a grace we could have also expected to be just a veneer, one we could watch crack to reveal the prototypical one percenter who operates on a base level of greed, lust, and malice. But that caricature doesn’t hold true here. Miller is a decent human being who feels genuine concern for the people in his life for whom he is responsible: his family, his employees, his investors. I do not pretend that he is typical representative of the ruling class, but his humanity and, therefore, status as a sympathetic character changes the way we view the film and his role in it. Sure, he has an affair with a much younger woman, portrayed with touching vulnerability and naiveté by French actress, Laetitia Casta, and sure, he bends if not breaks the law in pursuit of self-interest, but he is, overall, a real person dealing with real problems as best he can given the circumstances of the corrupt and ambiguous legal and societal ethics in which he finds himself. It is the post-Reagan, post-regulatory world of über capitalism where rules of a new class structure are being worked out and applied inconsistently even as they are ever-changing as the new class structure falls apart and is put back together by forces seen and unseen, inside and outside government, with or without the knowledge or consent of the people who are most affected by the resultant turbulence. It is the world we all live in.

This is what I find so absorbing about the film. What if I were Robert Miller? What would I do if I were in his position, with his responsibilities and problems, with his privileges? And make no mistake about it, Miller has problems—a lot of problems. Seeking a restorative from the pressures and corruption in his life, he has taken a youthful mistress, Julie Cote, played by the above-mentioned Laetitia Casta. She is trying to make it as a gallery owner in the art world of New York City where it is not so much what you know as who you know. It is a world in which your worth as a business owner is not so much determined by your taste as by your sales—the world of relative value that Miller knows all too well. Even as he is enamored by her innocence, treasures her naiveté, he buys up her paintings behind her back, striving to give her the allure of business acumen by creating the impression she can sell art even in a depressed market—the kind of market manipulation that is his forte. When Julie discovers his ploy, she is hurt. Trying to educate Julie about the ways of the world, Miller gives her a speech about how perception is reality and how, if she wants to “make it,” she has to play the game of perception. Julie doesn’t want his money or his advice, only his emotional support and his time—gifts he cannot seem to give. She collapses in despair, and we see that she is too delicate to make it in business, perhaps too sensitive to make it in this brave new world.

Miller and Julie. Photo courtesy of Lions Gate

In an attempt to give her what she needs, to make it up to her, Miller suggests that they go away for the weekend—with tragic consequences. All they want to do is fall asleep and wake up in each other’s arms, but burning the candle at both ends, Miller falls asleep at the wheel of Julie’s Mercedes Benz, and in the resultant roll over, as if to prove she was too gentle for the world, Julie is killed. Always the game player, Miller manages the crisis with what we suspect is his usual aplomb. Refraining from using his cell phone, which can be traced to the location of the accident, he calls from a pay phone a young African-American man named Jimmy to pick him up in the country in the middle of the night. Despite internal injuries, Miller finds his way back to his house and slips into bed beside his sleeping wife, acting as though all were normal. He instinctively realizes that his accident, if discovered, would jeopardize and possibly kill the sale of his firm. The game is on then in earnest to conceal his involvement in the accident and keep his deal with Mayfield on track.

Along the way, through an audit that reveal his firm’s books have been cooked to conceal a missing $400 million, an investigation by an inquisitive and decidedly proletariat police detective who detests the elite of which Miller is emblematic and who keeps turning up at the most inopportune moment, and an increasingly suspicious and bitter wife, Miller navigates his way to a successful resolution of his problem.

The film makes no overt criticism of capitalism nor judges the world of finance, but shows how Miller maneuvers within it, abiding by its demands and exploiting its rules or lack thereof. The film does not blame anyone for his or her role in the drama or even question the validity of the society that spawns such a drama but empathizes with how Miller and those around him are forced to live and find meaning within the confines of a society with shifting boundaries. Indeed, the film avoids casting Miller as the bad guy, although a less subtle, less insightful screenplay could have easily done so. Instead, it presents him as a victim, as much as anyone else in the film, even as much as Julie, whose death stings him deeply, so deeply that at her funeral, which Miller cheekily attends, one feels sorry for his loss as he hugs Julie’s mother and cries.

For the most part, Miller bears his burdens stoically. When Jimmy discovers the injury to his ribs he has incurred in the car crash and urges him to go to the doctor, Miller refuses. Even when Jimmy tells Miller that he is bleeding internally and he might not make it, Miller retorts, “Then I won’t make it.” One could say that he is just playing the game to win or because he fears prison, but his motives run deeper. He feels an obligation to succeed in his cover up and close the sale of his firm to protect the many people who depend on him for their livelihood: his family, his employees, his investors. If he fails they fail. Miller and those around him populate a near feudal society that has little or no safety net. He is the only protection they have. He may hold himself above the law, but the law is increasing corrupt and does not deserve to be upheld, as we see when Jimmy is hauled before a grand jury investigation into Julie’s death and is charged on evidence fabricated by a police department desperate for a conviction and frustrated by a justice system biased in favor of the wealthy.

Miller operates as an independent agent in a morass of conflicting wants and needs. His life is a litany of never-ending often simultaneous crises, each requiring a unique negotiation. He sees clearly society’s hypocrisies and injustices as he steers his way through them, following his own moral compass, making compromises on the fly, assessing relative value seemingly on a whim, for the good of all. He is self-reliant and keeps his own consul. He trusts his own judgment, which has been honed through relentless battle in the shark-infested waters of many a boardroom and which has been validated by proof of his survival. He is like a beneficent philosopher king in these new feudal times. He takes his responsibilities to the serfs and peasants in his charge as a noblesse oblige. In return he expects obedience to and acceptance of his authority and wisdom.

Miller dons fully the mantle of his kingly role when his daughter, Brooke, confronts him with her newly learned knowledge of the $400 million missing from the company books, books that were massaged without her approval, books that she certified as accurate and for which she is now criminally liable. Miller listens to her as she chastises him for what is rightly a deception at her expense and abides her harangue about the illegality of what he’s done and how it impacts her future in finance as heir apparent to the firm.

Miller has kept Brooke out of the loop to protect her. If she doesn’t know what is happening, she can’t be blamed for it. But then, in a rare departure from his personal credo of “don’t complain, don’t explain,” he confides in her that he is selling the firm to cover the missing $400 million, not because he pocketed it (an insinuation he has endured throughout the movie as only an innocent man can) but because it is the sum he lost investing in a copper mine in Russia. It was a big gamble but it had, at first, paid off handsomely. Money was rolling in. “It was a license to print money,” Miller says. “It was God.” Then Russia capriciously blocked the exportation of copper and refused to allow the transfer of Miller’s funds from the country. His investment was trapped there. It is not fair, just as life is not fair. There is nothing he can do about it but to accept it, and now the profit he will realize from the sale of his firm will barely cover the loss. It is sacrifice all around. In a teachable moment, Miller implies that his daughter needs to drop the pretense of a civilization with predictable rules that is now outmoded. To expect anything more than the chaos left in its absence is juvenile. It is another step in her education as his heir apparent. Feelings are luxuries financial royalty like they cannot afford. He is cruel only to be kind.

Miller explains all this backstory leading to his decision to sell his firm and all his behind-the-scenes machinations to ensure its success because he thinks Brooke will understand that, if he cannot sell his firm, they will be broke. He trusts Brooke will agree that the end justifies the means. Instead, Brooke yells:

“No, it’s illegal. It’s illegal. And I’m your partner.”

Miller, his emotions raw from the death of Julie, and tired from all the obstacles he has had to overcome in pursuit of his deal, reacts to his daughter’s insistence on legal principle, a concept that sounds tinny to him and now to us, in a moment of pique.

“You are not my partner. You work for me,” he shouts. “That’s right, you work for me.”

Everyone works for Miller. In an instant, he has made his role as her father seem to have been all a pretense. Boiling down his rationale, he tells her:

“I’m on my own path. It’s up to you to move with it or against it. But I’m the patriarch; that’s my role. And I have to play it.”

Brooke doesn’t want a justification for his financial misdeeds. She only wants an apology for his emotional mistreatment of her, for discounting her feelings in his decision-making process. Here we see that, while Miller has been adhering to the rules of necessity, he has been violating the emotional ones.

The tragedy of Arbitrage is not that Miller errs in his decision to take Julie away for the weekend, that in a vulnerable moment he gives into his humanity, but that he sees it as a mistake. Kindness is not his Achilles’s Heel but his best friend. Miller thinks every personal interaction should be a financial transaction. He acts with altruism toward others, while he expects to pay everyone who helps him. Throughout the movie, however, the people who help him do so not because he offers monetary compensation but out of gratitude for his past kindness, as repayment for previous favors he has done them.

Jimmy refuses to take money for helping Miller. Jimmy feels a bit used by Miller and is resentful his loyalty to Miller has embroiled him in a legal dilemma, but he helps Miller, not out of greed, but out of gratitude for Miller’s kindness to his father. When Jimmy’s father, who used to be Miller’s chauffeur, fell sick, Miller paid his hospital bills. But Miller insists on setting up a $2 million trust fund for him and wants to show him the papers he’s drawn up.

A frustrated Jimmy asks, “Do you think money is gonna fix this, huh?”

Miller responds, “What else is there?”

Despite being, arguably, the person most poorly treated by Miller, his wife, Ellen, refrains from turning him into to the police. Miller also has a friend, a government official, who falsifies the result of the audit crucial to the sale of his firm, in Miller’s favor. After the deal is agreed upon, even Mayfield overlooks Miller’s shenanigans in concealing the $400 million hole in his firm’s assets when it is revealed by an independent audit. Mayfield could have reneged on the deal based on this subterfuge and ruined Miller, but he does not. He is also result-driven. As long as Miller has replaced the $400 million from his profits in the deal, as long as Mayfield gains control of Miller’s firm, which he needs for his own solvency, what does it matter if he was snookered for a time? He admires Miller’s artfulness in deal making. The movie posits that people are basically good, but are trapped in a bad system, and that a certain flexibility in ethics is not only acceptable but necessary, as long as no one gets hurt irreparably.

Miller himself is basically good, and his obligation to others knows no bounds. When it appears that Jimmy will be convinced for Miller’s crimes, and finding no other way out, Miller decides to turn himself in to the police in order to free Jimmy. He calls his lawyer and tells him to arrange his arrest. Later that night, he hits on a way to prove the police falsified the photo of Jimmy’s car license plate that they are using to place him at the scene of the accident. He calls back his lawyer to reverse his decision only to realize his lawyer has exercised his own arbitrage, heeded his own inner code, and not called the police, thus allowing Miller to expose the police corruption and save both Jimmy and himself.

It is the moral of Arbitrage, as lamentable as it may be, that in a corrupt society where those who have the power make the rules, the sins of the past are the necessities of the present. I find myself wondering in difficult situations, not as dramatic or high stakes as those encountered by Miller in Arbitrage, what is the right thing to do? When the system is beyond fixing, do we each follow our own individual code? In a world where it is every man for himself, can we each be king?

Miller saves his world, sells his firm and emerges from all his problems free and solvent, but at a terrible cost. He has lost his wife and his daughter’s respect. I can’t see myself abandoning what is commonly held to be the ethics of right and wrong and working the system as an autonomous agent or having the skill, the imagination, or guts to do so. I cannot see myself bearing Miller’s sacrifices to make it in his world. I would work for a better world for all people where the abilities of someone like Miller would not enable him to make his own rules. I would fight, as I do now, for a world in which Miller’s individualism does not trump the individualism of everyone else. As much as I admire Miller’s skill at making the corrupt system work for good, as he sees the good, not all one-percenters can be charged nor entrusted with being so magnanimous. Empowering them with Miller’s kind of influence has turned out badly, every act of noblesse oblige taking us farther from a society of equality. I would instead empower everyone with influence over his or her circumstances, without fear of mutually assured destruction hanging over every possible misstep. A movie like Arbitrage reminds me of how far we have to go to achieve this.