For their first encounter with the principle of compounding, many Americans have Walt Disney to thank. It is his and the Sherman brothers’ 1964 version of the musical Mary Poppins that includes the song “Fidelity Fiduciary Bank.” A row of senescent bankers, led by Dick Van Dyke playing an asthmatic in a false beard, conjure for the child Michael Banks what the tuppence in his hand can generate if left to grow undisturbed. “Railways through Africa,” the men and Michael’s father tell the boy. “Dams across the Nile,” and, most evocative of all, “plantations of ripening tea.”
Never mind that the Shermans and Disney made sure to offset that lesson in markets with another number, “Feed the Birds,” so manipulatively redistributionist that it could have been scored by Thomas Piketty himself. What matters is that young people got some exposure to the rhythm of markets. They take in, after a while, that money growing 9 percent a year takes only seven years to double, a mysterious expression of the so-called Rule of 72. And that as they stare at their screens and move about their mutual funds, they can mutter Van Dyke’s famous line to themselves: “Tuppence . . . [pause to wheeze] will [pause to wheeze] comPOUND.”
These days that balance is gone from Poppins. Producers of the recent Broadway show kept “Feed the Birds” and the compelling near-vagrant lady who argues for spending today. The “Fidelity Fiduciary” number, however, is omitted. The recent film Saving Mr. Banks, about the making of Disney’s Poppins, does reference “Fidelity Fiduciary,” but it spends much more time reminding us that the author of the original Mary Poppins book, P. L. Travers, herself didn’t care for money.
The missing compounding principle in the Broadway Poppins in turn reflects the absence of this principle in our political culture. Compounding and redistribution used to be conveyed in tandem. Now, our culture pounds the theme of redistribution 24/7 and skips the rest. …
… The children of the wealthy still get herded quietly to the bank and learn about the Rule of 72. But the rest of the children in the country learn only about fairness, tax breaks, and evil plutocrats. Whatever is wrong with banks and banking law, and there is plenty, and whatever is wrong with markets, they still have the power to do for people much more than any tax committee can.
To restore the tarnished bank in the American mind requires more resources, political, legislative, and financial, than 1,000 Disney musicals. Banks should be allowed to fail, as “Fidelity Fiduciary” nearly does in the Poppins film. But a first step in the right direction might be to provide a little exposure of the compounding principle wherever possible, highlighting the historical record. Compounding, after all, is such a powerful engine of social mobility that it leaves the tax code in the dust. No one ever became rich from the EITC.