In the run-up to this Christmas, like most years, I watched It’s A Wonderful Life. And this year, like most years, I then annoyed my friends by noting at the end that under any reasonable system of financial regulation, George Bailey was still going to jail. The moral here is “don’t watch Christmas films with an economist,” you’re setting yourself up for a lecture on either the proper workings of the banking system or an explainer on the “deadweight loss of Christmas.”

But this year I found myself thinking more about the politics and the political economy of the film than previously, which in their own way are oddly fascinating.

(Before proceeding it’s worth noting that this post will contain spoilers but (i) the film came out 71 years ago and that is surely beyond the spoilers statute of limitations and (ii) if you haven’t seen It’s A Wonderful Life and have clicked on this link, I really have no sympathy.)

It’s A Wonderful Life is as quintessentially American as La Marseillaise is French and like that anthem its political legacy is contested, with both sides of the divide claiming this cultural icon as a celebration of their own beliefs.

To conservatives, Bedford Falls is the perfect representation of their traditional American values—small town, family-centric life and community-spirit. Of course this wasn’t always their view—indeed an FBI memo of the time listed the screenwriters as suspected communists and noted that the plot “deliberately maligned the upper class, attempting to show that people who had money were mean and despicable characters.”

For what it’s worth, I tend to see the film as much more liberal than conservative—but I mean “liberal” very much in the American sense of the term.

Fundamentally, and stripped of its Christmas story (I did warn you not to watch festive movies with economists), the entire film is a hymn of praise to the virtues of mortgage lending and home ownership.

The essential story is of George Bailey, through Bailey Building and Loan, helping his poorer neighbours escape from the rented slums of Potter and into newly built, privately owned accommodation. As the script makes clear, Bailey is even prepared to bend and stretch his lending criteria to help the less fortunate get on the housing ladder. One might almost say that the film is a celebration of the forgotten upsides of what we would now call “subprime lending.”

“The entire film is a hymn of praise to the virtues of mortgage lending and home ownership”

In the counterfactual world in which George Bailey was never born, BaileyBuilding and Loan folded and home ownership didn’t spread, poor but idyllic Bedford Falls has become prosperous but illicit Pottersville (cynics will note that Pottersville looks more fun). The supposed moral here is that without home ownership as spread through mutual thrift, savings and self-help the community itself would have collapsed. It’s hard to see this as anything but the movie version of New Deal Liberalism—left of centre yes, but with a distinctly American flavour.

Indeed, since my last viewing I have found myself pondering what a British version of It’s A Wonderful Life made in 1946 would have looked like. It’s quite easy to fall into a trap of thinking of 1945 as the triumph of Anglo-American liberal democracy but it’s always worth remembering that the post-war British model was as much social democratic as liberal.

The British Bedford Falls of the 1930s (when the bulk of the film is set) would almost certainly have been in one the country’s then depressed regions: the north of England, south Wales or central Scotland. The British Potter is easy to imagine: probably a local minor aristocrat as well as the wealthiest business owner in town, his eventual failure to prosper would have been in keeping with the spirit of the times.

Bailey though would require some changes—for a start his wartime service as an air raid warden would have been more eventful than his American peer’s. But, more significantly, the British social democratic politics of housing that the film celebrates look very different to the American liberal version. This was the era of council housing expansion, which grew from around 11 per cent of the stock of dwellings (with almost half then privately rented) in 1938 to a peak of 32 per cent in 1980.

The British Bailey of 1946 then would almost certainly have been a councillor and whilst he would also have provided better housing to his neighbours, his vehicle would have local government and the state rather than a privately owned lending institution.

I just wonder whether a British version would have aged so well.