In watching the compelling documentary, “Inside Job,” I knew that the financial recession of 2008 was bad, but I didn’t realize that it was so genetically embedded with corruption all the way from Presidential legislature to private investors. Beginning in Iceland with the implementation of large geothermal generator facilities and select privatized banks, what was once a country of relative stability and growth was transformed into an inflating bubble that took millions of dollars of debt and Icelandic tax payers’ money and invested it in companies abroad. Unfortunately, this pattern took root in America as well on an even grander scale. The checks and balances that were in place to prevent self-censoring corruption were “deregulated” by the movers and shakers in the government like Bill Clinton, Alan Greenspan, and George W. Bush. Banks were essentially given free reign to operate without consequence in deliberately providing loans to insecure proposals to earn funds by selling them as debt to investors.
This seems like a crazy concept to fathom, that essentially Wall Street, companies, banks, our own government, our own Presidents would promote and practice such malicious acts of deception and greed unabashed in “broad daylight.” Don’t we all universally agree that this is just WRONG? Apparently, no, and that answer might be more understandable to digest from Michael Walzer’s point of view in his theory of Pluralism. He argues that there is no single standard for society, but instead, plural interpretations of society’s definition and distribution of goods. Additionally, these definitions of goods are categorized into 6 criteria as well. So, to you and I, the horrendous acts of the Recession may be blatantly wrong, but Walzer’s 3rd category of social goods explains that “There is no single set of basic goods conceivable across all moral and material worlds,” meaning that our “morals” for the allocation of the Wall Streets loans won’t be universally the same for the bankers who distributed them.
Does this mean that we are always doomed to have the sea of difference between responsible citizens of society and professional business persons? Are we destined to repeat this pattern of corruption in capitalism since there are no universal theories of equality? We saw this quandary with the plural theories of ethics ranging from Deontological, Virtue, and Utilitarianism. There may never be a universal understanding of anything in our society (which is what Walzer hints at), but the fact that these plural equalities are being realized and publicized provides hope that society can take a step closer to understanding why and how situations like the Recession happen as corruption sets in from a self-validated point of view.
The World is Flat? 
The presidency has been a position that people have liked to go against over the past few decades, and perhaps those people had fair reasons to go against the position. I’m curious to see if/when there will be a lot of trust put back into this relationship, and what has to be done in order to make that happen. It works the same with the average person and the business leaders of the largest companies and banks – these business leaders have done whatever possible behind the backs of others in order to make profits. It is a terrible situation that needs to be fixed, and I certainly think a lot of the ethics that we have discussed in this class will help with the next generation of business leaders who have seen the devils of the 2008 financial crisis.
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I think that deregulation of the financial industry can actually have some benefits as long as the actors in the system act legally, morally, and fairly. This is obviously a huge assumption as those in finance tend to, as your title suggests, act in a greedy and selfish manner. To me, I have always thought that the biggest issue that led to the financial collapse was not so much the banks as it was the blatant incompetence of the rating agencies (namely, S&P, Moody’s, and Fitch). To rate bonds AAA that were quite clearly not deserving of this high rating is shocking to me. And yet, while the banks have seen increased regulations since 2008 and have had to pay billions of dollars in fines, not much has been done to change the conduct of these rating institutions.
It is also interesting to me how the documentary focuses so much on Iceland and how a seemingly small and insignificant country can have such damaging effects on the global economy. Iceland was supposed to get better after the financial crisis as they elected a PM who campaigned on increased financial regulation and other ways to avoid the turmoils of the great recession. Sounds great……until you find out hes investing offshore and selling massive stock in a company, Wintris, to his wife for the minute fee of $1. He told people Iceland was a safe and sound place to invest, yet he took his money offshore. Thanks, Panama Papers.
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Yeah Brady, I agree that the incompetence goes across the board here to definitely reach the rating agencies, but I can’t help but see this as an all-out debacle for all parties involved. It’s like, yes the rating agencies were wrong for falsely labeling these cases with positive scores, but it still doesn’t detract the sheer madness and blood-drunk behavior the banks exuded in deliberate giving out “crappy loans.” Also, I too was surprised at how much PR Iceland got as almost a “source” for the Recessionary troubles of America. If a little country like that can cause this, why didn’t we see similar devastation on the scale of 2008 when Greece crashed? And daaaang, out of the frying pan and into the fire with that new PM!
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Yeah, I was thinking about the slew of problematic Icelandic PMs. Such a small place. 250,000 people. Blows my mind.
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I think most people agree that what the financial industry did before the financial crisis was bad, but being able to prove wrongdoing in court is extremely difficult. After 2008, only a handful of traders were sent to jail, mostly for short periods of time. Most banks settled out of court with the government, and only had to pay a sum of money. Most of the bulge bracket firms will be able to make that money back in a year or two, which means that it will only stay fresh in their minds for a short period of time. The reality is that financial crises happen around every ten years, due to the short sightedness that is Wall Street.
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So, going with your point that this is a cyclical issue, would you say that this is partly due to (tying in Walzer here) the inherent criteria of the social good of banks loans/derivatives? Can we EVER really believe it when a politician promises to “clean up Wall Street?” Is the nature of capitalism bound for this? Or do we implement a dominance of spheres to curtail these predicted reactions?
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Genetically embedded. GOod phrase.
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Walzer, I think, would counsel us that no, Wall Street, or the financial system, based on free exchange, will ever be able to self-regulate well. The best we can hope for, and it might be pretty good, is to insure that the power of one sphere, finance, does not dominate others, like politics, but also academia. THe trifecta of economists, bankers, and politicians all breaking their arms patting each other’s backs over how perfectly munificent unregulated financial markets is truly problematic and galling.
It is the politician’s who do not move to structurally change our political system fault. I think it is their fault.
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