According to Merrian Webster’s dictionary, Politics are defined as, “the activities associated with the governance of a country or other area, especially the debate or conflict among individuals or parties having or hoping to achieve power.” So I will begin by saying that power and politics should be discussed simultaneously. First off, I would like to note that politics are defined to be used as a means to achieve power, the end. If you were to look at politics and power from a deontological perspective then it can be said that the use of politics in the pursuit of power is ethically permissible as Kant advises the use of a means as long as it leads to an end. When using politics to pursue power, power becomes an end because inherent with power is the responsibility to wield it for the good of the people. That is why people become elected officials and why they are given the power that their political effort was aimed at. It can then be said that power, when obtained through political endeavors, must be used to provide for the people being governed as that is the responsibility that is assumed. It would be unethical, according to Kant, to use power as a means for one’s own personal conquests. With this framework and context from The Inside Job, it can be understood just how unethical the actions of the government were in relation to 2008’s financial crisis.
One of the key and most publicized causes of the financial crisis was the inaction of Wall Streeters as they continued to sell and profit off of toxic CDO’s. Just about every bank involved was aware of the potential consequences and most of the top executives and key traders can be held at fault. However, one further unexplored aspect of the meltdown was the role that the government and many politicians played in the ensuing crisis. Alan Greenspan and Henry Paulson, the federal reserve chairs who served in the time leading up to the crisis, failed to enact many policies that would further regulate financial markets and potentially decrease the impact of the collapse of the MBS and CDO securities. The Federal Reserve has the responsibility to adjust interest rates appropriately based on the markets, however, even as housing prices continued to soar Alan Greenspan refused to increase rates due to pressure from Wall Street banks, and the incentive to keep his money growing, as well as the economy, growing. While his intentions seem genuine, interests should have been raised as he already deregulated the requirements that mortgage houses use when making loans and deregulated derivatives markets on which mortgage backed securities were created. Furthermore, he eliminated the leverage limits on the banks and allowed them to hold ratios of over 30:1. All of these events fall under his domain of power; he was appointed to be the Fed chair because it was believed that he would use his power to treat the American people as an end. Even in poor times, he is responsible for communicating to citizens that lending rates must be increased because too much money is being borrowed. Unfortunately, he did not uphold his responsibility and ended up treating the American people as a means for Wall Street banks to rake in bigger and bigger profits.
Each of the actions mentioned above are a failure of the government to wield its power in favor of the general public’s best interest. It is clear that this is not the case. Paulson was a former Goldman Sachs executive and catered to his former colleagues by swaying regulators away from the banks and their complicated practices. Politics are being gravely misused, not just to achieve power but to keep it. Pleasing the banks will be repaid with countless donations that will fuel many more campaigns to come. The incentives here are vastly misaligned. From a deontological perspective, it cannot be more clear how unethical these decisions are. Power is being used by the government to treat people as a means and not an end. This goes directly against Kant’s main principles. For many reasons, the financial crisis was caused and sent the world into a recession. Only after the fact, has the government’s role been explored and it can be concluded that the dynamics of power and politics should not be so closely tied together. At the end of the day, we need more regulation, we were given the chance to act responsibly and we failed.