Essay on "Applied Social Theory Economic Crisis Ethical Issue Perspective the Economy and Society"

Essay 4 pages (1575 words) Sources: 4

[EXCERPT] . . . .

Social Theory

Applied Social Theory -- Since the late 19th century, the new disciplines of anthropology and sociology have looked at the way that society is organized, what different stimuli causes action and interaction, and if there can be an overall theory to identify the manner in which social problems seem to occur regardless of the chronology or geographic location of society. Functionalism is one way to place this into a template; a way to perceive the individual in the micro way and society in the macro as means of generating knowledge and meaning by experience. Since each individual has unique needs and backgrounds they are, in effect, a complex and multidimensional part of the whole (De Maio, 2010, 29-31).

Functionalism, in effect, is a broad perspective in which society is the macro structure. Within society there are various components that act in congruence with one another -- sometimes in conflict, sometimes in cooperation, to provide wholeness. Herbert Spencer, for instance, saw these various parts of society (norms, customs, traditions, institutions, etc.) in the same way one can view the various organs of the body and the manner in which they work together to form the total individual. Disease, illness, or dysfunction in one of the organs can have an effect on the other organs; ultimately causing the entire organism to die. Thus, the reason that social ills and issues seem to reoccur is that the individual parts of the "organism" actual never completely change in structure -- but may evolve in technological knowledge (Urry, 2000, 23). For instance, regardless of whether one is a family in Ancient Rome, 19th Century London, or Modern America -- there are several issues that occur within the family structure as children grow, parents engage in conflict, etc. This is, in fact, the power of functionalism -- it tends to help us explain the reasons for similarities in societies and different approaches to social ills -- some of which have worked and resulted in contemporary society, some which have not and remain problematical.

Economic Crisis -- the gist of the contemporary economic crisis is it is a metaphor for both a game of dominos and the whole economic idea of the "trickle-down effect." In a sense, no one is immune to the effects; some are just more susceptible than others. Those in the upper echelons fiscally simply have a greater padding between fiscal loss and comfort than others.

There are two major examples that are quite apparent. First, for some years the media has been pushing the idea of society needing two specific careers by 2010 -- qualified Registered Nurses and Public School Teachers. Both professions were expected to be needy because an entire generation was scheduled to retire between 2008 and 2010. With the economic downturn, however, the portfolios that members of both professions had invested in for years simply were not worth the same amount expected, or even that they were worth in 2006. Thus, the monthly income after retirement would be reduced, typically from 30-45% of expectations. Thus, many had no real choice but to delay retirement, which in turn, caused the ripple effect of disallowing those already in the position to move up into higher levels, and opening up slots for new employees. We now have three major groups who are "stuck" waiting for openings; the group ready to retire who cannot until their portfolios become solvent; the middle group that expects higher degrees of responsibility; and the trained, college-educated group that cannot find employment in their chosen field (Balderama, 2009).

Second, when one group decides not to spend, it does not just affect the solvency of the retailer. Retailers are consumers, too; and when goods are not purchased it has a profound effect on manufacturing, transportation, hospitality, food production, entertainment, and any other outlet in which the dollar is transferred from one social group to another. Like the global environment, the complexity of modern society results in a world of interrelatedness that is quite fragile.

Ethical Investments -- the current economic situation, specifically the number of sub-prime mortgages and bank failures, has resulted in the government stepping in with more regulations, bailouts, and changes to procedures than have happened since the revamping of the entire system during the 1930s. Our situation is that in a certain area within a city, the demographics and fiscal data show that there have been an inordinate number of risky investments. In order to protect the solvency of the bank, and to avoid regulatory steps, the bank decides that it will refrain from granting loans to people within that certain area. At first glance, this seems like over discrimination on an entire group and therefore should be a practice that is banned. Upon further consideration though, other issues come to mind.

Using the theory of utilitarianism, for instance, that is that the greatest good should be for the greatest number and that if the process (the means) is flawed but the result (the ends) is positive for the majority, then the act is moral. Using the bank as an example we must ask ourselves: what is the overall responsibility of the bank? First and foremost, the bank is responsible to its stockholders, Board of Directors, and stakeholders. People who have invested in the bank have expectations, rightly so, that their investment will grow over time, while still helping the community. Stakeholders (those who work at the bank and have deposited money into the bank) also believe that the bank should stay solvent and provide the contracted services. Third, the community at large needs a bank in order to supply needed capital for local development. If too many investments and loans go bad, then the bank will be forced to close and a certain percentage of individuals will be hurt. However, by the same token, the bank has a moral responsibility to help rebuild the community -- and to partner within that community to ensure that all citizens are served fairly. Deontology, another branch of utilitarian ethics, is concerned with the means as opposed to the result -- and would find that if the bank was basing decisions about investments and loans solely on the zip code of the applicant, it would be immoral. If the individual meets all other qualifications, but lives or works within a depressed zip code, that should not be the deciding factor on banking policy (Ferrell, Fraedrick and Ferrell, 2008, 149-61). Certainly, the bank has a right to allow the zip code to be a weighted factor, but that is subjective. As the only factor, it should not be allowed.

The Economy and Society- it is impossible to point the finger at one group and state that they are the ones responsible for the global economic crisis post-2006. Certainly, the first part of the 21st century showed a surge in the housing, consumer spending, trade, and technological markets in most of the world. By all accounts, by 2008 a series of bank and insurance company failures, largely based on the lending of huge amounts of money to individuals and institutions that were unable to pay, triggered a crisis that was global in nature. Even institutions like Fannie Mae and Freddie Mac, large housing and student loan organizations, were on the verge of bankruptcy. In retrospect, what appears to be the case is one of greed -- short-term gains and suppositions about the market that did not have adequate (or tested) economic theory behind them continued to escalate until finally the balloon popped. It was not one financial decision that caused this to happen, but several. Certainly, many sub-prime loans were made to individuals who were buying "too much house," -- and then those loans were sold to investment companies at a higher rank than they should have been, again combined… READ MORE

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