According to Robert K. Merton of the Harvard University, there are “certain phases of social structures [that] generate circumstances in which infringement o social codes constitute a normal response.”(Meryton 1) Two parts of social structures have been identified: (a) the culturally defined goals, purposes, and interests (i.e. the “ends”), and (b) the acceptable modes or regulations of achieving these goals (i.e. the “means). Differences on the perception of importance of each part constitute ranges of behaviours that greatly identify one social group from the other, which can sometimes result to deviant behaviours from members of the group.
Social groups offer the question, “why available means is most efficient in netting the socially approved value?” (Meryton 4) In addition to the differences, growing tension between social groups arises also from varying codes and conduct between them. Such is the reason for Meryton’s belief of an existence of anomie within society for there is no one set of conduct that rules them all.
The movie Inside Job lets viewers see just what anomie and the nature of our social structures can do to a specific nation’s society and, evidently if it’s one of the most powerful countries, the world. It looks into the recent economic downfall that has struck the United States since the Great Depression, the reason for and impacts of its occurrence.
In summary, the pending economic crisis dates back about 30 years ago in the early 1980s when President Ronald Reagan approved of a 30-year plan for financial deregulation, which basically means that the effect was right on time. When they decides for deregulation of any sector of the industry, the government gives up their power of imposing laws, rules, and controls over the same sector and allows them sole judgment and responsibility over the sector. Usually, deregulation is a result of the government’s “intellectual decision” if it sees that an industry might bloom in the absence of restrictions implemented by the government. But as Andre Magnason says right in the beginning of the film, “Nothing comes without consequences.”
In the case of the U.S. economy, the financial deregulation that Reagan started gave power to investment banks and financial firms to set up rules and standards that may ensure the gain of the financial sector. While this saw the expansion of different financial and investment firms in the 1980s, it also saw the decline and closure of hundreds of other small savings & loans companies, which caused many to lose their life savings. This initial stumbling block, however, did not seem to discourage people, especially the government.
In the phase of the movie called The Bubble, the financial sector turned into one “great big national Ponzi scheme”. Banks were able to get money from people with the assurance of a safe investment. However, anything in excess can be bad for a person, or an entire economy. With so much CDOs, loans, and debt, 2008 saw the foreclosure of many homes and the collapse of the CDO market. Financial investment firms such as Bear Stearns, Freddie Mac, Fannie Mae, and Lehman Bros. also one by one started to declare that they are “out of cash”. While some of them have been rescued by the government, the others like Lehman Brothers were not able to recover. Furthermore, not only did the financial sector collapse, other industries started to decline as well, thus resulting to the U.S. economic crisis and in a way the global economic crisis.
The power given to executives and financial sector though may seem to have its advantages in the beginning, is an impending failure in itself when looking at society and social structure in the eyes of Robert Meryton. In his article entitled “Social Structure and Anomie”, Meryton shared society’s cultural concepts of the goals and means. Generally and in all parts of society’s past, success is measured by emphasis on accumulation of wealth. Independence given to financial executives and firms can only open the gates to greedy transactions and devious contracts in order to acquire more money.
This is evident in the sudden boom in the investment and insurance industry when deregulation was enforced. The U.S. financial sector became “more profitable, concentrate and powerful”. Such profitability was mostly in terms of assets, however. Financial firms have found a way to introduce legalized seizure of money in the form of derivatives, CDOs and CDS. They claim that these methods can generate more profits while having less risk, a concept that was greatly criticized by Raghuram Rajan. He was right eventually. The firms later on saw that while credit investments such as mortgage securities continue to expand, the chances of them falling in the future looms closer as well. As what Charles Ferguson, writer and director of the film had pointed out, “you tell something to somebody and then are determined to bet against that same security and you don’t disclose that to the person you’re dealing with?” In short, though they might lose some of their funds on selling bad assets, they gain more on betting against them as well. This is a win-win situation, only for top executives and their employees. Consumers, on the other hand, are on the bad side of the coin.
This same concept is what Meryton said about the differing emphasis placed by social groups on goals and means. In this case, the financial sector has evidently placed more emphasis on the goal of acquiring more wealth, which to them equates to attaining more success, than the means or ways with which to achieve said goals. By this concept, the most feasible and attainable means which can give these results, whether it is legitimate or not, is permissible. As the saying goes, “the end justifies the means” or so it is for the financial sector.
With the changing circumstances forced to us by the U.S. economy, society’s only reasonable action is to adapt. There were five ways on which individuals adjust and adapt within a culture-bearing society or group. It is the combination of: (1) an addition and/or elimination of culture goals, and (2) addition and/or elimination of institutionalized means. The U.S. economic crisis led people to a state of retreatism, wherein both goals of attaining wealth and means of getting them from helpless citizens with/without the help of the government are rejected and must be eliminated.
The differences in the stand of both groups (i.e. the financial sector and the consumer) lead to anomie. Consumers concern the growing schemes that financial sectors are bringing the public. While their institutions can only declare bankruptcy and surrender company assets, owners and top executives walk the earth free and with millions of dollars in their pockets. This is, of course, not acceptable. They must be held liable for the thousands of life savings lost in this national scam. The question is: “how do you make them pay?”
First and foremost, people must know what really happened and who really are liable. Since the time of the U.S. economic crisis up to present, there is not a single official investigation ordered by the government to look into the possible causes of the crisis. Three presidents had passed in the form of Clinton, Bush, and Obama. All of them were not able to give concrete reforms for the financial industry.
Secondly, there is much need in regulating the financial sector. Regulation was actually first introduced by Brooksley Born when she saw the need to regulate the expanding product derivatives and such created a proposal for this. However, Born was immediately turned down, again by the government, through the passing of the “Commodity Futures Modernization Act” in 1997. The act banned deregulation of derivatives. Now that we saw how dangerous and destructive these products are, it is about time to introduce again regulations.
Lastly is to choose wisely those who will hold posts in the government. This very important because a key factor in institutionalizing legal responsibility against the people behind the scam is the support of the government, the very one which gave the power in the first place. However, as the movie stressed clearly, it will be very difficult to get the cooperation of the government if the very people that started everything – the derivatives, the loans, the deregulation, the scam – are the same people seating on government posts on the U.S. Treasury Department. There is much protection of personal interest can only happen with this and consequently no good enough reforms can be passed. “It is a Wall Street government after all.”
Such deviance is never acceptable, and more so because of its greediness and lack of concern for others. The financial industry has definitely turned its back to society and infected even the government and the political system. They propelled the economy of the United States of America into a crisis and with it the rest of the world as well. “It is a very globalized world, economies are all linked together” as Lee Hsien Loong, Prime Minister of Singapore, said.
However, though the cut brought by the investment world might have been deep; and there may be many hindrances before the economy may be able to stand strong again, for both the sakes of the American people and the world that is connected with the ongoing crisis, there is a need to fight and claim back what is rightfully to the people. Whether it will take us years or decades, eventually proper reform will come. The road to it should not be given up because “some things are [always] worth fighting for.”
Works Cited
Ferguson, Charles, dir. Inside Job. Sony Pictures Classics, 2010. Film.
Meryton, Robert K. “Social Structure and Anomie.” American Sociological Review 3.5 (1938): 672-682. Print.
