Sociology of politics and economic life

Sociology Politics and Economic Life

Over the last several years, the political and economic system has been experiencing tremendous amounts of turmoil. Part of the reason for this, is because of the implosion in the asset prices related to the housing crisis and deregulation. To fully understand how this contributed to the current situation requires looking at the current state of democracy and equality in the United States. This will be accomplished by looking how the social elite manipulated these areas and the practices that have contributed to the current situation. Once this occurs, is when we will be able to offer the greatest insights as to how these factors are impacting the economic and social balance inside the nation.

Discuss how elites manipulated the political and economic systems to advance their interests and how these practices contributed the current economic crisis.

The way that social elite manipulated the political and economic systems was through a combined approach. This was accomplished was by continually lobbying various politicians in order to change the laws. As, this started in the period after the end of World War II through various efforts to be able to improve the world financial system with different agreements (i.e. Bretton Woods I and II). Over the course of time, the increasing amounts of pressure meant that the different laws, that limited the activities of financial institutions were slowly increasing.

During the 1980's and 1990's, is when there was a focus on rapidly decreasing regulations. While at the same time, the improvements in technology and continuing amounts of globalization caused the U.S. To easily export a host of different products / services around the world. This set the stage for the financial crisis, by allowing the wealthy to benefit off of any changes in these laws. Whereas, the rest of society was slowly being squeezed by these changes as there are less consumer protections available. This is important, because it is illustrating how the financial crisis was created by a concentrated effort to reduce the overall amount of government regulations. Once this occurred, it meant that the economy was exposed to tremendous amounts of risk. ("Inside Job," 2011)

Evidence of this can be seen by looking no further than the film Inside Job. In this documentary, the director (Charles Ferguson) is examining how the reduced amount of regulations gave everyone the ability to take increased risks. Where, firms such as Goldman Sachs had sold more $3 billion of high risk assets (i.e. subprime mortgages) in 2006. While at the same time, they were ignoring the fact that these were very volatile assets. That is dependent upon homeowners (with less than perfect credit) making their payments. ("Inside Job," 2011)

Once the economy began to slow, is when this contributed to the wave of defaults. At which point, firms such as Goldman Sachs received assistance from the Federal government because they were too big to fail. This is due to the fact that Glass Stegall Act was repealed in 1999. The reason why is because, this Depression era law limited the activities and size of financial firms. The owners of these institutions believed that this was preventing them from: increasing their profit margins and competing on the world stage. This is significant, because it is showing how the focus on reducing regulations in a host of sectors contributed to the financial crisis. As the wealthy, were able to increase their profit margins at the expense of the general public. This is when the overall amounts volatility increased, which led to extreme boom and bust cycles since the end of the 1990's. ("Inside Job," 2011)

How does your example reflect upon the current state of democracy and inequality in the United States today?

The example that we are looking at is a reflection of the current state of the economy. This is taking place through the break down in government. What is happening is the traditional constitutional procedures and practices are still embraced by society (such as elections). This is supposed to give the general public the power to elect representatives that will address those issues that are of importance to the voters. The problem is that running for office requires spending millions of dollars. To be able to raise the money that is necessary for this task, many politicians will focus on wealthy donors. This gives them more access to members of Congress in comparison with the general public.