Sociological Imagination, C. Wright Mills

¶ … Sociological Imagination," C. Wright Mills proposes a new social paradigm that allows one to deal with the uneasiness and indifference of his/her cultural milieu. In short, he proposes that one should recognize the interplay between the larger structures of the "system" (i.e. one's society, the political frameworks of government, mankind as a whole) and one's personal, intimate experiences. This process, this "sociological imagining," enables one to cope with and make sense of his/her plight in life. With unemployment hovering around 10% and with underemployment hovering around 20%, perhaps one who has fallen on hard times can apply Mills' approach to better understand his/her situation. It is the purpose of this paper to examine ways in which someone who is underemployed or unemployed can profit from the tenets of a social imagination by looking at the 2008 stock market crash.

Regarding unemployment, Mills stated in his essay, "When, in a city of 100,000, only one is unemployed, that is his personal trouble, and for its relief we properly look to the character of the individual, his skills and his immediate opportunities. But when in a nation of 50 million employees, 15 million people are unemployed, that is an issue, and we may not hope to find its solution within the range of opportunities open to any one individual. The very structure of opportunities has collapsed" (1959). The notion that the "very structure of opportunities has collapsed" should be a familiar to anyone who was lucid during the stock market crash in 2008, and the precipitous rise in unemployment and underemployment that resulted thereafter.

Corporate greed is nothing new. The avarice of men, particularly wealthy men working on Wall Street, is unlimited. However, in the years that preceded the market crash in 2008 corporate greed hit a fevered pitch. Banks were writing mortgages to anyone and everyone who had a pulse and/or a bank statement. Loan officers found creative ways to write mortgages, ARM loans, Stated Income loans, Negatively Amortizing loans, etc. so that more people could receive more loans (not only mortgages, but home equity loans) quicker. At some point during all of this lending a few shrewd investment bankers realized that this was unsustainable, that despite the consensus at the time, "home prices never decline in value," the pendulum would eventually swing back the other way and home prices would drop. Meanwhile, the majority of investment bankers, including the gatekeepers and CEOs at all the major investment firms were too busy writing mortgages, packaging these mortgages as CDOs (collateralized debt obligations) and then either selling them off to other firms or holding on to the CDOs and buying insurance for them in an agreement known as a credit default swap (Sorkin, 2009).

While this is a fair recapitulation of the system circa 2008, there are a few more points that should be addressed. The first is that there was porous and benign regulation agencies that feigned due diligence and instead of rating each CDO according to the inherent risk level of the mortgages that comprised it, at the behest of Wall Street and in the interest of the deal itself, these agencies gave the majority of CDOs the top AAA rating (Lewis). This, naturally, undermined the integrity of the deal. Investors were buying CDOs they thought to be low-risk ventures. The second point to make regarding the system is that on the individual level, loan officers were preying on credulous buyers. These salesmen put aside fiduciary responsibility and in many cases convinced their client to purchase more than he/she could afford. The result was people buying houses with balloon payments or mortgage payments they could not afford.

What does all of this have to do with the sociological imagination? Moreover, how does it provide solace and peace of mind to the unemployed and the underemployed? The answer to the first question is a lead-in to the second. Mills wrote, "To be aware of the idea of social structure and to use it with sensibility is to be capable of tracing such linkages among a great variety of milieux. To be able to do that is to possess the sociological imagination" (1959). In order for one to fully understand the current recession and his/her position within society he or she needs to do two things. The first is be self-conscious of the intimate and personal decisions one has made that has led him/her down his/her current path, the second thing is to understand the structural factors that ultimately precipitate the economic downturn. The aforementioned paragraphs give one, at least, a cursory understanding of why he/she is unemployed or underemployed. The economy, despite several infusions of cash by the Federal Government - TARP (trouble assets relief program) or as it's also known, "the bank-bailout" and the American Recovery and Reinvestment Act -- has still not fully recovered. Ironically, the banks are now thriving once again, the stock market has recovered, but many people in the middle class are still struggling, still languishing.

In 1959 when Mills wrote this piece, CEO salaries where roughly 30 times greater than the average employee. Now, CEO salaries are roughly 300 times greater than the average employee (Mishel, 2006). The system has changed. Some may even argue that the system is broken. In 1954 the marginal tax rate on individuals making more than $100,000/year was 89%. In 2010, the marginal tax rate on individuals making more than $100,000/year was 28%. What is more outrageous is that passive income is taxed at 15%. That's income that's made from the stock market. So, when a Wall Street tycoon cuts himself his billion-dollar paycheck for the year from his stock portfolio, that money only gets taxed at 15%, the same marginal rate a working stiff making $8,000/yr pays (Mishel, 2006). The implication here is that this corporate greed and avarice has a negative impact on the middle class. One can argue that unemployment and underemployment is as high for many reasons, globalization, global overcapacity, U.S. monetary policy (fiat currency), the rising national deficit, etc. But one would be very hard pressed to leave corporate greed and the exploitation of the working man off that list.