1) In The Sociological Imagination, how does the author distinguish the difference between “troubles” and “issues”?
According to the author, troubles and issues are different based on who experiences them and the setting that associated with them. Troubles are considered personal matters, and are experienced in a private matter. Troubles have only to do with an individual and the current setting they are in. They have some sort of control over the situation because it pertains specifically to them. Issues, on the other hand, are problems experienced by a whole group of people or a society. Issues are a product of a structure’s organization, and many people within a society can feel the burden of these issues. An example that would separate the two words could have to do with unemployment. A trouble in this case would be if I personally didn’t have a job and suffered as a result. It is my own personal trouble. It becomes and issue when there is mass unemployment, and it is the fault of the organization of society that leads to mass unemployment. This problem isn’t only occurring within my environment, but rather it is a problem faced by many within the system.
2) In your own words, briefly describe the details that lead to the financial crisis in 2008.
The first thing that really set the 2008 financial crisis in motion was the lowering of the Fed Funds rate by Alan Greenspan. Lowering this rate made it very easy for people to borrow money at almost 0% interest. Understandably so, this change caused a lot of people to start borrowing and pumping money into the economy. These low interests rates are even around today, and you can see companies looking to capitalize by buying back old debt and issuing new debt. CVS Caremark, for example, just did it themselves so they can be able to take advantage of the currently low rates. With people having the ability to borrow so easily, they wanted a place to invest their money at the time, and real estate was the big winner. Real estate was viewed as a rather safe and lucrative investment, and the public at the time was enthusiastic about it. People were able to borrow equity on their homes, and use the extra cash to purchase more real estate or other expensive investments. When the value of houses plummeted and people began to have to make the large payments, these people suffered to pay off the new refinanced mortgage they just borrowed. Furthering the problem, mortgage lenders became way more lax on the rules of borrowing, and began letting people borrow money that really had no right to. They made the rules and requirements for borrowing money too lenient, and they also let people borrow up to 100% of a home’s value. With so many people getting mortgages, the banks decided to sell these mortgages to larger banks, which bundled them up and sold them to investors as an investment vehicle. The public seemed to blindly trust these investment vehicles, and took little time to truly understand the possible outcomes of such an investment. The crash was very unexpected, and left to a lot of people being affected. Many of the big players in the US were taking part in these securitized loans and CDS’s, and as a result, the American taxpayer’s money had to be used to bail out a lot of these institutions.
3) Is business ethics really an important factor towards business?
Some people may ask the question whether or not business ethics really helps companies achieve better business. We have all been in the position where doing the “right” thing does not seem to match up with doing the thing that will benefit you most. Companies often face the same dilemma, and it is at these crossroads that management needs to make a decision – focus on achieving sound business ethics or do whatever they feel will make the company more money. Some people may argue that ethics are overrated and unnecessary in forming a successful business, but many would feel otherwise. In an article by Katherine Bradshaw, a member of the Institute of Business Ethics, she goes on to explain some of the logical benefits of good business ethics, while referencing works that prove her stance on the issue. She refers to a piece done by the IBE that researched if better ethics actually lead to better business. The findings in the work titled Does Business Ethics Pay? (IBE 2004/2007), show companies with an ethics code are more admired by their peers, and those companies that actively train their employees on ethics financially outperform their peers who do not. Trevino and Nelson also agree that better ethics leads to better business, saying “good ethics is absolutely essential for effective business practice.“ (3)
I agree that teaching good ethics in a business has a better chance of that business becoming both successful and sustainable. Ethical companies appear to be much more approved by the general public, and people who have good thoughts towards a company are more likely to purchase a product or service from those companies. I am not saying “unethical” companies do not get business, just they the ethical ones give themselves a better chance to get business because there is less negative press around them. Ethical companies aren’t just looking at the customers; they also have to remain ethical with the suppliers, partners, shareholders, stakeholders, and employees amongst other things. If a company can stay within good standing with each of these, they will be successful. In order to stay in good standing, they need to act appropriately and in a way that doesn’t upset the apple cart. Balancing all of these groups at once can be difficult, and sometimes interests of several parties contradict, and a decision must be made. Often, shareholders and stakeholders have diametrically opposite desires from a company, but that company needs to choose the best approach for the situation. Sometimes profits may take a short term hit, but in the long run, operating a company that is completely ethical has a better chance of survival.