Financial Industry Responsible for the Article Critique

It was irresponsible for banks to operate from a position of absentee management, and the careless ownership enabled reckless conduct from their "agents" who ran the day-to-day operation. While some blame must be placed on the public for continuing to spend at outrageous rates, the bank itself promoted and enabled such activity. Blankfein's argument that no one had been arrested is irrelevant since the issue at hand is whether the financial industry was responsible, not whether bank officials should be arrested. Banks made profound miscalculations concerning interest rates and loans, and should have been aware that their business practices were not feasible toward long-term success (Murphy).

Issue 7 places the theories of authors Roger Lowenstein and Robert Samuelson against one another. Lowenstein contends that government should bail out economic institutions; however, he does not argue that bailouts are necessary in order to assist the careless companies, but instead asserts that bailouts must be issued in order to assist the millions of people who have lost their jobs. Accordingly, Lowenstein places great emphasis on the effects of the collapse, stating that 15 million families owed more than their houses were worth, that unemployment was at greater than 10%, and that 8 million people had lost their jobs.

Samuelson takes the stance that the bailout was a result of the market structure, and that the economy will follows a "boom and bust" trajectory. He states that the financial collapse was more or less unavoidable after a 25-year period of economic prosperity, the greatest period of sustained economic success in history. Moreover, Samuelson contends that the financial boom that preceded the crisis was too large, suggesting that every economic development has an equal and opposite reaction. Accordingly, in order to prevent the next financial collapse, instead of issuing a bailout it is prudent for companies to operate in ways that do not promote excessive lending. Samuelson's argument corresponds with Alan Greenspan's comments that the bailout has shown that the free market economy will no longer regulate itself (Andrews).

Ultimately, Lowenstein offers the more persuasive argument because it acknowledges the gravity of the situation. While Samuelson's argument is intellectually understandable, it disregards the necessity to provide jobs for the millions who are now out of work. However, in the future banks (and the public) should avoid reckless spending, even if it precludes the economy from "booming" again.

References

Newton, L., Englehardt, E., & Pritchard, M. (2012). Taking Side: Clashing Issues on Business Ethics and Society. New York: McGray Hill.

Murphy, a. (Nov. 4, 2008). An analysis of the financial crisis of 2008: Causes and solutions. SSRN. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1295344.

Andrews, E.L. (2008, Oct. 23). Greenspan…