This video by Nicole Gelinas, a senior fellow at the Manhattan Institute does a pretty good job of answering the question of the government bailing out banks. However, it only lays the groundwork for differentiating between how the three theories of justice would answer the question. As the video points out, the government had a history of being around to help when big banks needed it. According to the utilitarian theory of justice, “Utilitarians favor whichever economic system will bring the most good for society as a whole’ (Shaw 88). Obviously an economic system where the government protects the banks seems pretty foolproof. On the other hand, the government didn’t step in when Lehman Brothers needed them the most. The Libertarian approach would suggest that this was appropriate: “we refrain from interfering with others. Beyond this, we are not obliged to do anything positive for anyone else, nor is anyone required to do anything positive for us’ (Shaw 91). Lastly, there is Rawl’s theory of justice. The video points out that President Bush was the one to sign a bill affecting the bailout into law. The president thought it was right for the government to bail out the banks. Even in an opposing political stance, he was able “to be objective and impartial’ which “makes agreement possible’ (Shaw 99). All three theories of justice have differing viewpoints regarding the question of the government bailing out the banks. The fact of the matter is, the government has helped bail out banks, and banks are still in business. Whether it is right for the government to give a huge bailout depends on which of the theories of justice explained above you subscribe to. The good news is that regardless of whether the situation was right or wrong it could have gotten much worse, but didn’t.
3 Comments for “Module 3 (Hamm)”
I enjoyed watching the video that you selected. It was very clear and informative. I happen to agree with the video’s message. I believe in a free market with little interference, which coincides with the libertarian point of view that you described in your post. I may be partial due to my libertarian beliefs but I think that bailing out the banks would be wrong even from a utilitarian point of view. Although a bailout may seem like the best option at the time, it is just delaying the inevitable and has a negative impact in the long-run. The video compared the government to an enabling parent. I think this comparison is spot on and that can have devastating effects.
Thanks for the comment! I like that you point out the inevitability of banks suffering with or without the immediate intervention of the government. That being said, I can also understand the potential value of bailing out banks to prolong their success, as they are a very significant part of the American lifestyle and economy. Either way, what happened in 2008 is in the past and the best we can do now is learn from what happened and try to set ourselves on a better path for the future.
What was your position? Besides writing up the facts of the video (which was good) you could have provided your opinion and position too. I know what the text says and want to see your thoughts on how the theory might apply to the problem. One idea: Rawl’s second principle basically expects that social and economic inequalities must benefit the least-advantaged members of society. This is the difference principle. This may imply that communism – where everyone is equal is automatic and that capitalism is only good if the poorest group (i.e., orphans) are benefited. So bailing out big banks in my opinion results in protecting the more privileged (shareholders, CEOs, employees, etc.) than those least advantaged. I did like the choice of video.