DSOC 1101 Lecture Notes - Lecture 19: Externality, Economic Inequality, Henry Paulson

• School: Cornell University
• Department: Development Sociology
• Course: DSOC 1101
• Professor: Tom Hirschl

Document Summary

Summary relationship between state and economy: state arises to protect the economy, state attempts to create the ways and means for economic development , two examples of state/economy relations. 1815-1860 andrew jackson and nicholas biddle. 1980-2015 obama and hank paulson (george bush"s secretary created system to shield financial industry form collapsing) Mortgage debt bubble and finance industry: rush to create mortgage backed securities (mbs) led to high volume of risky mortgages, unfavorable terms for borrowers, banks adopted a policy of lying to the court (pg. 248: state of georgia attempted to regulate mortgage market, successfully blocked by rating agency, co-conspiring with banks, conclusion- state-serving finance industry, not home owners or communities. Social theory: externalities arise in the course of profit seeking, creating costs not borne by the profit seekers, from a smithian perspective, only solution is state regulation, imposition of costs upon profit seekers.