The world economic recession of 2008 caused numerous people to lose their homes and employments and recorded an approximated cost of over $20 trillion. Considering its intense influence, the economic recession has not only been debated in the mass media and studied in academia, but is also a subject of discussion in films. Inside Job, a broadly celebrated 2010 documentary, written, produced and directed by Charles Ferguson, analyzes the incidents prior to, during, and after the economic recession. The movie concentrates on the complicated ethical issues connected to the financial services market and the market’s reaction to the recession. The major theme of the movie is its discussion of the pressure mounted by the financial services market on political procedures to evade guidelines. An important ethical issue discussed in the film is the commonness of the revolving door, where financial managers may be employed within the financial industry after working with the government.
The theme and subjects analyzed in Inside Job, makes the movie significantly connected to economic thinking. Inside Job provides a fascinating observation of the causes, and effects of the global economic recession. The documentary may be applicable for exploring and teaching business and economic ethics to present and prospective managers as it highlights ethical subjects, including fiduciary duty, conflicts of interest, financial regulation, and executive compensation. It also offers an informative summary of a significant historical event capable of affecting the economic prospects of generations. The global recession of 2008 and movies like the Inside Job lead to significant questions concerning the power of the economic environment on the civil and political realms. Towards the end of the movie the director queries the ability of Obama’s government to establish and enforce severe rules in the financial services market. Undeniably, various detractors insist that legal amendments such as the Consumer Protection Act are remarkably ineffectual owing to the widespread politicization by of the financial services sector.
The messages in the film, Inside Job will affect present and future managers. The movie presents the effects of ethical issues on the outcome of future economic situations. The ethical dilemmas faced by the various companies discussed in the film, the decisions taken by the management teams of these companies, and the resulting ethical issues, all indicate how delicate business ethics are, and the potential effects of ethical decisions on the performance of an organization and the industry at large.
Some of the major ethical dilemmas analyzed in Inside Job are revolving door, conflicts of interest, fiduciary duty and the investment industry, and executive compensation. Revolving door describes the shift of people from political, regulatory, or legislative statuses to statuses in the sector over which they initially had power (Ferguson, 2010).
The revolving door is also described as the political selection of previous sector executives into positions that have notable influence on regulations that are connected to their previous organizations. The film highlights some ethical issues related to the revolving door. According to the deontological school of ethics, the revolving door possibly risks the rights of society and individuals to be represented by fair administrators. The movie analyzes the Iceland bank events and proposes that revolving door was the reason bank managers were unable to protect the public interest. Owing to the high discrepancy in financial compensation amongst people acting as both auditors and connected positions in the regulated organizations, skilled regulators regularly change sides to the organizations that they previously audited. Inside Job explains that even though Obama’s election platform required change and the necessity for the regulation of the financial services industry, reforms passed were considerably weak. Inside Job attributes most of this failure to the government’s appointment of past industry directors as advisors to Obama’s administration. The film adequately resolved this ethical dilemma by proposing for the appointment of individuals that were not involved in the financial sector.
Conflicts of interest are situations wherein individuals have personal or private interests adequate to seem to affect the objective performance of their official duties as, for instance, an employee, a government official, or a consultant (MacDonald, McDonald, & Norman, 2002). Inside Job highlights various conflicts of interest constituting to the economic recession. The movie effectively frames this ethical issue from a deontological standpoint.
Another ethical issue highlighted in the movie is fiduciary duty. A person acting in a fiduciary character must be acting to benefit the individual to whom they owe the fiduciary duty to the elimination of any conflicting benefit (Richards, 2006). In order to accomplish fiduciary duties in offering investment advice, an individual must prioritize the interest of the client, act in extreme honesty, offer total and just disclosure of all evidences, not misinform the client, and must inform the client of conflicts of interest (Richards, 2006).
Although Inside Job resolves all other ethical dilemmas in the, the film fails to wholly resolve the ethical dilemma of fiduciary duty. The film wrongfully faults Goldman Sachs for not defending the interests of its clients. Although brokers have a clear duty to be honest with clients, they do not owe them fiduciary duty (Klarman & Zweig, 2010).
References
Ferguson, C. H. (Executive Producer). (2010). Inside Job [DVD]. CA: Sony Pictures Classics.
Klarman, S. A., & Zweig, J. (2010). Opportunities for patient investors. Financial Analysts Journal 66(5), 18–28.
MacDonald, C., McDonald, M. & Norman, W. (2002). Charitable conflicts of interest. Journal of Business Ethics 39(1–2), 67–74.
Richards, L. A. (2006). Fiduciary duty: Return to first principles. Web.