Objectives: After completing this module, you will be able to
Required Readings in Turner Turner pp. 7-31 (functionaism) and pp. pp. 60-72 (ecological theory). Regarding pp. 7-31, Parsons is difficult to understand. Although a major player in the development of social theory in the United States, his A-G-I-L systems (a form of categorization) is rarely used today. Read pages 18-24 quickly – do NOT spend much time trying to understand the categorization. No one really uses it today. Please do read pages 25-31 where Turner states his version of functionalism. Turner is an active theoretician and this is one of several places in the book where he will present his own ideas. Read pp. 60-72 with some care. There are two sets of ecological theories that are important in understanding communities, urban ecology and organizational ecology and both of these theories are prevalent in the contemporary literature.Predatory Lending We're going to have a discussion about predatory lending, which provides an excellent example of how functional and ecological theories can help us understand how needs drive structures and processes at the community level. I provide detail about the nature of our discussion below. Please come to class ready to participate in a discussion answering the questions I ask below, framing your responses in terms of functional theory AND ecological theory. The Newman, Gallmeyer & Roberts, and Kubrin et al. readings will form the basis for our discussion. As will be the norm in this course, read these for understanding of how theory is used in developing the authors "arguments" (in the sense of ideas) about how predatory lending "works" in communities, what needs it fills, how it has affected the evolution of communities, and what other processes and conditions come into being because of predatory lending. Do not focus on details. Read quickly to capture the key points made.Look at the questions under Class Preparation below BEFORE you read these materials. The questions will tell you where to focus your attention as you read.
Newman, K. (2009). Post-industrial widgets: Capital flows and the production of the urban. International Journal of Urban and Regional Research 33(2), 314-331. e-reserve Class Preparation Critical Thinking: Understanding and Applying Ideas. Step 1 in critical thinking is to really understand what an author is to identify the purposes and questions driving the author, the major concepts, and the key arguments the author makes. Step 2 is to think through the implications of the author's theoretical perspective in terms of how the PIN "works," why it develops and persists, who is affected, and how it will affect communities (and perhaps how communities can address the PIN). 1. Turner argues that Spencer and later Durkheim (we will see his work later) really did not explain social processes and outcomes, but rather simply categorized them. Why does categorization fail to achieve explanation? 2. How does Turner’s attempt to redefine functionalism differ from the ideas of Spencer? Focus on his emphasis on pressures rather than needs (see Figure 2.7 and read page 29 carefully). Do Turner's concepts of pressure "fit" with ecological theory? Why or why not? 3. In contrast, Newman states that the increased interaction between “the state and the Street” in liberalizing the flow of capital, specifically through mortgages and other financial instruments, represents an evolution of the democratic state’s traditional roles. Read Turner’s summary (pp. 18-19) of the key ideas in early functional theories (Spencer and Durkheim), especially the discussion of system needs and functions and inter-structural dependency, coordination and control. Newman argues that the relationships between government and the financial industry are a necessary component of modern capitalism, the result of an evolutionary process in which: “Capital accumulated by owners is extracted from urban communities and flows through brokers and lenders to investors and the subprime lending industry, linking global (and local) capital to place. Place is the node that facilitates capital accumulation, completing the flow from the ethereal world of securities and investment in the secondary circuit of capital to the real-world place of extraction in urban communities. Subprime lending in this context can be seen as a critical component of the financialization of the economy.” How would Spencer theorize about this development of a “financial instruments market” and the role of government in facilitating its development? (Hint: think about requisite needs and functions and how these concepts are related to integration, coordination, and the exercise of power). How would ecological theory explain the development of a financial instruments market? 4. Now look at Turner's version of functionalism. What about his theory (as opposed to Spencer) would point to the potential for financialization of the economy to become a way of moving resources from poor to wealthy communities? Is his approach more akin to functionalism or evolutinary theorizing? Critical Thinking: Ways of Understanding Communities and Why They Differ. 5. Gallmeyer & Roberts provide a spatial analysis of the location and use of payday lending services, often called the alternative or non-traditional banking sector. The U.S. Consumer Financial Protection Bureau’s (CFPB) report provides details about the degree to which individuals and households become dependent on payday loans. (https://files.consumerfinance.gov/f/201304_cfpb_payday-dap-whitepaper.pdf). Stacy Cowley reported in the New York Times (October 6, 2017, Page B1) that these lenders collect about $7 billion in total fees (interest plus “late fees” or “rollover fees”) yearly. The CFPB reports that the fees of $15 per $100 loaned is common, an annual percentage rate of almost 400% for a two-week loan, often compiled by rollover fees to extend the loan that generally are about $45 per $100 loaned for each extension (https://www.consumerfinance.gov/ask-cfpb/what-are-the-costs-and-fees-for-a-payday-loan-en-1589/) . On page 29 of our text, Turner says: “Differentiation that increases inequality and stratification generates massive pressures for new forms of regulation… Use of power to solve problems of regulation often generates new internal pressures that come from inequality of power as it is used to increase inequality in the distribution of resources and, hence, the level of stratification.” How do ideas about the role of pressures in the evolution of society help us understand the tremendous growth of “payday lending” institutions over the past 20 years? What are the critical traits of communities where this growth has been strongest? Critical Thinking: Evaluating Conclusions. All analysis of the conclusions that an author draws and your conclusions involves interpretation by you, the reader, of the data or facts that a writer provides, based on your own ideas and even biases and your ability to apply theoretical concepts to the interpretation you make. 6. Do you agree with Newman that subprime lending funnels resources from poorer to wealthier communities? Why or why not? Base your responses on evidence and theory rather than personal experiences or opinions, please. 7. In 2017, Richard Cordray was the director of the Consumer Financial Protection Bureau, created after the 2009 financial crisis to protect consumers from predatory lending. He and his staff created major changes in the regulations governing payday lending services that most believed would probably result in a significant contraction of these lending institutions. These regulations were “on hold” at the national level as a court case to decide the constitutionality of the Bureau’s decisions moved through the justice system. I honestly do not know at this point whether the proposed new regulations were ever passed or not. One argument against increased limitations on these alternative lending institutions is that many poor people are dependent on these services to meet their basic survival needs or cope with unexpected expenses like illnesses and that they would suffer greatly if this avenue of lending is not available. Compare and contrast key differences in how functionalism (traditional version) and ecological theory would explain these developments. 8. Meanwhile, some local communities in several states have taken the issue into their own jurisdiction. In Texas, for example, several communities have greatly increased regulatory oversight and reduced the number of payday lenders and the models have been adopted by many additional communities, including communities in other states (see Martin & Mayer for details). How would Turner explain these local initiatives? Look carefully at Figure 2.7 on p. 30 of Turner. 9. Do you think this “outbreak” of local communities taking matters into their own hands represents social progress or social deterioration? As before, please compare functional and ecological theory to support your conclusion. 10. Google the phase “payday loan services in Gainesville, FL” to find a Google map showing the location of the local services. Make sure you can see all of Gainesville. I found a total of 17 services using Google Map. Generally speaking, residents divide Gainesville into four quadrants. The dividing line between “north” and “south” is University Avenue, which is logical. However, the dividing line between “east” and “west” is 13th Street (not Main Street). What do you notice about the geographic distribution of payday loan services in Gainesville? What are some of the traits of communities in the areas where many are located? How have you heard people talk about these commuities? 11. Go to https://www.neighborhoodscout.com/fl/gainesville/crime and compare the safest and most dangerous neighborhoods with the distribution you noticed for payday loan services. The summary by Kubrin et al. discusses a potential relationship between crime rates and payday lending. Use functionalist theory to explain why this relationship would exist. Note that explanations like “bad people live there” or “poor people live there” are not theoretical explanations. Explanations – theories – require that we can explain what produced the kind of coincidence between crime and payday loan services that Kubrin et al. posit. A correlation between two phenomenon is not an explanation. Other authors (See Sweet, Kuzawa & McDade for a good example) argue that payday lending has long term mental and physical health impacts. How would ecological and functional "thinking and theorizing" explain the associations between health and payday lending? Can you think of other long-term impacts at the individual, family, and community levels that might be associated with a high density of payday loan services in a community? 12. Max Ehrenfreund (Washginton Post, September 8, 2015 Wonkblog) cites a study by Christopher Gibbs of the University of New South Wales and Harold Cuffe of Victoria University of Wellington that showed that many liquor stores also went out of business when tighter regulations on payday lenders put many of the lenders out of business. Liquor stores near payday lenders (within 33 feet) failed at three times the rate of those farther away. Obviously, one explanation is that people were using payday loans to buy alcohol and one could argue that closing the lenders down generated unanticipated social benefits by reducing alcohol consumption. Assess this conclusion from three perspectives. (A) Does anything in functional theory suggest a relationship of this type -- point to reducing things like the presence of liquor stores on behavior? (B) Is the evidence that people were using payday loans to buy alcohol sufficient to warrant the conclusion? (C) Even if the relationship proves to be solid -- some people really were buying alcohol with the payday loans -- is it ethical to use deprivation of a resource essential to the lives of everyone (money) to change unwanted behaviors of individual members in a community? |