Skip to content
Search

Latest Stories

Follow Us:
Top Stories

The overleveraged and underleveraged society

The overleveraged and underleveraged society
Getty Images

Anderson edited "Leveraging: A Political, Economic and Societal Framework" (Springer, 2014), has taught at five universities and ran for the Democratic nomination for a Maryland congressional seat in 2016.

Many critiques of capitalist society show that there is either too much of something or too little of something, and each kind of critique can be written in a way to show that the value that we have too much of is equivalent to too little of the opposite of that value. A book that shows that there is too much economic inequality (like Thomas Piketty's Capital in the Twenty-First Century) can also be read as saying that there is too little economic equality. A book that shows that women suffer too much injustice (like Betty Friedan's The Feminine Mystique) can be read to say that women experience too little justice in our society. A book that shows African-Americans suffer too much injustice (like Cornel West's Race Matters) can be read as saying that there is too little justice in our society toward African-Americans.


Leverage is very different. For American society -- in fact all societies -- suffer from both the problem of excessive leverage and deficient leverage though not about the same subject matter. Rather, on some matters we have too much leverage, and on other matters we have too little leverage. Moreover, leverage, unlike equality and justice, is not a moral concept. Leverage is an empirical concept like weight. A person can weigh too much or too little, but the weight itself does not establish the judgment that there is too much or too little weight. That judgment must come from the medical profession, who must defend their own standards and values.

With leverage -- and there are different kinds, bargaining leverage, resource leverage, and financial leverage -- there can be too much or too little. And the judgment that there is too much or too little must come from a normative standpoint-- for example, a moral philosopher, a political philosopher, or a Congressional oversight committee.

Leveraging involves using a minimum force to create a maximum force with the help of some tool and a fulcrum. In traditional physical leverage, you can move a large concrete block with a pen if the pen is placed under the block and lifted in the appropriate way. Archimedes, the ancient Greek scientist who is credited with discovering physical leverage, said he could move the entire earth if he had a pole that was long enough and a fulcrum.

The financial crisis of 2008-09 was, according to many economists, a "leverage crisis," because both banks and homeowners were involved in excessive leveraging practices. In financial leverage, there is borrowing that takes place which is used for an investment that is intended to generate an outsized return. In the home mortgage leveraging crisis, homeowners bought homes which were interest free for a few years and then the interest rates ballooned, leading many homeowners to become incapable of paying their mortgages. They were "overleveraged." The banks, which could not collect the monthly mortgages, were also overleveraged and many of them crashed. Thus, excessive financial leveraging led to a financial disaster. Another example of overleveraging in our society is working mothers who are overwhelmed with their work and family responsibilities.

On the other hand we have under-leveraging. For example, the poor minorities in many American big cities who do not have laptops or broadband (although they may have smartphones), are part of an economy and political system which under-leverages information technology. An economically strong society is going to leverage information technology -- this is resource leverage and not financial or bargaining leverage -- effectively so that citizens can benefit in their work, health care, and family relations. A society can also under-leverage the diversity of its very population if the talents, background and cultural knowledge of different groups of people are not effectively harnessed in business, education, and government. Resource leverage typically goes beyond efficient use of resources. Gary Hamel and C.K. Prahalad in their book Competing for the Future explained how resource leveraging is inherently creative, especially by uniting resources from diverse sources.

A just and prosperous society will minimize the cases of overleveraging and under-leveraging striving to reach what I have called a "Leverage Mean." Aristotle said that virtue was the Golden Mean between excess and deficiency. Leverage analysis sends up red flags when it reveals either excessive or deficient leveraging. Indeed, if there is excessive or deficient leveraging, there is probably some moral value that is being violated.

There we have it then. Leveraging should be used more responsibly, avoiding extremes and hitting the Mean. If we analyze different parts of society via a leverage framework, then we will be better positioned to promote moral values like justice, equality, freedom and stability.


Read More

people in a boardroom


Happy female entrepreneur with colleagues sitting at a desk in an office

Getty images

Understanding The Dissolution of Federal DEI Offices and Initiatives: Debate and Implications

This nonpartisan policy brief, written by an ACE fellow, is republished by The Fulcrum as part of our partnership with the Alliance for Civic Engagement and our NextGen initiative — elevating student voices, strengthening civic education, and helping readers better understand democracy and public policy.

Background

Diversity, Equity, and Inclusion (DEI) is a buzzword often used in political spaces, and its implementations, or lack thereof, have repercussions on many groups. Diversity, Equity, and Inclusion efforts are organizational policies and initiatives that aim to equitably distribute opportunities and to create accepting workplaces for marginalized populations. These policies create hiring and recruitment guidelines to hire, retain, and promote individuals from those backgrounds. Supporters of these policies argue they are necessary in driving meaningful social progress, while critics argue they subordinate the role of merit in awarding opportunities.

Keep ReadingShow less
United States Capitol building
The United States Capitol building in Washington DC during the golden hour

Do Six Political Factions Cause Congressional Gridlock?

A recent congressional voting record report of our 535 delegates in D.C., published by the Institute of Legislative Analysis, found that significant voting behavior shifts have occurred within both major political parties over the past three years.

According to tracking from YouGov and Marquette Law School, roughly 28% to 35% of self-identified Republicans explicitly state they are not Trump- MAGA fans. Meanwhile, data published by the Pew Research Center shows that 67% of Democrats are frustrated with their political party.

Keep ReadingShow less
Windows of a house

Low-angle view of two dormer windows protruding from townhouse roof

Grace Cary, Getty Images

Go Home

The distance from Washington, D.C., to my hometown of York, Pennsylvania, is 100 miles. When I worked as a Congressional staffer in D.C., I could get out of town and be back where I grew up in about an hour and a half, at least so long as I avoided rush hour traffic. Those last miles as I crossed the Pennsylvania-Maryland border brought a sense of gratitude for the relationships I would be keeping up. At my nephew’s soccer game, at an English-style pub with my long-time best friends, with my mother at the breakfast table having a local newspaper in her hands, life was ordinary.

I would return to work in D.C. feeling grounded. I felt better connected to

Keep ReadingShow less