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

Chicago’s First Environmental Justice Ordinance Faces Uncertain Future in City Council

David Architectural Metals, Inc. is a longtime Chicago metal fabrication company for commercial and industrial construction. The company is situated in the same area as the other sites.

Chicago’s First Environmental Justice Ordinance Faces Uncertain Future in City Council

CHICAGO— Chicago’s first environmental justice ordinance sits dormant in the City Council’s Zoning Committee. Awaiting further action, some activists and alders have been pushing to get it passed, while others don’t want it passed at all.

At a Nov. 3 rare special committee meeting, Ald. Bennett Lawson (44th Ward), chair of the City Council’s Zoning Committee, said he would not call for a vote on the ordinance. His decision signaled the measure may lack enough support to advance, but its sponsors think there is enough community support to push it forward.

Keep ReadingShow less
Democrats' Affordability Campaign Should Focus on Frozen Wages
fan of 100 U.S. dollar banknotes

Democrats' Affordability Campaign Should Focus on Frozen Wages

Affordability has become a political issue because the cost of basic necessities - food, health and child care, transportation, and housing - for 43% of families today outruns their wages.

Inflation is one factor. But the affordability issue exists primarily because inflation-adjusted (real) wages for 80% of working- and middle-class men and women have been essentially frozen for the past 46 years.

Keep ReadingShow less
Silence, Signals, and the Unfinished Story of the Abandoned Disability Rule

Waiting for the Door to Open: Advocates and older workers are left in limbo as the administration’s decision to abandon a harsh disability rule exists only in private assurances, not public record.

AI-created animation

Silence, Signals, and the Unfinished Story of the Abandoned Disability Rule

We reported in the Fulcrum on November 30th that in early November, disability advocates walked out of the West Wing, believing they had secured a rare reversal from the Trump administration of an order that stripped disability benefits from more than 800,000 older manual laborers.

The public record has remained conspicuously quiet on the matter. No press release, no Federal Register notice, no formal statement from the White House or the Social Security Administration has confirmed what senior officials told Jason Turkish and his colleagues behind closed doors in November: that the administration would not move forward with a regulation that could have stripped disability benefits from more than 800,000 older manual laborers. According to a memo shared by an agency official and verified by multiple sources with knowledge of the discussions, an internal meeting in early November involved key SSA decision-makers outlining the administration's intent to halt the proposal. This memo, though not publicly released, is said to detail the political and social ramifications of proceeding with the regulation, highlighting its unpopularity among constituents who would be affected by the changes.

Keep ReadingShow less