Leverage: How economic policies affect you and America

Leverage: How economic policies affect you and America

I heard the economy's great! Pass it on. / Image: Wikimedia Commons
I heard the economy's great! Pass it on. / Image: Wikimedia Commons

WASHINGTON, September 2, 2014 — The Democrats failed to deliver on their economic vision after the Great Recession. With midterm elections on the way, polar opposite policies coming from the GOP may sound attractive, but we should have learned from President Obama that change isn’t always for the better. 

For the non-economist, the ability of economists to explain and provide convincing remedies for the Great Recession and subsequent malaise have been a huge disappointment. Most economists were as blindsided by the Great Recession as the rest of us. They have emphasized the financial sector at the expense of the real economy. Failing to show leadership and true insight, these experts have not explained to non-economists what happened, nor offered a convincing explanation for their failure to predict the collapse. Until they do that, they cannot expect us to view their solutions to our current malaise with any confidence.

Policy makers and economists have not shown that they know how to repair the economy so that it is capable of supporting a decent middle-class lifestyle for the bulk of the human population. Politicians seem to be building an economy that will enrich a handful of individuals in each country, engineering an economy composed of the super rich and then everyone else.

It is therefore essential for the middle and poor classes to take control of their economic destinies. This starts with a clearer understanding of how the national and global economies need to work. Because the vast majority of individuals struggle to understand economic theory, they can easily be pushed into supporting policies that actually hurt them. People need a measure that ensures their interests will be addressed and that they can understand; one such measure is the notion of economic leverage.

Celebrities and CEOs are often able to take millions of dollar in pay for their services on an annual basis. The average person cannot do this. The reason is that affluent people have greater leverage when they are seeking compensation; their socioeconomic position, their qualifications, and the potential revenue they can make their employers affords them leverage.  

For most others, education, expertise, union membership, professional affiliation, and a whole host of other factors give them varying degrees of leverage. For instance, Wall Street firms in 2008 were able to coerce a large taxpayer bailout, because their executives wired the economy with a dead-man-switch to ensure economic devastation if their firms failed; anyone outside of their interests was economically disposable.

Much of the 20th Century was spent empowering the masses with greater leverage. Some of this was accomplished by government bolstering the leverage of individuals with the force of law; government as the hand of the people became the norm. Laws were passed to protect worker rights, customer rights, civil liberties, and the environment.

The expansion of education afforded more people greater leverage in the economy, until too many acquired college-level degrees. Labor unions allowed individual workers to join together to establish an equal footing against management. But although policy and ideological shifts secured the American Golden Age, which was marked by a high standard of living enjoyed by an unprecedented number of people, shortsighted, self-serving thinking started to undercut progress.

In the 1980 and 1990’s, the push for accelerated economic globalization forced workers in wealthy western countries to directly compete with those working in less-regulated, lower-taxed, far poorer nations. NAFTA was sold to the American people as an opportunity to gain access to new markets and cheaper goods. More importantly, NAFTA effectively de-leveraged workers in the U.S., Canada, and Mexico by creating competition between middle class and poor workers. China’s special trade status was an even bigger assault on individual power due to the size of that country’s workforce.

The formation of the Europe Union helped give the U.S. a stronger economic partner and allowed the Europeans to balance American influence in the global economy. It also created layers of bureaucracy that put distance between the European peoples and their democratically elected leaders, thereby undercutting the democratic authority of elected leaders. 

In all, the “liberalization” of international trade undercut the ability of governments to tax, regulate, and protect their national economies, neutralizing the leverage governments had once extended to their people. In other words, countries outsourced their economic sovereignty and de-leveraged their people.

A healthy economy, as a balanced part of a healthy society, depends upon the financial health of the masses. Only when individuals have leverage in a given situation can they or their advocates ensure their interests will be met. Thus it is important to understand that a sustainable economy can only be built if the interests of the many can be addressed and balanced.

When the people lack meaningful leverage, more and more of their interests go unaddressed. Consequently, economic researchers need to start building economic models that incorporate the importance of leverage. In turn, policymakers must seek to extend greater leverage to individuals in all aspects of society. Moreover, society needs to do a better job of addressing the negotiating powers afforded to the people when developing economic policies.

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My name is Matthew Justin Geiger; I currently hold a BS in physics and psychology based politics from Allegheny College of Meadville, Pennsylvania. I am the creator/manager/editor of ​The Washington Outsider. I am a freelance writer, political analyst, commentator, and scientist presenting my views through news sites like The Washington Outsider, Communities Digital News (CDN) and Examiner.com. I also host the shows "The Washington Outsider" and "FocusNC" on local news station startup NCTV45 in New Castle, PA. In addition, I have written a short story collection, “​Dreaming of​ Other Realities,” two novellas “​Alien Assimilation” and “​The Survivor,” and a poetry collection, “​A Candle Shrouded in Darkness” available on ​Amazon. My goals are to offer my opinions and skills to those who are in need of an honest, professional consultant or freelance writer.