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    Building the New American Economy: Smart, Fair, & Sustainable
    Building the New American Economy: Smart, Fair, & Sustainable
    Building the New American Economy: Smart, Fair, & Sustainable
    Ebook154 pages2 hours

    Building the New American Economy: Smart, Fair, & Sustainable

    By Jeffrey D. Sachs and Bernie Sanders

    3.5/5

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    About this ebook

    The influential economist offers a persuasive strategy for a more just and sustainable economy—with a forward by Bernie Sanders.
     
    The New York Times has said that Jeffrey D. Sachs is “probably the most important economist in the world.” Now, in a book that combines impassioned manifesto with a plan of action, Sachs charts a path to move America toward sustainable development. Sustainable development is a holistic approach to public policy that unifies economic, social, and environmental objectives. By focusing too much on short-term economic growth, the United States has neglected rising inequality and dire environmental threats—all while putting our long-term economic growth at risk.

    Sachs explores issues that have captivated national discourse, including infrastructure, trade deals, energy policy, the proper size and role of government, the national debt, and income inequality. In accessible language, he illuminates the forces at work in each case and presents specific policy solutions. His argument rises above the stagnation of partisanship to envision a brighter way forward both individually and collectively.
     
    “Sachs demonstrates expertise on vastly different policy fields and makes a convincing case that abdicating the toxic intersection of militarism and exceptionalism is key to building a brighter future.”—Global Policy Journal
    LanguageEnglish
    PublisherOpen Road Integrated Media
    Release dateFeb 7, 2017
    ISBN9780231545280

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    Reviews for Building the New American Economy

    3.5/5

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    • 3/5
      Jeffrey Sachs’ new book, which runs about 150 pages, has a Foreword by Bernie Sanders. Sachs directly addresses the new Trump administration, and makes suggestions about our nation’s priorities. Sachs wrote it fast, since the election, and it shows. He'd supported Bernie, but Sanders was not explicit when it came to running the government. These are Sachs' ideas, but knowing there is someone in political life that he supports helps to flesh out Sanders' ideas as well.Sachs allows that we might be able to comprehend priority spending of the government, so shares some national budget particulars:“Federal taxes account for about 18 percent of GDP, mostly income and payroll taxes…Together with state and local taxes, the total tax collection of all levels of government amounts to around 32 percent of GDP.”On the spending side, first is military spending at 5% of GDP. Next is what Sachs calls “mandatory spending” but what Republicans call “entitlements:” Medicare, Medicaid, Social Security, income support programs, etc. This is a rising share of GDP, at 12.6%. The third category of spending is interest payments of government debt, which will rise when interest rates increase. Public debt to national income is about 75%, and average interest charges on that debt are at about 1.5% of GDP per annum. Finally, we have non security discretionary spending, or our investment in the future, which in the scenario Sachs talks about here, doesn’t even make it to the drawing board unless we take on further debt. The reason Sachs gives us is that income taxes, etc are only 18% of GDP while military, mandatory spending, and interest payments alone are 19%. He is a smart guy, and he may be right, but if you are asking us to decide on which categories or programs to cut, I will need to see the whole budget, many thanks. [Unfortunately the graphs and charts are not reproduced in the ebook of this pre-publication galley.]Anyway, Sachs suggests we cut military spending and increase discretionary spending commensurately, leaving the other categories to be adjusted in smaller ways. In theory, I don’t have a problem with this. I have lately weighed good and bad in American foreign policy in the past fifty years, and see lots of room for a reduced role, though one has to acknowledge the vacuum of leadership is going to be filled, perhaps by a country we don’t admire much, or at all. When we abdicate as a superpower, we also jettison some of the trust and reliance of our allies, as some of their positions and spending were predicated on our own. It is a much more fragmented and divided world, a world that may not be so amenable to policies the U.S. supports. And Sachs’ proposals for the future are all about global cooperation. He suggests that we use our military spending instead on global development projects, which will keep some portion of goodwill headed our way.Sachs also recommends a value-added tax like they have in Scandinavia which would raise another 3-4% of income. The huge discrepancies in income from top to bottom of the U.S. income ladder will still be there, they just won’t be as great, and more in line with the world’s other great democracies. Sachs is even willing to consider restructuring corporate taxes, like Trump has already proposed, but only “if combined with an end to corporate loopholes and foreign tax deferral provisions.” Definitely one of the main income disparities is who even pays taxes in the U.S. Sachs looks not very far into the future and see some major changes in our economy: an end to internal combustion mobility and the beginning of a low-carbon lifestyle, regardless of government leadership. It would help if government was in front, using their think tanks and scientific offices to help direct some of the changes, but what we really have to guard against is allowing entrenched corporate interests to hijack our future and investment money. We can decide these things without government, though.Trump has stated he wants states to make their own decisions on many things we have in the past asked the federal government to do. States with wealth, educated workforces, and well-funded universities (like Massachusetts, California, and New York) may make out very well, drawing more similarly-minded folks to them, and exacerbating the cross-talk divisiveness among the states. They’d have to capture taxes from individuals who wish to work, but not live, in their states. But my feeling is, if we can’t work together within our own country, how can we expect to work across national boundaries on important issues like climate change, exploration, and energy supplies?When Sachs discusses the changes in the workplace, I find my credibility meter reading low. I agree that even educated workers will be replaced in the modern economy as computers and machines get more capable. But Sachs is suggesting that older, experienced workers pay some part of their wages to younger people who cannot find jobs. Hello! We’re already doing that! It’s called taxes, and it is a stupid idea. Older workers, whether they want to believe it or not, are going to die, and if they haven’t mentored young people to get experience and be able to take on the stress of creativity everyday, they may be surprised when the whole show goes tits up. [This was Hillary Clinton’s problem. She thought she needed to do everything herself.]We cannot continue to have older workers stay in the workplace as long as they want—and continue to decline—keeping younger folk from earning and gaining experience, let alone spur creativity. May I suggest this is a real problem? People who have been working for forty or fifty years cannot keep up, no matter what they believe about themselves. And it is not good for the country.Sachs has one idea towards the end that is kind of interesting: that Wall Street be tasked with earning and churning the financial investment monies for our infrastructure retooling. I actually really like that idea, and think the incentives could be restructured to focus on this. Once the wonky windfall profits not only on Wall Street, but everywhere in corporate America, are tempered with reasonable tax policy and closing of tax havens and loopholes, people might remember they must play well with others. We don’t have long, however: we should already be well into flood abatement.There are lots of other things lightly touched on in this book, including a discussion of why “free trade” is not free for everyone. Sachs has a blog where he makes notes and posts articles and media accounts that he find interesting or thinks we need to discuss. In the summer of 2016, his important and informative discussion about the election, globalization, immigration, and Brexit was subsequently picked up by NPR and discussed on radio. He pointed to what is now called “populist” anger and explains the real substantive issues behind this. Jeffrey Sachs is professor of economics and sustainable development at Columbia University, former director of the Earth Institute, and special advisor to UN Secretary General Ban Kin-moon. He is the author of The End of Poverty.

      2 people found this helpful

    • 3/5
      I voted for Hillary Clinton twice in 2016. She beat Bernie Sanders in the first race, only to lose to Donald Trump in the second in a close race. Bernie Sanders relied on Sachs' economics advice. Therefore, I find it important to educate myself on the issues in this democracy and to read this book to illuminate my ignorant mind.

      Sachs lays out a powerful and persuasive case for engaging in new challenges for America. In particular, he suggests that we move investment away from the militarism that has consumed our deficit-laden budgets since 1980 and towards domestic challenges.

      Some will surely label Sachs' plan as socialist. But if you get past that word and delve into the arguments and data, Sachs has very good points. In fact, the happiest and most prosperous countries today (and America is not among them) are socialist in their orientation. Surely, we in America can learn from these situations instead of engaging in a red fear.

      My main concern with Sachs' plan is that it moves too quickly too soon. History teaches that too much reform can be the enemy of true reform as much as obstructionism. We must pick a few hard challenges to engage in and focus. Unfortunately, hyperpartisanship in Washington is crippling our national leadership. The easy part is identifying challenges. Even finding solutions is somewhat easy these days. The challenge is working together with the other, whether that other be a protester or an evangelical, someone who watches Fox News or someone who watches MSNBC. We must learn to work together again. I'm left wanting to hear Sachs' ideas on that.

      1 person found this helpful

    Book preview

    Building the New American Economy - Jeffrey D. Sachs

    1

    WHY WE NEED TO BUILD A NEW AMERICAN ECONOMY

    My purpose in this book is to explore the economic choices facing the United States and its relations with the rest of the world at the start of the new administration of President Donald Trump and the new Congress. One reason why Washington has been in gridlock for years is that both parties have pursued a deeply flawed vision for America. The Republicans have called for a smaller government when we need a government that does more and better to address slow economic growth, rising inequality, and dire environmental threats. Democrats have called for a larger government but without clear thinking about priorities, programs, management, and finances for an expanded role.

    This book charts a better course for American public policy based on long-term societal objectives around the concept of sustainable development. I outline a strategy of scaled-up investments, both public and private, and the means to finance them. I emphasize throughout that the way to break Washington’s gridlock is to build a new national consensus based on local brainstorming in every part of the country. President Trump and the Congress will remain stymied until they both hear from people across the United States that the time for major change has arrived, with clear goals, policy direction, and financing.

    My core contention is that with the right choices, America’s economic future is bright. Indeed, we are the lucky beneficiaries of a revolution in technologies that can raise prosperity, slash poverty, increase leisure time, extend healthy lives, and protect the environment. It sounds good, perhaps too good to be true; but it is true. The pervasive pessimism—that American children today will grow up to worse living standards than their parents—is a real possibility, but not an inevitability.

    The most important concept about our economic future is that it is our choice and in our hands, both individually and collectively as citizens.

    The reasons for the pessimism are real. The United States is experiencing the lowest growth rates in the postwar era. Economic growth recorded since the 2008 financial crisis has been about half of what was forecast in mid-2009: 1.4 percent annual growth from 2009 to 2015 compared with a projected growth rate of 2.7 percent. Around 81 percent of American households, according to a recent McKinsey study, experienced flat or falling incomes between 2005 and 2014¹. At the same time, the inequality of income has soared over the past 35 years, adding to the concentration of wealth and income among the top 1 percent of the population. In 1980, the top 1 percent took home 10 percent of household income; in 2015, it was around 22 percent.²

    While unemployment has declined, from a peak of 10 percent in October 2009 in the depths of the recent financial crisis to the current low rate of around 5.0 percent, part of that recovery has been achieved because individuals of working age have left the labor force entirely, out of frustration at low-paying jobs or no job opportunities at all. The ratio of overall employment relative to the working age (25–54) population has declined from 81.5 percent in 2000 to 77.2 percent in 2015.

    If this were not enough, the headwinds seem set to continue. The antitrade sentiments from both political parties over the 2016 election season, leading both Donald Trump and Hillary Clinton to reject a draft trade agreement with Asia, reflects a widespread feeling that America has lost jobs in large numbers to low-wage competition with China and other countries, and that more such job losses are to come. Recent research suggests that such fears, long scoffed at by economists, are based on reality.³ U.S. manufacturing sector jobs have shifted overseas, as well as being lost to automation. U.S. counties on the front lines of competition with Chinese manufacturing have experienced the largest job losses.

    Automation has become another source of high anxiety. Here, too, economists have generally scoffed at the public fears that machines will take away our jobs.⁴ Hasn’t the entire industrial era proved that view wrong? they ask rhetorically. Haven’t new machines and technology always created more jobs than they have cost? These questions are fair, but so too are the worries. The advent of smart machines seems to be shifting income from workers to capital, driving down wages, and contributing to the frustration low-wage workers feel about finding a job with a livable wage. Some workers do seem to be squeezed right out of the labor force, and the share of labor earnings in national income is falling, a sign that decent jobs indeed are being overtaken by the robots.

    So, yes, Americans have the right to lots of economic fears: of Wall Street traders who destabilize the economy; of the top 1 percent who corral the lion’s share of economic growth; and of jobs and wages lost to China and the robots. But there are still more reasons to worry.

    The federal budget deficit in 2016 was around 2.9 percent of gross domestic product (GDP,) but given current trends will rise to around 4 percent of GDP in the coming years. The consequence of chronically high budget deficits is rapidly increasing public debt. The Treasury debt owed to the public here and abroad has soared from 35 percent of U.S. GDP at the end of 2007 to 75 percent at the end of 2015. The Congressional Budget Office warns that under current fiscal policies, the debt is likely to reach around 86 percent of GDP by 2026 and 110 percent of GDP by 2036.⁵

    Debt sustainability is one part of the future we leave to today’s children. Environmental sustainability is, of course, the other. And if there is one endangered elephant in the room, one existential worry to keep us up at night, it is the relentless, punishing, ongoing damage that Americans and the rest of the world are doing to the environment. We can’t rest easy on our economic future, and I would not advise doing so for a moment, until we find a path to climate safety and true sustainability for our water, air, and biodiversity. Most importantly, we need to overhaul the energy system, to shift our reliance from carbon-based energy—coal, oil, and gas—to noncarbon energy sources—wind, solar, hydro, nuclear, and others that do not cause global warming. Fortunately, America is replete with renewable energy resources. But there are many other steps we need to take to achieve environmental sustainability, and I’ll get into those in more detail in the chapters to come.

    Finally, add to these challenges our nation’s highly divisive and corrupted politics, and it’s not hard to be gloomy. Some leading economists have even declared the end of two centuries of economic growth. We are, to use their jargon, in a new era of secular stagnation. And if growth is at an end, social stability could be jeopardized as well, with the economy turning into a zero-sum struggle wherein the gains for some groups must be the losses for others.

    The doyen of the pessimists (and author of a wonderful new book, The Rise and Fall of American Growth), Robert Gordon, says we’ve simply run out of big new inventions to keep the economic engine going.⁶ Gordon argues that smartphones and the Internet simply don’t measure up to mega-breakthroughs like the steam engine, electricity, TV and radio, the automobile, and aviation—the great technological drivers of two centuries of economic

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