Idealism in a ‘deeply cynical age’

TheStar.com – news/insight
Published November 13, 2011.   By Jennifer Wells, Feature Writer

Eighteen years afterThe New York Times Magazine decreed him “probably the most important economist in the world” — he was tackling Russian economic reform at the time — and six years after the release of his seminal work,The End of Poverty, Jeffrey Sachs has let loose with The Price of Civilization: Economics and Ethics after the Fall. Turning a critical eye to his home country, the U.S. economist calls for a return to civic virtue, compassion for others and the creation of a mindful society. He spoke with the Star by phone.

Star: In early October, you addressed the Occupy Wall Street crowd in Zuccotti Park. The odd echo-locution of that speech, in which everything you said was repeated by the crowd, amplified the bond you expressed with the protestors. You are one with them, fair to say?

Sachs: I am.

Star: Can you elaborate? How would you synthesize the meaning of the movement?

Sachs: I think they are channelling a general anger in American society with the impunity of the richest and most powerful people in the country, and Wall Street is not only an important part of that, it’s also a representation of it. We have the biggest inequality of income and wealth in modern American history, but on top of that we have a political system which has fallen into the hands of the corporate lobbies and we have a business elite which violates the law with alarming frequency and a Wall Street financial centre which not only broke the law but helped to create one of the most painful financial disasters in economic history that we’re still living through. That’s why people are upset. They want a restoration of democracy. They want money out of the political system and they want a fairer economy.

Star: You described the top 1 per cent as lazy. They’ve stopped trying, you said. That’s quite an indictment.

Sachs: Well, I was saying that many behaved to game the system. And I was specifically talking about Wall Street. The CEOs. The people who wanted the easy way to phenomenal wealth, even if that way was not through their economic prowess but through financial fraud or through corporate lobbying.

Star: On Fareed Zakaria’s show, GPS, historian Niall Ferguson accused you of overstepping the mark, moving from academic to demagogue. What is your response?

Sachs: Well, I thought he overstepped the mark moving to a blatantly inappropriate ad hominem attack.

Star: You seemed upset that he was calling you names.

Sachs: I thought he was obnoxious.

Star: What does Ferguson not get?

Sachs: He has long represented powerful interests. He works with financial companies.. . . I don’t know. Those are his choices. They’re not my choices.

Star: Is there a symbiosis between the Occupy movements and what you have to say in your latest book?

Sachs: I have found in my own generation, among my colleagues and among people whom I know well, a kind of loss of civic virtue, a disappearance of responsibility, and I have hoped and believed that the young generation is ready to help lead a new era in the United States. So I was very happy when I saw Occupy Wall Street begin. I have to say that nobody can have an illusion that young people camping out in a park will by itself change America. What it has done in a few weeks is provoke questions for the first time in 30 years in American society. It’s forcing Americans to look more closely at how our political system malfunctions, but it’s only the beginning of true social change. True social change begins with public awareness. It moves to activism. There needs to be programmatic ideas that gain support and there will need to be campaigns for political power, and we’re still far from all of that.

Star: Social reform, political reform, the creation of a more mindful, virtuous society — civic virtue you said. The Price of Civilization lays down lofty goals. How do you respond to the suggestion that you’re sounding rather idealistic for an economist?

Sachs: Well, it sounds idealistic in a deeply cynical age. It may sound idealistic to say a country should be normal, that we should pay attention to income distribution, that we should care about our kids not getting a proper education, that we should learn to live in diversity not just with our minorities heavily in the under class, that we should be investing again as a society in our science, technology and infrastructure. So the fact that sounds idealistic or utopian right now, I would argue, is a measure of how far we’ve declined, not a measure of our utopianism.

Star: Globalization, unfettered markets, Reaganomics. The forces of inequality were unleashed a long time ago. How can we possibly affect change now?

Sachs: It has been 30 years, I would say, of this kind of behaviour. I think probably 50 books were written after 2008 that basically laid the blame at the financial misdealings of the past decade. Some went as far back as 1999, when Glass-Steagall was repealed. But the theme of my book is that we have deeper roots to all of this that really go back to the 1970s and especially to Reagan, who I think put the country on a very hurtful course when he declared that government is not the solution to our problems, government is the problem. It’s a sentiment that reflects a mode of political power. . . that has denigrated the idea of shared action, that has denigrated the idea of public responsibility, that has denigrated the idea of government as an instrument of collective will. And I think that a society that lives like that will be a very, very unhappy place and America is an unhappy place right now.

Star: You referenced Glass-Steagall. You are referring there to financial deregulation and moves that then-President Bill Clinton made to free up institutions from the bonds of a more constrained operating model.

Sachs: That’s exactly right. Each time we deregulated we let people that use other people’s money behave with an abuse toward the system. My interpretation is that Bill Clinton really sold the Democratic Party to Wall Street.

Star: How would you gauge your level of disappointment with President Barack Obama’s administration?

Sachs: Very disappointed. The only reason that. . . I expect to vote for him again is that I find what’s happening on the Republican side beyond any comprehension. How a pizza man with no experience at all, of any slightest discernible kind, with four women who accused him of sexual harassment, could be the head today of the Republican polling shows a society that is in complete loss of its bearings.

Star: You’re referencing Herman Cain there.

Sachs: Of course. I can’t even create a model of how this can be. I don’t have any theory except that we’re in a kind of political nervous breakdown in America. If anyone can give me a rational theory — or not even a rational, a sensible theory — of how a Herman Cain, a man so palpably inappropriate for a presidential campaign, could be in the situation that he’s in right now I would have to have a complete revision of my understanding of our times because this just seems to be a pathology of politics, nothing less.

Star: Your remedies rely on a much more interventionist, big-spending government. You call for an investment in schooling adolescents under the age of 25 at an estimated cost of between $15 billion and $30 billion. That’s a big ticket.

Sachs: $15 billion is point one of 1 per cent of GNP. We’re a very big economy. My whole career has been devoted to the proposition that if we invest even a modest per cent of our national income for public goods, for decency, for fairness and for sustainability we could have a much more successful life in our societies. The problem is that America has been led down a path of demonization of taxation.

Star: So taxation for the über-rich is central to achieving your hoped-for outcomes?

Sachs: Absolutely. What’s happening in the U.S. is so abusive that I think this will come to an end, but how much damage will be done in between is really the issue.

Star: Let’s talk about the 99 per cent. The little guy. What’s he responsible for? Where has he gone wrong?

Sachs: I think he and she watches too much TV.

Star: And is too aspirational?

Sachs: Yes, I think everybody got into the rush of the bubble. Everybody knows this was a frenetic period. I think for us as individuals we need to unplug to gain some perspective. I actually do believe unplugging the TV is literally, not just figuratively, an important part of recovery.

Star: When you went before the protestors at Occupy Wall Street, you compared the financial disequilibrium of our times to 1929 and forewarned that disaster will befall us if we don’t head it off. What will that disaster look like?

Sachs: We can see right now that the world economy is leaderless and in growing turmoil. Maybe the first disaster will come in the eurozone. Maybe it will come in the next major El Niño which, given the state of preparedness in our societies, could lead to a worldwide food crisis of profound proportions. Maybe it will come in the paralysis of our political system that leads to a spread of violence in America. I’m not pretending to have the crystal ball on any of this. What I am saying is that we are on a path that is dangerous, that is a deepening crisis that neglects the things that are obviously of most significance for us — the education of our children, the deteriorating natural environment, the growing poverty of a significant part of our population, the collapse of our infrastructure and yet we have a political system disconnected from these basic realities.

Star: You said you will continue to support the Occupy movement. How will you do that?

Sachs: I wanted to explore how we can get new politics going in the United States, so I’m interested in helping to fashion more of a platform, to define what the 99 per cent really means. I think it is around the three ideas of ending the wars, making the rich pay their fair share and expanding the investments in public goods, but that has to be defined. And I would like to give support to candidates, especially young candidates who are ready to take on the challenge of battling entrenched interests.

Star: I detect a slight note of optimism.

Sachs: Of course. I’m extremely unhappy about our state of affairs but I’m not desperate about them because I don’t think people in my generation — I just turned 57 — have the right of cynicism. The world’s not ours. The world is increasingly made up of younger people who are going to be coming into a position of leadership and it is going to be their world to make. We can help them better than we have so far. But I don’t think there is a right to be pessimistic or to be cynical. The only right we have is to work to solve the problems.

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