Jeffrey Sachs Addresses Economic and Environmental Crises in Inaugural Lecture for Social Justice
Includes full video of talk and Q&A session
“This is a room filled with future leaders,” Jeffrey Sachs told the students gathered in Founders Hall.“And the problems we discuss today will all have to be solved by you in the future.”
On Monday, April 13, Sachs gave the Inaugural Lecture for Social Justice, sponsored by the Offices of the President and Provost; his talk was called“Emerging Prosperous, Fair, and Sustainable from the Global Economic Crisis.” Sachs is a professor of sustainable development and health management at Columbia University, as well as director of Columbia's Earth Institute, and also serves as an adviser to U.N. Secretary-General Ban Ki-moon. He is considered to be one of the leading economic advisers of his generation.
Sachs stressed that the economy means more than simple dollars and cents:“It's the life-and-death struggle of the poor, and the plight of the planet.” He compared the current economic crisis to a slot machine turning up three lemons, and defined the economy by three“uns”: It is unstable, unfair, and unsustainable.
The instability comes as a result of what Sachs calls an“odd period” in American society, an era that began in the 1980s with Ronald Reagan's statement“The government is not the solution but the problem.” Deregulation became the norm, as the cutting back of government services, the lowering of taxes, and the capping of public expenditures were seen as routes to economic prosperity.
Sachs assailed the term“free-market economy.”“There is only one such economy, and it's in your introductory textbooks, because they are bad textbooks,” he said.“They portray an economy which doesn't exist.” The danger of free-market economics, he said, is the false idea that a market economy is a self-organizing system.“We've spent 30 years living a fantasy.”
Also contributing to the current instability, according to Sachs, is the fact that for 20 years the Central Bank was led by one person, Alan Greenspan.“It's bad to have a government institution governed for 20 years by anyone,” he said.“People don't own positions.” Greenspan took an activist approach to the monetary policy of the Federal Reserve, increasing the money supply and lowering interest rates when the economy weakened.
In the late 90s and early 2000s, said Sachs, there were three“bubbles” of economic prosperity. The first occurred in 1997, when the U.S. lent money to Asian banks to shore up their financial systems. The second came in 1998, with the dot-com boom and startup companies worth billions of dollars. Finally, in 2002, interest rates dropped to low levels in the wake of 9/11 and the housing market responded in kind.“Can you sign your name? Here, have a house. Can't sign your name? Have a house anyway,” Sachs joked.
Then, as other countries' banks began borrowing from the U.S., the worldwide stock market soared. But halfway into the first decade of the 21st century, the bubbles crashed to Earth.“The world suffered $40 trillion in losses,” said Sachs.“There was more consumer debt, more houses built than people could afford.”
The unfairness of society also played a significant role in exacerbating the economic crisis.“The keys to power were handed over to the financial markets,” said Sachs.“American power was radically dominated by Wall Street. CEOs took over American monetary and financial policy, deregulated everything, made tremendous amounts of money, and left taxpayers with several trillion in losses.” The prominence of the oil industry, especially during the two Bush administrations, said Sachs, also adversely affected the environment, as oil companies fought efforts to address climate change.
Today, said Sachs, the U.S. has the worst social indicators among the world's highest-income countries.“For 30 years there have been no innovations in social policy,” he lamented.“The health system has been unreformed, children are chronically hungry, our infant mortality rate is high. And society treats it as normal when hunger and health needs are unattended.” On a global scale, he added, the poverty is even more shocking:“I've looked at people who are hungry to the risk of death.” The world, he said, cannot remain on its present course and sustain itself.
“You are the answers,” he told the audience in Founders.
Sachs offered no easy solutions or quick fixes, but he did provide hints to tackling the problems head-on.“This crisis is an opportunity that shouldn't be missed,” he said.“We have the best president in modern history to change the direction of the economy.” He said that the market economy needs to be put“back in place,” that the government should be efficient, monitored for lawfulness, and protect those who can't be protected by the market alone. Sachs also suggested that the market be circumscribed within environmental constraints:“We will tell Washington what kind of cars we should be driving, in which technologies we should invest.” A new food system (agriculture, he said, is the number one emitter of greenhouse gases) and a renewable energy system are also necessary.
“We are so far from out of the woods,” Sachs concluded,“and we must do all we can to shift the world's path to a stable, fair, sustainable trajectory. This is the job of your generation.”