Good Morning America

Jeffrey Sachs spoke on his new book, The Price of Civilization, Friday, October 21st at the Brattle Street Theater, hosted by the Harvard Book Store. Note: In my opinion, Sachs is a much better speaker than a writer. The book is great for the numbers, but if you have a choice, go see the guy.
“One of the biggest surprises was how disappointing this administration’s been.” So begins Jeffrey Sachs, Director of The Earth Institute and professor at Columbia University, in his steady, measured tone. “And that’s not just the accident of a tough opposition.” Sachs, like countless other liberals, recounts the deep chagrin he felt upon the realization that Barack Obama was not actually planning on changing the system. The feeling lingering about his words, then and throughout his talk at Brattle Theater, is that of a doctor who had, in a sudden, shocking moment, discovered that the problem was much more serious than he had thought.
In essence, that is the story Sachs presented last night in his talk on his recent book, The Price of Civilization. According to Sachs, unemployment and the economic crises are mere symptoms of a deeper problem, one he diagnoses as the combination of the structural crisis of a changing global economy, and an absent political system that has failed to meet the challenge. Sachs depicts our present condition poignantly with a few graphs and some history. Inequality in the early twentieth century spiked in 1929, then steadily decreased, remaining at a dramatically low point following the New Deal and World War II, until the 1980s. It is there that the shaky line of the top 1%’s share of income begins its clawing climb. Here we are today, where the wealthiest 1% of American households’ total net worth exceeds that of the bottom 90%. It really is a neo-Gilded Age nightmare in distribution, the villains of which are, according to Sachs, globalization and Ronald Reagan.
Globalization itself wasn’t new, but the technological changes of the ‘70s information age amplified its effects in fundamental ways. Suddenly, the value chain was split among countries around the world, driving concepts like “the American car” to extinction as new models followed construction paths racing through Asia and Latin America. In the face of emerging economies with populations eager for low-paid labor, the average American worker found it hard to compete. Well-educated Americans still saw their incomes rise, as they capitalized on the niche of more sophisticated and innovative jobs. But it was no longer possible for the guy with the high school diploma to support his family through the factory job, and difficult too to even hold it. However, it was a transition that, as Sachs reminds us, affected pretty much every high-income country. Yet, America’s increase in inequality “completely outstrips what’s happened to any other high income economy.” And that’s because of the U.S.’ distinct political reaction. Whereas in other countries, “politics kind of leaned against the wind”, balancing against globalization’s gusts with more generous social programs, the U.S. “piled on”, giving the rich a further boost and cutting off support for the poor. If widening inequality was globalization’s natural child, politics nurtured it. Or, in Sachs’ words, “globalization came, but so did Ronald Reagan.”
Jeffrey Sachs names the culpable presidents with the vehemence of someone who can’t help but flash angrily in the face of a moral wrong that has gone without rectification. From Carter onward, no one is spared the tongue-lashing. Carter began the process of deregulation, which Reagan both sped up in the financial, telecommunications, environment, and energy sectors, and combined it with a demonization of taxes into a form of “subservience for the state”. Financial deregulation was immediately followed by financial abuse, which was not rolled back with the incoming Democrats. “Clinton’s ‘clever idea’ was to bring Wall Street to the Democrats, just like the Republican Party administrations were filled with Big Oil.” Sachs emphasizes bitterly.  Bill Clinton continued to bless deregulation and low taxes for the rich. The fight over taxes has become the fight over single percentage points. It’s almost inconceivable now to imagine a return to the days when top marginal tax rates settled in the ‘70s under Johnson (after Reagan, it has remained below 40%.) And there is an even deeper problem beneath the bipartisan consensus that the rich deserve a break.
One of Sachs’ skills is to utilize his wide-ranging knowledge to peel back each layer of societal gangrene, in an attempt to get to the heart of the matter. He is the clinical economist par excellence, one who sees changes in the economy not merely as the result of the Fed’s decisions, but as reflections of the workings of a societal structure. “It’s not that the American people hate taxes”, Sachs explains with gravity. Surprisingly, data from September 2004 to December 2001 show that around 60% Americans have actually consistently favored a repeal of some or all the Bush era tax cuts. “It’s that our political system produces a consistent outcome that doesn’t reflect public opinion.” Something’s broke in American democracy. Mass media campaigns have made them extremely expensive, incentivizing politicians to spend large amounts of their time courting corporate funds to lubricate their election bids. Obama, of course, is no exception. Sachs brings home the point with a solid punch: “this is a fatal blow to democracy if a president has to raise a billion dollars for his own re-election campaign.” And yet, curiously enough, we don’t seem to feel that government is smaller. That, Sachs says, is because “we don’t identify properly what government is.”
This is perhaps the most hard-hitting point of Sachs’ talk. He divides government’s role into four areas: defense (“which is really offense, by the way”), transfer/mandatory programs such as Medicare and Social Security, interest payments on debt, and finally, discretionary non-security spending, which is, essentially, “what we think of as government.” These are things like Health and Human Services, Education, Justice, and Housing and Urban Development. These are our schools, our law courts, our highways and our bridges, our efforts to protect the environment, our job training, our R&D. In the 1970s, 5-6% of the GDP was spent on these important functions. Under Reagan, it dropped and has remained constant between 3-4% of GDP. And the consequences of the budget wrangle is that America is currently programmed to run with a discretionary civilian spending of less than 2% of GDP. In Sachs’ words, “we are squeezing government almost to the point of irrelevancy.” Squeezing government does not result in a cleaner, more efficient system. Our infrastructure is falling apart. Our industries go abroad for lack of skilled labor. Our kids’ chances for education depend on the block they live in.  Sachs’ point is that while we can make cuts in military spending and health care (“with real reform”), we need to make new investments if we are to seriously deal with globalization, and remain a civilized nation. And that can’t be done with the current tax structure.
You can’t help but admire Sachs’ not only skilled, but vividly sincere oration. He often transitions from the steady, almost monotonous tone by which he builds up his points smoothly to a quick joke or quip (“This is not Joe the plumber wanting someday, somehow to be a plumber,” on campaigning: “Obama never seems to have dinner in the Bronx,”) which he often lets continue into an emotional statement that betrays how personal this concern is. For example: “I have loved…the first half of every one of Obama’s speeches.” Sachs notes dryly amidst laughter, “The second half is about the numbers.” He continues seriously: “But the numbers are how to pay for the dreams.” Sachs has not given up on those dreams. As depressing as that picture is, when a member of the audience asks a question about Occupy Wall Street, Sachs immediately leaps to embrace it. “This is the beginning of a movement,” Sachs says. It doesn’t really matter whether OWS itself lives or dies; there’s no way to get that anger back into the box.
Sachs’ talk is a badly needed wake-up call to how low America has sunk. And it’s compelling because it’s a message that resonates today with Americans across the country, just as we do empathize with the frustrations of Occupy Wall Street and the Tea Party. Sachs’ gift is in responding to the deep anxieties of American experience with a lucid breakdown of the policy wonks’ world of numbers and dollars that gives real data to frame their experiences. He places people’s lives in historical, economic, national, and international context, to give sense to what’s happening. It’s a mantle that intellectuals today would do well to take on too, as we begin to properly acknowledge that we would rather pay the price of civilization.