A leading world economist, who will lecture here next week, says the United States’ economy can recover by implementing five strategies, including upgrading its infrastructure and cutting defense spending by two percent.
Jeffrey Sachs, director of the Earth Institute at Columbia University, says government leaders must work together on creating effective long-term strategies to reverse the national deficit.
Photo by Pietro Naj-Oleari
“The Obama administration and Republican opposition are both guilty of irresponsible short-termism and lack of forward thinking,” Sachs wrote in an opinion piece that appeared in the Financial Times.
Sachs will give the 2010 Citigroup Foundation Lecture 4 p.m. Nov. 29 at Rackham Auditorium. The event is coordinated by the Gerald R. Ford School of Public Policy and the International Policy Center.
Sachs has been in the forefront of the challenges of economic development, poverty alleviation, and enlightened globalization, promoting policies to help all parts of the world to benefit from expanding economic opportunities and wellbeing. He was named as one of the 100 most influential people in the world by Time Magazine in 2004 and 2005, and the World Affairs Council of America identified him as one of the 500 most influential people in the U.S. in the field of foreign policy.
The United States could learn from China, which already is successfully implementing some of these strategies, Sachs says.
The recovery plan must include a significant boost in investments in clean energy and an upgraded national power grid, he says. These should be promoted through guaranteed price subsidies to clean energy to be financed by gradually rising carbon taxes.
A decade-long program of infrastructure renovation — with projects such as high-speed inter-city rail, water and waste treatment facilities and highway upgrading — also should be implemented to help the economy. These would be financed by local and federal governments and private capital, he says.
Sachs also sees the benefits from increased educational spending at secondary, vocation and bachelor-degree levels. Tens of millions of American workers lack the advanced skills needed to achieve full employment at the salaries that the workers expect, he says.
“The unemployment crisis is largely a structural crisis of job skills,” Sachs says. “It is hitting young workers — many of whom should be learning — and older workers who lack a degree.”
A fourth strategy involves boosting infrastructure exports to Africa and other low-income countries. Sachs says the costs are modest, but the benefits are huge: increased exports and boost in global goodwill and stability.
Another plan is establishing a framework to reduce the federal budget deficit to sustainable levels in five years. For example, this can be achieved in part by cutting defense spending by 2 percent of the gross domestic product, meaning ending the Iraq and Afghanistan military occupations and cutting wasteful weapons systems. Another measure, he says, should include gradually phasing out the tax subsidy on high-end health insurance.
