on October 4, 2011
In the Price of Civilization Jeffrey Sachs makes a powerful call for significant changes in the way the U.S. government manages the economy. According to Sachs, an economics professor at Columbia University, Washington has not devised policies that meet the challenge of globalization. Rather than investing in education and infrastructure, as many Asian countries have during the last twenty years, they have resorted to popular short-term stimulus measures such as cutting taxes and reducing interest rates. These problems have been exacerbated by lobbyists whose influence over Republicans and Democrats has made meaningful change impossible.
Sachs argues that the best solution for these problems is for Washington to move toward a "mixed economy" in which a more effective government plays a larger role in regulating businesses. He believes that the current problems in the American economy are structural and not short-term. With the Republicans and Democrats both seeking solutions that will prop up the economy for a year or two rather than address the structural issues, the United States is on the wrong course and not likely to return to the levels of prosperity it previously enjoyed. These problems can only be solved if the government makes a long-term commitment to investing in industry in part by raising taxes on the wealthy and reducing the growing gap between the rich and poor.
The Price of Civilization is divided into two sections. The first section covers The Great Crash and gives a thoroughly detailed description of the mistakes made by American elected officials. He critiques free market capitalism as well as those politicians who have blamed big government for the United States' difficulties in meeting the challenges of globalization. Sachs devotes the second part of the book to laying out his solutions for the economic woes that have beset the United States. His chapter on "The Seven Habits of Highly Effective Government" was especially powerful. Here, he calls for policy makers in Washington to pay more attention to planning and to stop ignoring long-term considerations. Sachs demonstrates very convincingly in this book that Washington's inability to focus on the long-term during the last thirty years has been one of major contributing factors to the nation's current economic malaise.
Sachs's bold argument is not likely to be welcomed by either Democrats or Republicans. One Republican congressman (Paul Ryan) has already published a scathing review of the book in the Wall Street Journal more or less equating Sachs's proposals with socialism. But I think Americans fed up with Washington and its inability to solve the current crisis will find many of Sachs's arguments very compelling. The majority of Americans do wish that the government could be reclaimed form corporate lobbyists and the people empowered. They do recognize that politicians on both sides of the spectrum are part of the problem.
Is Sachs right? I don't agree with him on everything but I do think he makes many valid points especially on the shortsightedness of our politicians and the methods that they are now using to attack our economic problems. I am not completely sold on Sachs's mixed economy solutions, however. I believe the key to economic policy is not whether we lean toward laissez-fair or a mixed economy. In fact, both of these have been successful in certain situations and may be part of the solution. The key is that our economic policy be smart and farsighted. In this sense, Sachs's book is at least a step in the right direction.
on October 4, 2011
In "The Price of Civilization" Jeffrey Sachs, one of the top economists specializing in poor and developing countries, turns his attention to the problems facing the United States, a task that he finds himself "deeply surprised and unnerved" to have to undertake.
Sachs is a strong proponent of the "mixed economy" and argues that while the free market works in most cases, it cannot be expected to solve all problems by itself. Government has a crucial role, and Sachs lists three primary goals: efficiency, fairness, and sustainability. In order to achieve these things, government must provide services like regulation, redistribution of income to protect the most vulnerable, and investment in public goods like infrastructure and basic scientific research.
Sachs argues that, beginning with the Reagan administration, the U.S. government has increasingly abandoned this role, and has been more and more subject to capture by corporations and the wealthy elite. As a result of this, and of a distracted consumption-focused population, policy makers have underestimated the impact of globalization and failed to make the necessary investments and adaptations to insure the country's success in the future.
Sachs' prescriptions include increased public investment, especially in education, and a dramatic reduction in military expenditure. He also argues convincingly throughout the book that marginal taxes on the wealthy should be increased, as the rich are not paying their fair share of the "price of civilization."
Whether you are from the left or the right, Democrat or Republican, this is the book you must read to understand America. It is extraordinary because it is completely understandable. There is no jargon. This is a totally understandable narrative of what America is facing today and what we as concerned citizens can do about it.
Any undergraduate in college can tell you that economics is more about advanced mathematics than anything else. Warren Buffett, America's most famous investor will tell you that if he needed calculus to make investments, he'd still be delivering newspapers in Omaha. What Sachs has done is come at us with the truth, the unvarnished, unfiltered, objective truth as he sees it.
He pulls no punches and makes no pretense at protecting anyone else's feelings and reputation. He admits voting for Obama, and then tells us why the President has failed us miserably. He will vote for Obama next time as well, but he doesn't mind making point after point why the current programs in effect and proposed can't possibly work. His analysis and conclusions are impeccable. There's no bias here. This is the information you and I as citizens of the Great Republic desperately need and we are not getting it anywhere else.
Mass media wastes our time with the same old recycled nonsense from both sides of the aisle, but not Harvard trained Jeffery Sachs. He comes right at us and tells us that Washington gives us gimmicks after gimmicks when we need long term planning that makes sense. He is absolutely straight forward when he informs us that the millions of jobs lost to China through globalization are GONE FOREVER. The problem is structural unemployment and nobody in the government has attacked it.
The answer is to RE-TRAIN the workforce and we haven't spent one penny doing it. We give people unemployment and then they sit and watch television for 98 weeks, when for $4000 per year we can put them through community college and get them ready for the 2 million jobs that desperately need filling in our economy for which there are no takers. Is anybody listening to Sachs in Washington? The answer is no one, and when you ask the author why they aren't listening. He has a simple answer.
The President spends his time at fund raisers when only elite well-off voters write checks for almost $40,000 per plate. He is surrounded by the rich and powerful who fill his ears with what THEY WANT, not what is good for America, but what is good for THEM. According to Sachs, the Congress is bought, sold, and paid for by lobbyists representing the wealthiest people, families, corporations in America. WE as citizens vote for them, and THEY the SPECIAL INTERESTS then own them.
The lobbyists take the Congressmen to lavish dinners at the finest restaurants in Washington. They give them access to whatever they need to sustain their Washington existence. They put the word out on the street that this elected official plays ball, and campaign contributions come rolling in. We know that 95% of all elections are won by the guy with more money, and the lobbyists know how to take advantage of this reality. As a society we are the poorer for this reprehensible behavior.
The Price of Civilization is divided into two parts:
PART I - The Great Crash - Chapters 1 - 8
PART II - The Path to Prosperity - Chapters 9 - 13
There are 265 pages of riveting narrative. Its seat of your pants type writing, it is simply that interesting. If you are a concerned citizen, if you are a policy wonk, if you simply care about your country, you cannot put this book down.
In the first part of the book, Sachs gives us the details about how America's prosperity was lost, no blame here, just the facts. This author is not concerned about fixing the blame; he wants to fix the problems. He has devoted his life to fixing economic problems around the world, especially in lesser developed countries. He has now realized that America, a country of such enormous wealth and power has squandered its resources in a misguided fashion, and that he is worried about his own country. He has given us this book as a roadmap for what we must do.
This is a book he did not want to write. He takes us through the decline of civic virtue which has led to a severe lack of social responsibility among those of us who should know better. Unless the rich and powerful do what they should be doing which is lead society instead of running off with a bigger and bigger share of the national income each year, we will continue our decline as an affluent society. This is covered thoroughly in Chapter 5 - The Divided Nation.
Chapter 7 is the chapter that begs to be read. It is entitled the RIGGED GAME, and the game is indeed rigged. The tax code is written by and for the rich and the corporations. Normally 10,000 long, there are 70,000 pages of exemptions for the powerful, taking a 10,000 page code to 70,000 pages. More than 70,000 pages were written to cut down on the tax burden of the powerful who are simply the top 1% with the money and ability to write the checks.
Throughout the entire first half of the book the author could not have made it clearer that we live in a bifurcated society. We have two different countries living simultaneously side by side. For the rich, it has never been better. There has been a disproportionate amount of the income in our country going to the very rich. No society in history has lasted very long with this behavior - that's what history says.
Sach's lays out the facts and some of the facts are brutal:
* Short-term measures don't generate long term results
* Massive corporations keep and book profits abroad and pay no taxes - it's just wrong
* The 35% corporate tax rate is a fraud. No Fortune 500 company in America pays 35%. It's there to humor the masses.
* President Obama's 800 billion stimulus program was just a gimmick as is his current stimulus proposal. It's a one year, one trick pony.
* Lobbyists dominate and CONTROL the United States Congress.
* The wars in Afghanistan and Iraq have achieved nothing for us in spite of more than a trillion dollars being spent, and a trillion more will be spent before they are over.
Part II Blows you away
It is in the second part of this book that we can find optimism and hope. The book is full of prescriptions and BOLD ideas. These are concepts that our politicians will never implement until a new crisis appears and it will appear. The author quotes President Obama's former Chief of Staff, Ram Emanuel that a crisis is a terrible thing to waste, and the President did waste it.
The author tells us we must get people back into schools that can give them the training for the jobs exist now and will exist in the next few years. Jobs that the Chinese and India cannot take from us because of their slave wages -18 cents to a dollar per hour.
For two years we have given unemployment benefits to millions of Americans and never forced them to go back to school to continue their benefits. We should have created the equivalent of the next GI Bill. For $4000 per year, they could have gone to community colleges and gotten the training, but no Democrat and no Republican proposed this. You could put one million people into community colleges for $8 billion per and yet the President is proposing near $500 billion to stimulate the economy and the bill won't work. For $80 billion, still a fraction of the President's stimulus proposal you could put 10 million Americans through community colleges that are now only 40% filled to capacity. There room and there's talent, why aren't we doing it?
Sachs implores us that we must increase taxes on the rich. They can afford it. He points out that all the benefits of the last 20 years, of globalization have gone to the rich and then the Congress gave them the benefits of tax cuts too. They got a double whammy on the upside. What's going on here? Oh and by the way, The Price of Civilization according to Oliver Wendell Holmes the Supreme Court Justice is TAXES. Thank you for reading this review.
on January 19, 2012
The Price of Civilization is an attempt to describe the problems Jeffrey Sachs sees in the US economy and how to fix them. It is very readable and insightful giving much food for thought. It reads well though its tone oscillates between being a dispassionate observer to an angry bystander in which emotional outbursts are included. The problems facing the US are vast and politics are more polarized than anytime in the post world war era (with the measure being party voting overlap for example). At the same time there are deep issues to be solved in which paralysis compound the process with the result being much larger costs to society. The Price of Civilization is an attempt by an author who really cares about people to describe and offer guidance on how to fix these issues.
The book is split into 2 parts, the first called The Great Crash, the second The Path to prosperity. The titles make apparant the first half of the books purpose of describing our situation and problems and the second to solving them. I will start with the first part. There are many themes in the authors analysis of the problems in the US, most economic and well cited elsewhere- including wage growth and stagnation as a function of education, the divergence in incomes resulting in rising inequality. The changing diversity of society in demographics and ethnicity and resulting issues are covered in a few examples. The issues arising from globalization are discussed as well. The author makes a strong point of discussing how corporate interests seem to control politics to a degree never seen before. There is much philosophy intertwined about the degradation of society and values and how people have lost their civic duty (citing putnam's bowling alone for example).
The path to prosperity is an attempt to give a plan to set us back on the path to a well balanced life. The first step, which is casually described as what we have lost that needs to be regained is a participation in society. Aristotilian ethics and buddhism are given as examples of what leads to a good life (interesting to hear aristotle brought up here as well as in Justice by Sandel). After a description of the qualities of people that are desirable, to be knowledeable and considerate etc the author sets out his concrete goals which are then listed- he has 8. The author gives guidance on his 8 goals in general terms and this is the core of the chapter. The essentially contain raising emplyment improving education, reducing poverty, consider ecology, budget discipline, improve corporate ethics, revert to softpower national security, consider new measures of progress like gross national happiness.
There are lots I like about the book but there is much that is frustrating. The author comes off as looking to allocate blame instead of building consensus despite making a point to say he is not doing that. He seems to argue that what we need is money to fix our problems (which is true) without focusing on the need for major reform to precede it. He uses economic examples that in other places he articulates as causes of stress - Sweden is constantly brought up as a happy place with high taxes, which is true but it is a homogenous ethnic population. Diversity is the source of discontent when kin dont subsidise each other - the subject of one of the author's own sections... See Tanzi if one actually wants to do the right case analysis. The book is riddled with socializing arguments masked as obvious necessity, he makes mistakes about income taxes on super rich, ie hf managers getting taxed @ 15%, i think he means private equity (at least that is what the news is talking about because their income is capital gains not income). He argues we should all work less to increase employment citing Germany as an example- he fails to mention that in Asia (Korea, Japan, China etc) the work hours are 15% higher than in the US. There are aspects of truth to what he says- if skills atrophy then having more flexible hours instead of labour force participation volatility creates better social cohesion but its argued poorly. Look at Spain Italy and Greece where inflexible labour participation in many industries has helped create mass youth unemployment. The author uses data selectively and unconvincingly- this is a common theme. In another example he discusses how low US taxes are at the federal level relative to elsewhere with the next section giving figures including state level taxation that blows the argument out of the water! Anyway, i do believe in much of what he says- higher taxes are needed, lower spending is needed, i would like people to be more civic minded so we could form consensus but the author is too preachy. The author is disillusioned and fed up with the direction, as are many in the country for good reason. The discussion of what we have in common is well needed, the analysis of what to do though has elements of insight, but much is too clouded in anger and lack of objectivity. At times its a fun to read and at times it can be pretty tough, I do recommend it all in all.
on October 23, 2011
I am deeply concerned about the way our nation continues its descent from a beacon of democracy into a squalid plutocracy, so I've read a number of books on the subject in an attempt to understand what went wrong. Of these, Sach's "Price of Civilization" is the most succinct, insightful, and current analysis of the perfect storm of circumstances that allowed a handful of the country's wealthiest people to take control of the country. This is all set out in Part One of the book, which I recommend most highly.
Part Two of the book is a prescription for how we can reverse this national decline and restore the democracy our country's founders envisioned. Unfortunately, Part Two is as weak as Part One is strong. The prescription begins with "First, we all stop, reflect on the wickedness of our rampant consumerism, and become mindful, informed citizens..." This leads to a return to the values that made America great, a newfound willingness on the part of the rich to do "their fair share," and a transformation of our system of government from the current, two-party system in which the majority party rules into a multi-party system with proportional representation and a partial merger of the executive and legislative branches of government.
In other words, we're hosed.
Sachs closes the book by acknowledging that even if all the reforms he prescribes took place, America would still be unable to recover its greatness or its dominance as a world power. He argues that this would be a good thing because (a) we Americans could all relax a little and enjoy life a little more, and (b) the world would be better off without America thinking and acting like it's everybody's parent. I happen to agree with these conclusions. And I believe that the readiness of this nation to accept this reduced role and the willingness of people to sacrifice immediate gratification in order to reach that endpoint is effectively non-existent.
And yet, there is a glimmer of hope. Sach's tells us that this hope lies in the Millennials -- the young people in their late teens and early twenties who grew up with the Internet instead of TV. Sach's thesis is that this new generation, which is tired of the corruption and ready to promulgate change, will simply refuse to accept the mess they have been given and fight for change. Prescience? Perhaps. Not long after this book went to press, these same young people began to form a movement called Occupy Wall Street, and they are refusing to back down. Maybe, just maybe, it's possible.
on October 5, 2011
This book was able to simply explain that it's the entaglement of politicians, policy, and business greed that has caused the collapse of our economy. Mr. Sachs did a great job of helping me understand, and I'm no economist. Very well written, no matter your ideals.
on August 5, 2013
I wanted to take Jeff Sachs's course in college, but he was never there to teach it. He was too busy saving the world, and the Eastern Block countries in particular, to turn up for his fall semester class in International Economics.
If this book is any guide, that's quite lucky for me.
The book has two parts. In the first, all 175 pages of it, the author exposes what's wrong with the world. In the second part, a mere 90 pages, he offers his solutions.
One star is probably too generous for part one. If it had been written by a Zen Buddhist monk, I'd have been more lenient, I might even be half-impressed. But if this is the best one of the rock star economists of our planet can do, we're in deep trouble. I'm rather liberal in my leanings, this ought to have been right up my alley. Instead, I found myself thinking I need to take my losses and start reading something else.
EVERYBODY knows there's a case to be made for government, everybody knows CEOs are overpaid, everybody knows politicians can be bought, and quite frankly nobody really agrees with some of the weirder stuff Sachs talks about. I know that giants like John Kenneth Galbraith shared the author's aversion for advertizing, but nine out of ten people you ask would not put the advertizing model in their top 100 problems with today's capitalism. Hell, I like ads! And I have no patience for a globetrotting professor telling me I need to worship Gandhi or Buddah. Not if the book is advertised as an economics book. Jeff Sachs has his place in the pantheon of economists, but for my money (which I forked out to buy this opus) he's a crumby philosopher.
But I finished part one of the book and got to part two and my persistence was rewarded. First, somewhere around page 180 (give or take 20 pages, I haven't got the book here) the author tells you what "the price of civilization" is. It's taxes. Hats off to him for keeping that under wraps that long. Even better, his laundry list of solutions / propositions / answers to the world's ills is thorough and clearly presented and, frankly, at odds with the weirdness of the first part of the book. It comprises a list of necessary areas where we need to spend more, places where we can make cuts and ways to raise revenue, all with estimated numbers attached. I'd give four stars to the second 90 pages, with the fifth star missing because he does not back up the proposals with anywhere near as much oomph as they deserve.
Overall, though, I can't help thinking there's some type of ulterior motive to this book. Don't know if Jeff Sachs is trying to move from Economics to Philosophy or from problem solver to Zen master, but what he's doing here is attempting some type of transformation. Two stars.
on October 5, 2011
I think the book should be rated with 6 stars.
What makes Sachs outstanding is that he is a practical economist and does not get lost in abstract theories.
His strongest point is his analytical skills that derive from a blending of sciences and strong support of numerical evidence.
I admire the fact that he does not hesitate to explicitly point the finger to those he thinks have wronged.
In my opinion Sachs is one of the best economists.
I think he should definatelly send an autographed copy to Obama.
Highly recommend it.
Sachs diagnosis of America's economic crisis is based on his analysis of the different phases of the catastrophic meltdown that crashed the real estate markets and shook Wall Street financial institutions. The 2008 financial crisis started on Wall Street, but quickly spread to the entire world, urging the need for global cooperation on banking and finance. Sachs examines the fallacy of a self regulated free market. The dramatic economic collapse enhanced loss of prosperity, the government failure to fulfill its public role, and triggered the political fragmentation of the society into a divided nation.
Globalization has created major economic problems that need to be addressed, it increased the extent of tax evasion due to an excessive spread of tax havens worldwide. Multinational companies found more expediencies to evade their fair and lawful share of taxation. While workers in the US, who lack the means to compete effectively with low-paid global workers, received the hardest hit. American workers have lost millions of jobs, and those struggling in their jobs have seen their wages stagnate if not decline. Globalization requires intelligent policies to face worldwide competition.
Convincingly, he shows that the US government has been going the wrong way, cutting the role of government in domestic economy, while pledging to cut taxes and slash government spending. This, he thinks, is a failure to perceive the challenge and respond to globalization with more investment in education, infrastructure, and technology renovation, a trend that has initiated the down spin. The rich have benefited in the short run, by getting massive tax breaks, and the poor has suffered from job losses and deep cuts in services. Economic inequality, says Sachs, has reached a high not felt since the Great Depression.
He thinks that both political parties, and many leading economists have missed the big picture offering short sighted solutions, such as stimulus spending or tax cuts, to address complex economic problems that require deeper solutions, while the rich have used their wealth to strengthen their grip on power. Alarming signs around the world show that people are fed up with governments which ignore prudent governance. These upheavals are calls for greater social justice, which has erupted around the world, and recently in the US against Wall Street indifference. Protests call the rich to pay their fair share of taxes, as an urgent necessity.
The core of Sachs message, masterfully delivered in "The Price of Civilization," is the vital role of providing visionary leadership and efficient creative governance in an era of globalization. He steadfastly advocates that, "we need more government nowadays, not less. Yet the role of government also needs to be modernized, in line with the specific challenges posed by an interconnected world economy." He convincingly presents examples of applying high taxes to finance a high level of government services, as demonstrated by the Scandinavians who have balanced high prosperity with social justice.
Finally, Sachs draws a plan to turn the American economy around, and stop the devastating influence on jobs, incomes, and the environment, by facing the global economic realities. Sachs reaches deeper in his diagnosis in an overall, holistic approach to geopolitics, domestic policies, mass psychology, and the environment. He compellingly uncovers the underlying schism of our crisis, arguing it is not our abiding values, which remain strong and generous, but the abuse and political spin around them. Concluding, Sachs bids each of us to pay the price of civilization, so that we can together restore America's genius and its greatness.
on October 28, 2011
The other day, my adult daughter mentioned that she supported the Occupy Wall Street protests but wasn't really sure what they were protesting. At the time, I was reading The Price of Civilization. I referred to it often to answer her question. After finishing this book I bought eight more copies, to send to my children and give to my friends. To read and to pass on to others. The Price of Civilization is a great summary of where we are as a country today and what we will have to do to effect real change. There are a lot of charts, graphs and research references but this book is a remarkably easy read because Sachs does not dwell on one subject extensively- just gives you the high points, the research to support it and then moves on.
This is the book to read if you want a really good overview of why nothing seems to get done these days and why our elected officials seem to be ignoring most of us.
Buy this book and pass it on!