Eminent economist Jeffrey Sachs, professor and director of the Earth Institute at Columbia University, talks about politics, capitalism and other contemporary issues. Excerpts:
Has greed gone and are we moving into a new era, or are we quickly going back to our old ways?
In the US, part of the strategy actually seems to recreate the bubble. There has been a lot of pumping of money supplies and a lot of catering to the very banks that created this mess. There has to be some worry whether we are going to the core of the problem, unstable finance, climate change under control, social systems that are catering to the rich and not to the poor.
Many bankers and economists say they are beginning to see the bubble inflate even before the worst of the crisis is over.
The world economy as a whole is pushing hard against the physical resources in the world. The world economy expands, we see oil prices, food prices, start to go back up. We have environmental and resource challenges… we are going to be pressuring natural resources when the world economy is moving. I won’t call it a bubble I would call it a significant constraint. Asia’s inflation, I would not call it a bubble, although there are risks; too much easy money could lead to bad investment. But, on the whole, Asia’s recovering as it has got a lot of investments to do in urban infrastructure. In China, they are building metro lines around the whole country, that’s the kind of stimulus that keeps the economy moving, but that’s not a bubble, that’s something China needs for long-term development.
Similarly, in India, so many basic investments need to be made and that can provide a lot of stimulus for years to come, without returning to a financial bubble. In the US, we were pushing out money to get relatively poor people to buy houses they couldn’t afford. That was the bubble. Extreme structural changes are needed.
There was so much talk about how we need to relook at capitalism.
We need to look at capitalism. So far, it has been superficial. One big failure of modern capitalism is the failure to regard the natural environment as the fundamental part of the economy that needs to be cared for. It’s not going away... the environmental problems, the inequalities, and the inability of the government to deliver.