As promised I finished reading Jeffrey Sachs – “The Price of Civilization” – Economics and Ethics After the Fall. The book was an easy read but at the end of it left me feeling somewhat underwhelmed. Rebooting the US economic and political system is a tough dream to even think about.

Yes it confirms what we suspect about US politics – that it is monumentally dominated by big money and completely broken in a systemic way. The book argues for more government and better government in the economy which has also been hamstrung by the idea of low Federal taxation over many decades.

We already know that Obama’s administration has not been able to break away from the finance sector who helped cause enormous economic mayhem on the US and global economies. Sachs argues in favour of a new 3rd party. Or better a new movement (the millennial generation?) who will clean up politics. On page 249 Sachs tells this story

“The bad old joke complains about the lousy restaurant where the food is terrible – and the portions are small. Arguing for a larger role of government feels about the same. Yes, the federal government is incompetent and corrupt – but we need more, not less, of it.”

Fundamental generational change might be the answer but  actual voting behaviour in Western style democracies appears to be down rather than up. In New Zealand we had an election less than 3 months ago and only about 74% of registered voters (down from 79.4%) bothered to even vote. This was down on previous elections for a range of reasons including a very pointed lack of faith in the system.

I’d suspect that saying the US political system is “incompetent and corrupt” doesn’t get voters excited to vote for more of the same. The paradox is many politicians and citizens alike share this view and yet remain optimistic about the future of our economies. We want to be optimistic, that is part of human nature – but how to transition towards a more positive future when the mainstream news is still high on doom and gloom.

Sachs thinks we can do it – I hope he is right and that Presidential elections in the US produce some real systemic change but I suspect that view is too rose tinted and too much of a long shot to believe in.

This is despite a Paul Krugman OpEd in NY Time Today

“That said, our economy remains deeply depressed. As the Economic Policy Institute points out, we started 2012 with fewer workers employed than in January 2001 — zero growth after 11 years, even as the population, and therefore the number of jobs we needed, grew steadily. The institute estimates that even at January’s pace of job creation it would take us until 2019 to return to full employment.

And we should never forget that the persistence of high unemployment inflicts enormous, continuing damage on our economy and our society, even if the unemployment rate is gradually declining. Bear in mind, in particular, the fact that long-term unemployment — the percentage of workers who have been out of work for six months or more — remains at levels not seen since the Great Depression”.

Who knew the US was in such dire economic straits? Clearly whatever the US government is doing now the policy settings have no significant effect on the top line job numbers.

Let’s say for arguments sake that there are a group of new emerging leaders who might organise and promote change where would these people be found? The green movement in NZ often gets criticised for having economic ideas and policies, but perhaps other green movements around the world might be the place to look for new leaders.

After finishing this book I wanted to learn more about Sach’s past history as an economic adviser.  It seems like he has glossed over some really terrible work in Bolivia, Poland and the Russia* where he was part of grand experiment in radical shock therapy style economics that had more in common with Milton Friedman and the Chicago School of Economics than his current views.

*Sachs was in Russia in 1992 and appears to have been genuinely caught out by cold war thinking by the U.S who (were) largely happy about Russia’s economic collapse. That failure seems to have been a turning point for Sachs. Naomi Klein (on page 250 of The Shock Doctrine) describes Jeffrey as sounding

“like a boy scout who has stumbled into an episode of The Sopranos“

Clearly in The Price of Civilization Sachs has a much more Keynesian view of the world that values mixed economies and sees a place for governments to mediate against free market failures of which there have been many.

On page 186 of the book are 8 goals and targets covering 2010-2020. Why the goals themselves look eminently sensible and specific e.g – Raise employment and quality of life, reduce poverty, improve governance and so on I doubt that any 2 politicians or economists would agree on how to do any of them. Therein lies the real problem for the rest of us.

I’ve been reading Paul Ormerod for years ( waiting 2 years for his next book Positive Linking: How Networks and Incentives Can Revolutionise the World) conflicting reports on what has happened to Iceland – Jon Danielsson says that the IMF programmes in Iceland were not successful or sustainable.

To top it off we are constantly told Japan is an economic failure which does not seem true at all The Myth of Japan’s Failure. At least part of the problem seems to be the different ways that GDP is measured and some cultural spin.

Luckily I also got Daniel Kahneman’s book Thinking Fast and Slow which so far seems to offer a more insightful view of behavioural economics than anything  else I’ve read. More on that and Naomi Klein next time.

Further reading – here are some stats and economics from 2009  from Juan Enriquez. These numbers are different from the ones that Sachs proposes but useful for comparison. Enriquez also

“covers the profound changes that genomics and other life sciences will cause in business, technology, politics and society”