Started: August 2015
Completed: End of September 2015
Recommendation: This book is already several years out of date, but many of the principles apply. I think the value of the book will go down as time goes on and many of the underlying assumptions are no longer valid.
Recommended By: Nobody
Review:
This is not a "sky is falling" popular economics book. Rather, it is an investigative look at the economic position of the United States circa 2010 and what can be done to remedy the economic situation. The economics of the book are guided by broader social issues, particularly poverty, and the general issue of disenfranchisement of the individual. Sachs makes extensive use of the term "
Corporatocracy" to describe the current political situation in the United States. The fundamental premise of the book is that income inequality is being driven by a free market economy to the detriment of the poor. Dr. Sachs has a history of trying to help the poor and he feels that this can best be done through an emphasis on support institutions to include education. He would divert considerable sums from other activities (such as war) to invest in children of chronically poor families in the hope that the history of poverty can be changed.
His arguments are compelling and his willful desire to help others is evident. His disdain for corporate opportunism in the face of governments trying to find work and economic advantage for their constituents is emphasized by his feeling that governments should coordinate (some might say collude) to insure that a corporate tax base is not constantly eroded as increasingly global corporations pursue the location of lowest taxes.
Recent developments suggest that at least Dr. Sachs is not the only one to think this kind of thing should be stopped and may offer third party credence to his concepts. On the other hand, it is possible that his analysis of this particular issue is just riding down a well-trodden economic path of which I am unaware.
It is clear from this work, however, that the economics problems of the United States cannot be resolved in any way by reducing government or continuing to reduce taxes. Since it simply is not possible to get blood from a stone, it seems unlikely that raising taxes on the poor or even the middle class (by class, I mean class of wage earners, not some indistinct social class). Like everyone these days, Dr. Sachs jumps on the concept of closing loopholes in the tax code (this is common sense that only eludes politicians who want to stay in office more than helping the USA), but shows that simply closing loopholes is not nearly enough. The rich are going to have to contribute more. If for no other reason, then that they have the money, the rich are going to be the subject of increased taxes. Sheer growth cannot sustain us and the illusion that there is some sort of causal link between reduced taxes on the rich and growth has been thoroughly debunked (one-sided analysis from
Salon and a more unbiased analysis from the
International Monetary Fund). Likewise government excesses and mismanagement (though present) make up such a tiny portion of the deficit and debt that making fixes in those areas are a red herring.
Social Security, Medicare, Medicaid, along with Unemployment, government retirement, and veteran's benefits (generally referred to as "mandatory" spending for a good reason) comprise the largest section of the budget. The remainder is literally broken into two equal halves (defense and everything else). The
Congressional Budget Office created a nice graphic showing this split. Dr. Sachs points to defense as a place to realize substantial reductions (he advocates cutting it in half) and additional taxes on the rich as a place to reduce the deficit. He offsets some of these gains, however, by increasing spending on the poor (e.g. increasing the food stamps program and grants/aid for education). The net still is a reduction in deficit which is greatly needed.
As time goes on, however, our opportunity to take the reigns and resolve our budget deficit issues without saddling future generations to Greek style Austerity Programs is swiftly sliding through our fingers.
