A Closer Look With Arthur Levitt: Jeffrey Sachs (Audio)

u N Sustainable Development Solutions Network. He has twice been named among Time magazines one hundred Most Influential World Leaders. He's a New York Times best selling author. His books include The End of Poverty and the Age of Sustainable Development. His newest book is Building the New American Economies, Smart, Air, and Sustainable, in which he shows how we can find a path to growth and economic progress that is both

fair and environmentally sustainable. He joins me now for a closer look, jeff your latest book is about why we need to build a new American economy. Did we stop building things? Did our government stop investing in its own future? Is that what provokes this writing The US economy in some ways has continued to do what it has done for almost two centuries, and that is to achieve economic

growth and to bring new technologies to the markets. So there are some wonderful accomplishments of the US in information technology, in a Tesla, electric vehicles, in SpaceX, and so forth. But there are two huge shortcomings in the US economy that we really feel socially and politically. One is that our society has become incredibly divided on income and on

the basis to a large extent, of educational attainment. So people in the US that have a college degree, by and large are doing well, feeling well, having rising income

standards in life expectancy. Those who have less than a bachelor's degree are having a pretty hard time, and those with a high school diploma or less as their highest education attainment are are really bearing the brunt of technological change and globals a So that's one big problem, which is an increasingly divided society and people just not making it. We even have rising death rates for working class white Americans that are experiencing more substance abuse, more suicides, more despair.

The second big problem one that a lot of people just want to look away at and pretend doesn't exist, but most of us who live our lives know that it is real. Is that we're really wrecking the environment in a pretty thoughtless way. And the two big problems there are the global warming, which we know to be caused by our heavy dependence on coal, oil, and gas.

And second, we are really depleting so many vital parts of the environment, like the groundwater that provides the basis for a lot of our irrigated agriculture, or the bio diversity that's just dying off, not only in the United States but worldwide. So I don't despair of our economy.

I think it's a pretty impressive that we have a eighteen trillion dollar annual output about sixty thou dollars per person produced in the United States is very impressive, but it could be much much better for our well being and for our long term sustainability. Well, I'm wondering whether Trump's plans really coincide with the goals that you've outlined in the book. He proposes a package of tax breaks meant to help spur a trillion dollars and spending on

roads and bridges. Do you think the tax breaks are enough to get the job done in terms of public works projects. I think that our country has a little bit of a problem with what psychologists called delayed gratification, which is the ability to wait a little bit, save for the future, invest for the future, and then reap

the benefits. Uh. Too many people and too many influential lobbies, unfortunately want want the benefits right now, and so they want tax cuts, tax cuts, tax cuts, But we need the taxes to pay for the education, for the science and technology, and for the public part of the infrastructure in order to be able to have the higher productivity

in the future. And we need to pay extra right now in order to mobilize technologies like wind and solar power, which are a little bit more expensive than coal, but the heck of a lot cleaner and safer. And so it's spending a little bit more for a safer future. That's delayed gratification. But we don't have it right now, and the populists like Trump play to be we gotta have it now. We'll continue this conversation with renowned economist

and Columbia professor Jeffrey Sachs in just a moment. This is a closer look with Arthur Levin, it's twelve minutes past the hour. This is a closer look at Columbia professor Jeffrey Sachs. We've been discussing issues like infrastructure investment and income inequality, covered in his new book Building a New American Economy. I'm Artha Levitt, jeff Unemployment at four point seven, stock market going reasonably well, and Janet Yellen

suggesting that we're back to normal. How do you see this economy and what do you regard to be its major weakness from a macroeconomic point of view, the one that Janet Yellen looks at. We're doing okay. We have recovered from the two thousand and eight financial crisis. The economy is growing, and employment is relatively high. The problems that we have are not business cycle problems. They're structural problems. Now that we're are we getting the most human value

out of the eighteen trillion dollar gross domestic product? Are we sharing the benefits of prosperity widely enough? Are we looking after those who are really hurting? Are we investing for the future. That's where we fall short, not so much in the short term quartered a quarter macroeconomics, but in the longer term questions of what we want to be building for this country. The angry voters in the

last election weren't wrong. All the wealth seems to be accruing at the top, and to them, I suppose the game does seem rigged. Is there anything that you think we can do to redirect this imbalance? I think the basic lesson of advanced market economies is that it's normal that there would be pretty high inequality of market returns, but that these can be reduced by government policies that ensure that everybody has access to education, healthcare, vacation time,

maternity leave, and so on. So the countries they admire the most are Germany, Netherlands, Denmark, Sweden, Norway. I think they run the most balanced ships of states. Canada I think does better than we do, also in that they're all market economies that like the US, they're all very prosperous, but they tax some more than we do, and they use that added revenue to ensure that kids don't have a crushing student death. They ensure that every poor child

can get a decent education. They ensure that everybody has vacation time, which I think we're rich enough to ensure. Right now, the States is the only rich country that doesn't give even a single day of guaranteed paid vacation to the labor force, and I think that's just wrong.

Now we're rich enough to do better and fairer than that. Well, that turns us towards emphasis on Wall Street, where you're suggesting a turn away from high frequency trading and hedge fund trading to long term capital formation, and that inevitably those who have spoken about this topic before you and those who will come after you will be talking about some sort of tax policy to deal with our short

term thinking in the markets. I've always had reservations about using tax policy to influence market structure, but I be interested to know how you feel we to deal with this. First, I want to thank you for speaking out about these issues for so many years. Uh. It is a little bit crazy that we're spending a vast amount of money and taking the best minds in our country to shade the time of trading by nanoseconds. There isn't a single

human benefit to that activity. There are winners and losers, but it's a negative some game because that arms race too. Trade in in nanoseconds faster accomplishes no social purpose, but it does cost a lot of resources. And I think the hedge fund industry has a different problem, which is that I don't see the social value to it either, in that uh they've charged choose huge fees. Of course, over the years, they have underperformed the market on average

for more than a decade. There has been one scandal after another of insider trading or financial fraud. I follow each of them closely. I think that uh, this business of thinking that there are gurus that are going to systematically and consistently outperformed the market is a mythology to begin with. And when these people uh try to live up to their mythical status, many of them end up

breaking the law. And so I'm worried about our general moral framework of Wall Street because I think it has become an incredibly corrupted place in one financial fraud after another, whether it's inside or trading, or live or rigging, or selling known toxic assets to count parties, front running a front,

running takeover bids with insider information, and so on. And I wish that our regulators were well, they've they've really other than collecting some fines, they've not really faced the moral question of Wall Street, and uh, we just haven't. We've had a debate about it, but we also haven't seen statesmen on Wall Street coming forward and saying we have to clean up our act even when there's such

an egregious behavior. As well as Fargo and others. He's a world renowned professor of economics, leader and sustainable development, senior u N advisor, and best selling author whose latest book is Building a New American Economy. He's also the co recipient of the two thousand and fifteen Blue Planet Prize, the leading global prize for environmental leadership. Columbia Professor Jeffrey Sachs will return for part two of this interview next

week at this same time. By the way, if you have comments about the show or suggestions for topics, please email me at a Closer Look at Bloomberg dot net. That's a closer look one word at Bloomberg dot net and follow me on Twitter at Arthur Levitt one word. This is a closer Look with Arthur Levitt. It's twenty five minutes past the hour. This is a Closer Look

with Arthur Levitt. Arthur Levitt is a former chairman of the u S Securities and Exchange Commission, a Bloomberg LP board member, a senior advisor to the Promontory Financial Group, and a policy adviser to go Leman Sachs. This week, we continue our closer look renowned economist and Columbia professor Jeffrey Sachs widely considered to be one of the world's leading experts on economic development, global macroeconomics, and the fight

against poverty. He's a Senior u N Advisor for Sustainable Development and best selling author whose books include The End of Poverty, The Age of Sustainable Development, and his newest book, Building the New American Economy. You spend your days with college students, jeff will the young people save us on climate change. For young people, they've been hearing about this issue. They've been studying it in from elementary school through high

school to university. They have heard rightly from uh the scientists in the world that they're going to be bearing the brunt of what's happening. So there's a lot of interest in this. There's among the college students no doubt that this is real, and there's a lot of concern that our government doesn't act. China owns five of the world's six largest solar manufacturing companies. Aren't these the jobs

we should be worried about? Absolutely, China is on a breakneck course to dominate the sustainable technologies of the future.

They actually have something called Made in China Initiatives, and it's an industrial policy that says China should have cutting edge global expertise and competitiveness in industries including information technology, semiconductors, robotics, electric vehicles, smart shipping, fast inter city rail, advanced a bonics and passenger aviation, advanced agriculture, genomics UH and new materials with the renewable energy UH in proto voltaics among those.

So they've really set out a bold, clear, explicit agenda. UH. This is not just the textbook pronouncement. It's what the government's actually doing and allocating resources. And so what are we doing spinning our wheels or even canceling In Trump's budget? UH? Something called aren't e r PAY is the Advanced Research Program for Advanced Energy in the Department of Energy. It's

a it's a wonderful program. It's looking at cutting edge technologies for batteries, for example, for high quality, low cost, low weight electric vehicles, and it's been going on for a number of years. And because Trump is trying to pretend that the climate change isn't real, he cut out all through the government. He obviously had his team go through every place that climate change was mentioned, and then tried to acts that program. Well, who's going to produce

the renewable energy of the thirties on this strategy. It won't be us if we continue that way, It'll be China. Solar power is now cheaper than coal in some parts of the world, and I suspect will be everywhere soon. Don't you think the markets will be able to deal with the clean energy and the right way. Markets are are absolutely playing a very clear role in certain ways right now. For instance, it's heavily polluting oil stands have

taken properly a big market hit. Despite the Trump saying We're gonna be bringing those oil sands to market through a new pipeline. What's actually happened is that Shell sold its holdings, Conical, Phillips sold its holdings. Chevron is about to sell its holdings in the Canadian oil sands. Stat Oil sold its holdings in Canada. So the markets say no way. And another dramatic case in just the recent days is the Tesla is now valued on the market

more than General Motors and more than Ford. So that's the market playing the right role for sure. Uh. And I actually think that the message is getting through. So even though President Trump kind of fulminates against the climate agenda, I think real investors know the difference and are going to be putting more money into coal plants. But what is also true, and I think it's important to note,

is that some of these clean technologies cost more. They really do still cost more because while solar maybe cheaper, it can't be stored so cheaply. We'll continue this conversation with Columbia professor Jeffrey Sachs, also the director of the Center for Sustainable Development at Columbia University. In just a moment, this is a closer look with Arthur Levin. It's twelve minutes past the hour. This is a closer look at economist and Columbia University professor Jeffrey Sachs. He's also a

best selling author and syndicated columnists. And I'd like to talk about one of your recent columns Jeff and the Boston Globe on our Wars in the Middle East. Could you, uh, well, let's say, what do you think of National Security Advisor hr McMaster and Defense Secretary Maddis? Are these moderating forces

in Trump world? Tell? What I do think is that our foreign policy establish uh, not the particular individuals, but really the the security state that's been there from Clinton through Bush, through Obama and remains largely in place till now, has taken us into too many wars in the Middle East.

And uh, we should not have fought the wars of choice in Iraq in two thousand three, or overthrowing Kadafi in Libya in two thousand eleven, or trying to overthrow Assad in Assyria from two thousand and eleven until this very day. I think this has been very naive, very costly, very destabilizing, and increasingly dangerous because it puts US on a collision course with a lot of other powerful countries. It's also unleashed the wave of millions and millions of

refugees that in turn is destabilizing European politics. So these are what I call wars of choice. Would you end the fighting in the Middle East right away? And would you end it everywhere right now? Just pull out. Yes, what I would do is stop the covert operations which were undertaking in probably a dozen countries right now. I would stop the support of the anti Assad rebels in uh Syria. I would stop the US military and often covert presence in Yemen, in Somalia, in Syria, in Iraq,

in Afghanistan. But what I would do is a note that the powers of the region, Iran, Turkey, Saudi Arabia have a real interest in uh stopping the Islamic State. For example, none of those standing sovereign nations wants this kind of violent, super violent renegade the group running around in their territory. Our wars have actually opened up the space for these horrible uh jihades groups. And so what

I would do is pull out the US military. But I would try, through the U N. Security Council to say that the major powers, especially China, Russia, the United States, Britain and France. I push the regional powers, the ones that live with this day in and day out, to get their act together to actually get end this uh

isis phenomenon. Realizing that isis is a it's horrible, it's it's a vulgar, it's uh incredibly brutal uh in medieval but it's only thirty or fifty thousand in total, and they're so completely outnumbered by the standing armies of the region.

If we did this systematically, not with the US, and it's a bombastic way, and I used the term because we bomb all the time if we weren't doing it, but we were doing it through a U N framework that recognized the role of the regional powers and didn't keep taking sides so relentlessly that we're on the Saudis side, were against the Iranian side, and so forth, we would actually stabilize a region that urgently needs stabley. Can this

be done almost immediately? I know that you wrote an article on the Boston Globe recently that the United States should immediately end its fighting in the Middle East? Do you mean everywhere and just pull out suddenly? I'm alarmed, and I would alert everybody to the fact that we're right now on a path of escalation. We've had the Tomahawk drone attacks in Syria. We've had the mother of

all bombing bomb in Afghanistan. We've had major drone strikes in Iraq which killed hundreds of civilians, were rattling, beating the drums of war with regard to North Korea. This is rather alarming because we have a president who is completely inexperienced in foreign policy. He obviously changes day to day even in basic questions, basic alliances, and basic decisions. So he's impetuous, inexperienced, and at the command of the most powerful arsenal in the history of the world. And

I don't find that a comforting combination. I find it a very worrisome thing. And I wish that some grown ups in Congress, not just in the executive branch, but in Congress, would say, this is a democracy. Congress that declares war, the president does not have the authority to go to war on his own. And before we do something that could be disastrous, absolutely tragic, for example, attacking North Korea and with the potentially horrific consequences, that we

need some better governance. He is a professor and director of the Center for Sustainable Development at Columbia University. The New York Times called him probably the most important economist in the world, and he has twice been named among Time magazines one hundred most influential World leaders. He's also a New York Times best selling author whose new book is Building a New American Economy, Smart Fair and sustainable

professor Jeffrey Sachs, thank you for joining us. By the way, if you have comments about the program or suggestions for topics, please email me at a Closer Look at Bloomberg dot net. That's a closer Look one word at Bloomberg dot net, and follow me on Twitter at Arthur Levin when we're it. This is a Closer Look with Arthur Levitt. It's twenty five minutes past the hour. M