Speaker 1: This is a closer look with Arthur Levitt. Arthur Levitt
Speaker 1: is a former chairman of the U S Securities and
Speaker 1: Exchange Commission, a Bloomberg LP board member, a senior advisor
Speaker 1: to the Promontory Financial Group, and a policy adviser to Goldman. Sachs.
Speaker 1: Jeffrey Sachs is Professor of Sustainable Development and Professor of
Speaker 1: Health Policy and Management at Columbia University. It's the director
Speaker 1: of both the Columbia Center for Sustainable Development in the
Speaker 1: u N Sustainable Development Solutions Network. He has twice been
Speaker 1: named among Time magazines one hundred Most Influential World Leaders.
Speaker 1: He's a New York Times best selling author. His books
Speaker 1: include The End of Poverty and the Age of Sustainable Development.
Speaker 1: His newest book is Building the New American Economies, Smart, Air,
Speaker 1: and Sustainable, in which he shows how we can find
Speaker 1: a path to growth and economic progress that is both
Speaker 1: fair and environmentally sustainable. He joins me now for a
Speaker 1: closer look, jeff your latest book is about why we
Speaker 1: need to build a new American economy. Did we stop
Speaker 1: building things? Did our government stop investing in its own future?
Speaker 1: Is that what provokes this writing The US economy in
Speaker 1: some ways has continued to do what it has done
Speaker 1: for almost two centuries, and that is to achieve economic
Speaker 1: growth and to bring new technologies to the markets. So
Speaker 1: there are some wonderful accomplishments of the US in information technology,
Speaker 1: in a Tesla, electric vehicles, in SpaceX, and so forth.
Speaker 1: But there are two huge shortcomings in the US economy
Speaker 1: that we really feel socially and politically. One is that
Speaker 1: our society has become incredibly divided on income and on
Speaker 1: the basis to a large extent, of educational attainment. So
Speaker 1: people in the US that have a college degree, by
Speaker 1: and large are doing well, feeling well, having rising income
Speaker 1: standards in life expectancy. Those who have less than a
Speaker 1: bachelor's degree are having a pretty hard time, and those
Speaker 1: with a high school diploma or less as their highest
Speaker 1: education attainment are are really bearing the brunt of technological
Speaker 1: change and globals a So that's one big problem, which
Speaker 1: is an increasingly divided society and people just not making it.
Speaker 1: We even have rising death rates for working class white
Speaker 1: Americans that are experiencing more substance abuse, more suicides, more despair.
Speaker 1: The second big problem one that a lot of people
Speaker 1: just want to look away at and pretend doesn't exist,
Speaker 1: but most of us who live our lives know that
Speaker 1: it is real. Is that we're really wrecking the environment
Speaker 1: in a pretty thoughtless way. And the two big problems
Speaker 1: there are the global warming, which we know to be
Speaker 1: caused by our heavy dependence on coal, oil, and gas.
Speaker 1: And second, we are really depleting so many vital parts
Speaker 1: of the environment, like the groundwater that provides the basis
Speaker 1: for a lot of our irrigated agriculture, or the bio
Speaker 1: diversity that's just dying off, not only in the United
Speaker 1: States but worldwide. So I don't despair of our economy.
Speaker 1: I think it's a pretty impressive that we have a
Speaker 1: eighteen trillion dollar annual output about sixty thou dollars per
Speaker 1: person produced in the United States is very impressive, but
Speaker 1: it could be much much better for our well being
Speaker 1: and for our long term sustainability. Well, I'm wondering whether
Speaker 1: Trump's plans really coincide with the goals that you've outlined
Speaker 1: in the book. He proposes a package of tax breaks
Speaker 1: meant to help spur a trillion dollars and spending on
Speaker 1: roads and bridges. Do you think the tax breaks are
Speaker 1: enough to get the job done in terms of public
Speaker 1: works projects. I think that our country has a little
Speaker 1: bit of a problem with what psychologists called delayed gratification,
Speaker 1: which is the ability to wait a little bit, save
Speaker 1: for the future, invest for the future, and then reap
Speaker 1: the benefits. Uh. Too many people and too many influential lobbies,
Speaker 1: unfortunately want want the benefits right now, and so they
Speaker 1: want tax cuts, tax cuts, tax cuts, But we need
Speaker 1: the taxes to pay for the education, for the science
Speaker 1: and technology, and for the public part of the infrastructure
Speaker 1: in order to be able to have the higher productivity
Speaker 1: in the future. And we need to pay extra right
Speaker 1: now in order to mobilize technologies like wind and solar power,
Speaker 1: which are a little bit more expensive than coal, but
Speaker 1: the heck of a lot cleaner and safer. And so
Speaker 1: it's spending a little bit more for a safer future.
Speaker 1: That's delayed gratification. But we don't have it right now,
Speaker 1: and the populists like Trump play to be we gotta
Speaker 1: have it now. We'll continue this conversation with renowned economist
Speaker 1: and Columbia professor Jeffrey Sachs in just a moment. This
Speaker 1: is a closer look with Arthur Levin, it's twelve minutes
Speaker 1: past the hour. This is a closer look at Columbia
Speaker 1: professor Jeffrey Sachs. We've been discussing issues like infrastructure investment
Speaker 1: and income inequality, covered in his new book Building a
Speaker 1: New American Economy. I'm Artha Levitt, jeff Unemployment at four
Speaker 1: point seven, stock market going reasonably well, and Janet Yellen
Speaker 1: suggesting that we're back to normal. How do you see
Speaker 1: this economy and what do you regard to be its
Speaker 1: major weakness from a macroeconomic point of view, the one
Speaker 1: that Janet Yellen looks at. We're doing okay. We have
Speaker 1: recovered from the two thousand and eight financial crisis. The
Speaker 1: economy is growing, and employment is relatively high. The problems
Speaker 1: that we have are not business cycle problems. They're structural problems.
Speaker 1: Now that we're are we getting the most human value
Speaker 1: out of the eighteen trillion dollar gross domestic product? Are
Speaker 1: we sharing the benefits of prosperity widely enough? Are we
Speaker 1: looking after those who are really hurting? Are we investing
Speaker 1: for the future. That's where we fall short, not so
Speaker 1: much in the short term quartered a quarter macroeconomics, but
Speaker 1: in the longer term questions of what we want to
Speaker 1: be building for this country. The angry voters in the
Speaker 1: last election weren't wrong. All the wealth seems to be
Speaker 1: accruing at the top, and to them, I suppose the
Speaker 1: game does seem rigged. Is there anything that you think
Speaker 1: we can do to redirect this imbalance? I think the
Speaker 1: basic lesson of advanced market economies is that it's normal
Speaker 1: that there would be pretty high inequality of market returns,
Speaker 1: but that these can be reduced by government policies that
Speaker 1: ensure that everybody has access to education, healthcare, vacation time,
Speaker 1: maternity leave, and so on. So the countries they admire
Speaker 1: the most are Germany, Netherlands, Denmark, Sweden, Norway. I think
Speaker 1: they run the most balanced ships of states. Canada I
Speaker 1: think does better than we do, also in that they're
Speaker 1: all market economies that like the US, they're all very prosperous,
Speaker 1: but they tax some more than we do, and they
Speaker 1: use that added revenue to ensure that kids don't have
Speaker 1: a crushing student death. They ensure that every poor child
Speaker 1: can get a decent education. They ensure that everybody has
Speaker 1: vacation time, which I think we're rich enough to ensure.
Speaker 1: Right now, the States is the only rich country that
Speaker 1: doesn't give even a single day of guaranteed paid vacation
Speaker 1: to the labor force, and I think that's just wrong.
Speaker 1: Now we're rich enough to do better and fairer than that. Well,
Speaker 1: that turns us towards emphasis on Wall Street, where you're
Speaker 1: suggesting a turn away from high frequency trading and hedge
Speaker 1: fund trading to long term capital formation, and that inevitably
Speaker 1: those who have spoken about this topic before you and
Speaker 1: those who will come after you will be talking about
Speaker 1: some sort of tax policy to deal with our short
Speaker 1: term thinking in the markets. I've always had reservations about
Speaker 1: using tax policy to influence market structure, but I be
Speaker 1: interested to know how you feel we to deal with this. First,
Speaker 1: I want to thank you for speaking out about these
Speaker 1: issues for so many years. Uh. It is a little
Speaker 1: bit crazy that we're spending a vast amount of money
Speaker 1: and taking the best minds in our country to shade
Speaker 1: the time of trading by nanoseconds. There isn't a single
Speaker 1: human benefit to that activity. There are winners and losers,
Speaker 1: but it's a negative some game because that arms race too.
Speaker 1: Trade in in nanoseconds faster accomplishes no social purpose, but
Speaker 1: it does cost a lot of resources. And I think
Speaker 1: the hedge fund industry has a different problem, which is
Speaker 1: that I don't see the social value to it either,
Speaker 1: in that uh they've charged choose huge fees. Of course,
Speaker 1: over the years, they have underperformed the market on average
Speaker 1: for more than a decade. There has been one scandal
Speaker 1: after another of insider trading or financial fraud. I follow
Speaker 1: each of them closely. I think that uh, this business
Speaker 1: of thinking that there are gurus that are going to
Speaker 1: systematically and consistently outperformed the market is a mythology to
Speaker 1: begin with. And when these people uh try to live
Speaker 1: up to their mythical status, many of them end up
Speaker 1: breaking the law. And so I'm worried about our general
Speaker 1: moral framework of Wall Street because I think it has
Speaker 1: become an incredibly corrupted place in one financial fraud after another,
Speaker 1: whether it's inside or trading, or live or rigging, or
Speaker 1: selling known toxic assets to count parties, front running a front,
Speaker 1: running takeover bids with insider information, and so on. And
Speaker 1: I wish that our regulators were well, they've they've really
Speaker 1: other than collecting some fines, they've not really faced the
Speaker 1: moral question of Wall Street, and uh, we just haven't.
Speaker 1: We've had a debate about it, but we also haven't
Speaker 1: seen statesmen on Wall Street coming forward and saying we
Speaker 1: have to clean up our act even when there's such
Speaker 1: an egregious behavior. As well as Fargo and others. He's
Speaker 1: a world renowned professor of economics, leader and sustainable development,
Speaker 1: senior u N advisor, and best selling author whose latest
Speaker 1: book is Building a New American Economy. He's also the
Speaker 1: co recipient of the two thousand and fifteen Blue Planet Prize,
Speaker 1: the leading global prize for environmental leadership. Columbia Professor Jeffrey
Speaker 1: Sachs will return for part two of this interview next
Speaker 1: week at this same time. By the way, if you
Speaker 1: have comments about the show or suggestions for topics, please
Speaker 1: email me at a Closer Look at Bloomberg dot net.
Speaker 1: That's a closer look one word at Bloomberg dot net
Speaker 1: and follow me on Twitter at Arthur Levitt one word.
Speaker 1: This is a closer Look with Arthur Levitt. It's twenty
Speaker 1: five minutes past the hour. This is a Closer Look
Speaker 1: with Arthur Levitt. Arthur Levitt is a former chairman of
Speaker 1: the u S Securities and Exchange Commission, a Bloomberg LP
Speaker 1: board member, a senior advisor to the Promontory Financial Group,
Speaker 1: and a policy adviser to go Leman Sachs. This week,
Speaker 1: we continue our closer look renowned economist and Columbia professor
Speaker 1: Jeffrey Sachs widely considered to be one of the world's
Speaker 1: leading experts on economic development, global macroeconomics, and the fight
Speaker 1: against poverty. He's a Senior u N Advisor for Sustainable
Speaker 1: Development and best selling author whose books include The End
Speaker 1: of Poverty, The Age of Sustainable Development, and his newest book,
Speaker 1: Building the New American Economy. You spend your days with
Speaker 1: college students, jeff will the young people save us on
Speaker 1: climate change. For young people, they've been hearing about this issue.
Speaker 1: They've been studying it in from elementary school through high
Speaker 1: school to university. They have heard rightly from uh the
Speaker 1: scientists in the world that they're going to be bearing
Speaker 1: the brunt of what's happening. So there's a lot of
Speaker 1: interest in this. There's among the college students no doubt
Speaker 1: that this is real, and there's a lot of concern
Speaker 1: that our government doesn't act. China owns five of the
Speaker 1: world's six largest solar manufacturing companies. Aren't these the jobs
Speaker 1: we should be worried about? Absolutely, China is on a
Speaker 1: breakneck course to dominate the sustainable technologies of the future.
Speaker 1: They actually have something called Made in China Initiatives, and
Speaker 1: it's an industrial policy that says China should have cutting
Speaker 1: edge global expertise and competitiveness in industries including information technology, semiconductors, robotics,
Speaker 1: electric vehicles, smart shipping, fast inter city rail, advanced a
Speaker 1: bonics and passenger aviation, advanced agriculture, genomics UH and new
Speaker 1: materials with the renewable energy UH in proto voltaics among those.
Speaker 1: So they've really set out a bold, clear, explicit agenda. UH.
Speaker 1: This is not just the textbook pronouncement. It's what the
Speaker 1: government's actually doing and allocating resources. And so what are
Speaker 1: we doing spinning our wheels or even canceling In Trump's budget? UH?
Speaker 1: Something called aren't e r PAY is the Advanced Research
Speaker 1: Program for Advanced Energy in the Department of Energy. It's
Speaker 1: a it's a wonderful program. It's looking at cutting edge
Speaker 1: technologies for batteries, for example, for high quality, low cost,
Speaker 1: low weight electric vehicles, and it's been going on for
Speaker 1: a number of years. And because Trump is trying to
Speaker 1: pretend that the climate change isn't real, he cut out
Speaker 1: all through the government. He obviously had his team go
Speaker 1: through every place that climate change was mentioned, and then
Speaker 1: tried to acts that program. Well, who's going to produce
Speaker 1: the renewable energy of the thirties on this strategy. It
Speaker 1: won't be us if we continue that way, It'll be China.
Speaker 1: Solar power is now cheaper than coal in some parts
Speaker 1: of the world, and I suspect will be everywhere soon.
Speaker 1: Don't you think the markets will be able to deal
Speaker 1: with the clean energy and the right way. Markets are
Speaker 1: are absolutely playing a very clear role in certain ways
Speaker 1: right now. For instance, it's heavily polluting oil stands have
Speaker 1: taken properly a big market hit. Despite the Trump saying
Speaker 1: We're gonna be bringing those oil sands to market through
Speaker 1: a new pipeline. What's actually happened is that Shell sold
Speaker 1: its holdings, Conical, Phillips sold its holdings. Chevron is about
Speaker 1: to sell its holdings in the Canadian oil sands. Stat
Speaker 1: Oil sold its holdings in Canada. So the markets say
Speaker 1: no way. And another dramatic case in just the recent
Speaker 1: days is the Tesla is now valued on the market
Speaker 1: more than General Motors and more than Ford. So that's
Speaker 1: the market playing the right role for sure. Uh. And
Speaker 1: I actually think that the message is getting through. So
Speaker 1: even though President Trump kind of fulminates against the climate agenda,
Speaker 1: I think real investors know the difference and are going
Speaker 1: to be putting more money into coal plants. But what
Speaker 1: is also true, and I think it's important to note,
Speaker 1: is that some of these clean technologies cost more. They
Speaker 1: really do still cost more because while solar maybe cheaper,
Speaker 1: it can't be stored so cheaply. We'll continue this conversation
Speaker 1: with Columbia professor Jeffrey Sachs, also the director of the
Speaker 1: Center for Sustainable Development at Columbia University. In just a moment,
Speaker 1: this is a closer look with Arthur Levin. It's twelve
Speaker 1: minutes past the hour. This is a closer look at
Speaker 1: economist and Columbia University professor Jeffrey Sachs. He's also a
Speaker 1: best selling author and syndicated columnists. And I'd like to
Speaker 1: talk about one of your recent columns Jeff and the
Speaker 1: Boston Globe on our Wars in the Middle East. Could you, uh, well,
Speaker 1: let's say, what do you think of National Security Advisor
Speaker 1: hr McMaster and Defense Secretary Maddis? Are these moderating forces
Speaker 1: in Trump world? Tell? What I do think is that
Speaker 1: our foreign policy establish uh, not the particular individuals, but
Speaker 1: really the the security state that's been there from Clinton
Speaker 1: through Bush, through Obama and remains largely in place till now,
Speaker 1: has taken us into too many wars in the Middle East.
Speaker 1: And uh, we should not have fought the wars of
Speaker 1: choice in Iraq in two thousand three, or overthrowing Kadafi
Speaker 1: in Libya in two thousand eleven, or trying to overthrow
Speaker 1: Assad in Assyria from two thousand and eleven until this
Speaker 1: very day. I think this has been very naive, very costly,
Speaker 1: very destabilizing, and increasingly dangerous because it puts US on
Speaker 1: a collision course with a lot of other powerful countries.
Speaker 1: It's also unleashed the wave of millions and millions of
Speaker 1: refugees that in turn is destabilizing European politics. So these
Speaker 1: are what I call wars of choice. Would you end
Speaker 1: the fighting in the Middle East right away? And would
Speaker 1: you end it everywhere right now? Just pull out. Yes,
Speaker 1: what I would do is stop the covert operations which
Speaker 1: were undertaking in probably a dozen countries right now. I
Speaker 1: would stop the support of the anti Assad rebels in
Speaker 1: uh Syria. I would stop the US military and often
Speaker 1: covert presence in Yemen, in Somalia, in Syria, in Iraq,
Speaker 1: in Afghanistan. But what I would do is a note
Speaker 1: that the powers of the region, Iran, Turkey, Saudi Arabia
Speaker 1: have a real interest in uh stopping the Islamic State.
Speaker 1: For example, none of those standing sovereign nations wants this
Speaker 1: kind of violent, super violent renegade the group running around
Speaker 1: in their territory. Our wars have actually opened up the
Speaker 1: space for these horrible uh jihades groups. And so what
Speaker 1: I would do is pull out the US military. But
Speaker 1: I would try, through the U N. Security Council to
Speaker 1: say that the major powers, especially China, Russia, the United States,
Speaker 1: Britain and France. I push the regional powers, the ones
Speaker 1: that live with this day in and day out, to
Speaker 1: get their act together to actually get end this uh
Speaker 1: isis phenomenon. Realizing that isis is a it's horrible, it's
Speaker 1: it's a vulgar, it's uh incredibly brutal uh in medieval
Speaker 1: but it's only thirty or fifty thousand in total, and
Speaker 1: they're so completely outnumbered by the standing armies of the region.
Speaker 1: If we did this systematically, not with the US, and
Speaker 1: it's a bombastic way, and I used the term because
Speaker 1: we bomb all the time if we weren't doing it,
Speaker 1: but we were doing it through a U N framework
Speaker 1: that recognized the role of the regional powers and didn't
Speaker 1: keep taking sides so relentlessly that we're on the Saudis side,
Speaker 1: were against the Iranian side, and so forth, we would
Speaker 1: actually stabilize a region that urgently needs stabley. Can this
Speaker 1: be done almost immediately? I know that you wrote an
Speaker 1: article on the Boston Globe recently that the United States
Speaker 1: should immediately end its fighting in the Middle East? Do
Speaker 1: you mean everywhere and just pull out suddenly? I'm alarmed,
Speaker 1: and I would alert everybody to the fact that we're
Speaker 1: right now on a path of escalation. We've had the
Speaker 1: Tomahawk drone attacks in Syria. We've had the mother of
Speaker 1: all bombing bomb in Afghanistan. We've had major drone strikes
Speaker 1: in Iraq which killed hundreds of civilians, were rattling, beating
Speaker 1: the drums of war with regard to North Korea. This
Speaker 1: is rather alarming because we have a president who is
Speaker 1: completely inexperienced in foreign policy. He obviously changes day to
Speaker 1: day even in basic questions, basic alliances, and basic decisions.
Speaker 1: So he's impetuous, inexperienced, and at the command of the
Speaker 1: most powerful arsenal in the history of the world. And
Speaker 1: I don't find that a comforting combination. I find it
Speaker 1: a very worrisome thing. And I wish that some grown
Speaker 1: ups in Congress, not just in the executive branch, but
Speaker 1: in Congress, would say, this is a democracy. Congress that
Speaker 1: declares war, the president does not have the authority to
Speaker 1: go to war on his own. And before we do
Speaker 1: something that could be disastrous, absolutely tragic, for example, attacking
Speaker 1: North Korea and with the potentially horrific consequences, that we
Speaker 1: need some better governance. He is a professor and director
Speaker 1: of the Center for Sustainable Development at Columbia University. The
Speaker 1: New York Times called him probably the most important economist
Speaker 1: in the world, and he has twice been named among
Speaker 1: Time magazines one hundred most influential World leaders. He's also
Speaker 1: a New York Times best selling author whose new book
Speaker 1: is Building a New American Economy, Smart Fair and sustainable
Speaker 1: professor Jeffrey Sachs, thank you for joining us. By the way,
Speaker 1: if you have comments about the program or suggestions for topics,
Speaker 1: please email me at a Closer Look at Bloomberg dot net.
Speaker 1: That's a closer Look one word at Bloomberg dot net,
Speaker 1: and follow me on Twitter at Arthur Levin when we're it.
Speaker 1: This is a Closer Look with Arthur Levitt. It's twenty
Speaker 1: five minutes past the hour. M