Jeffrey D. Sachs ’76 is the Director of the Earth Institute at Columbia, an advisor to the United Nations, and one of the youngest Economics professors in Harvard’s history. He talks to FM about virtue, occupation, and intellectual struggle.
1. Fifteen Minutes: Your new book, which came out earlier this month, is called “The Price of Civilization: Reawakening American Virtue and Prosperity.” Let’s start with that title, an allusion to Oliver Wendell Homes, Jr. who said, “Taxes are the price we pay for civilization.” What do you believe is the price of civilization? Is it just taxes?
Jeffrey Sachs: I believe a commitment to civic virtue includes a regard for one’s community, one’s country, and the world. Paying taxes is part of that, but so are obeying the laws and promoting laws that are good for the community. And I think we have lost those civic virtues at the top of American society—or at least diminished them in recent decades. We are suffering badly as a result of that. We are in a society that is increasingly lawbreaking and corrupt in key institutions.
2. FM: That sounds pretty daunting. Which are the corrupt institutions to look out for?
JS: We’ve seen many scandals around stock options in compensations. We’ve seen many scandals around accounting. Recently, on Wall Street, we saw fraudulent financial behavior that contributed to the financial bubble and ultimately to a disastrous collapse. In recent months, major Wall Street companies have paid large fines to the SEC for having fraudulently packaged and sold bundles of securities that they knew were going to fail ... But even though fines have been paid, I’m not sure how much accountability has been achieved. The fines were generally small fractions of the profits that were earned in this bubble. I worry that the moral hazard of having behaved this way—having been bailed out, having incurred modest fines—may actually be encouragement to more recklessness.
3. FM: Virtues are another part of your book’s title. What kinds of virtues need to be reawakened in these corrupt institutions?
JS: Well, I talk about virtues at many different levels. Aristotle and Buddha are two of the sages I refer to in the book in order to emphasize that, at an individual level, virtue involves a middle path between asceticism and hyper-consumerism. And I discuss in the book my feelings about American society becoming hyper-commercial. At the individual level it becomes dangerous, as we have all become vulnerable to the weight of advertising and the remarkable amount of TV watching ...
4. FM: You mentioned Buddha as a model for individual virtue. Buddha created his Eight-Fold Path, and in your book the solution you prescribe to American economic upheaval is a set of eight goals: a sort of Jeffrey Sachs Eight-Fold Path. Is that all a coincidence?
JS: Well, both Buddha’s Eight-Fold path and the eight goals I recommend in the book share a similar purpose in bringing the long-term to attention. Right now in the U.S. we are so relentlessly short-term in our debates, discussions, and policy-making that we have lost sight of the longer-term purposes.
5. FM: You have always played a large role in promoting the Millennium Development Goals. There were also eight of those, right?
JS: Yes, and you know with the Millennium Development Goals, those have been enormously helpful in organizing action—in helping countries to focus on important things. Even if countries don’t get there on time, and many will not, the greater intention to inspire crucial efforts like fighting poverty, hunger, and disease has kept up enormously.
6 FM: So you think that setting goals makes a significant difference in how countries ultimately act?
JS: Yes, definitely.
7. FM: For example?
JS: It’s a commonplace observation, but it has not been corrected [that] we have substituted the measure of GNP for many things that are more important in our lives and in our economy.
8. FM: In your book you mention Bhutan’s King Jigme Singye Wangchuck, whom you admire for suggesting the concept of “Gross National Happiness” as being significantly more telling than Gross National Product. Happiness is a pretty out-there idea. What do you believe it really is?
JS: There are two ways happiness has been measured in recent years. One is called affective happiness, which is people’s moods, emotions, and sense of well-being. The other is called evaluative happiness, which is the sense that people have about the overall satisfaction of their lives. I find the latter to be more relevant. A number of countries are measuring evaluative happiness; they are asking people: “Are you satisfied with your life?” There are different ways of asking this, and the answers offer a lot. You find there is consistency within countries and there are patterns that reveal what people need for a deeper life satisfaction. Income plays a role, but a diminishing role: after a reasonable level of income, according to studies, it has no affect on overall happiness. A feeling of trust in the community plays a role as well. There is a lot of evidence that quality of life in the workplace means a lot. I think that this notion of looking seriously at life satisfaction and its determinants is illuminating.
9. FM: “The Price of Civilization” is peculiar among your wide academic repertoire in that it focuses on domestic economic issues whereas you typically have written on foreign economies. Why the sudden interest in the U.S. economy?
JS: After the financial crisis so many questions arose that needed answering and over the last more than a decade I felt that on the international scene the U.S. was being less and less effective in playing a constructive role, much less a leadership role. I had very much growing concerns about problems in the U.S.: the growing poor, the fact that the U.S. educational system is lagging behind. As I watched this happen, I decided it was really time to write something more than some essays. That was the motivation for researching and writing this book.
10. FM: With the U.S. falling off the cannon as a leader, are there any foreign countries people should specifically be looking towards as a better role model?
JS: I think different countries have done different things I admire ... I do view favorably the balanced approaches of the northern European countries. I think that the Netherlands, Germany, Denmark, Norway, Sweden, and Finland have shown an admirable balance of respect for free market trade but also attention to social equity as well as to environmental sustainability. I find that that kind of balanced approach makes a great deal of sense, and I am attracted to that. While those countries are not models for the U.S. because the U.S. is so much bigger and diverse, I still feel that those countries help to give some interesting and pertinent examples for how things could be better in the United States.
11. FM: How about the Occupy movement going on right now? Is there anything you specifically hope to see come out of it?
JS: I think the basic message of the Occupy movement—“We are the 99%”—is really channeling an important truth of American society right now. Over the past 30 years, the top has gotten a lot richer: the top of the top, by the way, has gotten phenomenally rich. And now it is not just wealth and income at the top but also political power. Increasingly, that power has twisted our public policy, emphasizing the cutting of taxes, and even in the danger of slashing public services and public investments. I think it has been extremely dangerous and shortsighted. The Occupy movement is, I think, the beginning of awareness and I hope it is the beginning of change in American politics.
12. FM: Have you been down to Wall Street to march with the protestors?
JS: I’ve actually been there several times, and I’ve spoken there. I told them that I think they are on the right track.
13. FM: You are now at the vanguard of global economic thinking, but looking back to when you were a Harvard undergraduate, what prompted you to pursue economics and global development?
JS: I was lucky after high school to travel before entering college. I spent some time travelling in Europe. It was my first time seeing different societies. I spent some time on the other side of the Iron Curtain. I saw how puzzling and different Soviet-style socialism was. And I was completely fascinated by the fact that different places I had seen had different approaches to things. I wanted to know what works and what doesn’t work. Those were the beginning days for me.
14: FM: And what about when you got to Harvard?
A few weeks before freshman week, we had a list of books sent to us and we were asked to read “Capitalism, Socialism, and Democracy” by Joseph Schumpeter and to go to a lecture in Sanders Theater by Daniel Patrick Moyinhan. I read that book. I don’t think I understood almost any of it, but I found it completely fascinating. My head was spinning by the time I came to Harvard with all these questions about economics. I started Ec. 10, and never looked back. That was 39 years ago.
15. FM: Any final words of wisdom for students currently studying economics?
JS: The thing that worked for me, I must say, is that I came into the field asking big questions because I found them completely fascinating and I never gave up on trying to grapple with those questions. As one is flogging through economics sometimes, one loses sight of the big picture because it all seems pretty esoteric and technical. Things don’t seem to relate to a lot of the questions you were asking. Sometimes people give up on those questions. Sometimes advisors say that it’s one thing to think about big issues, but you’ve got to write this paper or that paper and to focus in and so on. There’s often an element of truth to that, but I think the most exciting thing about social science is that it is the field that grapples with the greatest questions—about society after all. If you go into this field, remember that you went into it because you found the big questions fascinating, and don’t lose that appetite for digging big and inquiring about difficult issues. It’s worth the intellectual struggle.