The U.S. economy is running on fantasies. Will Washington be ready when they finally collapse?
JEFFREY D. SACHS
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The U.S. economy is rich, unhappy and unsustainable, something like Donald Trump himself. In fact, like Mr. Trump, we don’t really know whether the country is really rich or merely living beyond its means. More of Mr. Trump would mean more fantasyland, until an ultimate reckoning and collapse of the American economy down the line. Joe Biden, by contrast, would mean a return to pressing realities, less flashy to be sure but much better for long-term sanity and survival.
The numbers tell the story. In the annual Sustainable Development Goal Index, which my team at the UN Sustainable Development Solutions Network (SDSN) prepares annually based on objective and quantified indicators, Canada ranks 21st in the world while the United States ranks 31st. While both economies depend too much on fossil fuels, the U.S. is also far more unequal than Canada, and hence much less sustainable. In the annual World Happiness Report, also produced by SDSN, Canada ranks 11th while the U.S. ranks 18th. The U.S. society is now so divided – rich versus poor, evangelical versus others, conservatives versus liberals – that social trust is shot, and Mr. Trump has governed by deliberately exacerbating these divisions while stoking racism.
It’s perhaps a tribute to the American economy that it can operate despite a lot of political noise. Before COVID-19, Mr. Trump understood that he could keep consumers spending freely if the Fed pumped out cheap credits while the federal government ran huge budget deficits stoked by unnecessary and unaffordable corporate tax cuts. Live for today, buy for today. And in a country where image is king, the glitz worked for a while – the federal debt be damned.
Yet what Mr. Trump could not do, and showed not the slightest interest in doing, was building anything lasting for the future. Despite the fleeting and quaint thought that Mr. Trump was a “builder” or a “real estate developer,” in fact the U.S. built no modern infrastructure under Mr. Trump. To do so requires planning ahead, the very skill that Mr. Trump lacks in entirety. Even worse, the only infrastructure that he contemplated was new pipelines for oil and gas (familiar to Canada, alas). Such projects are retrograde, uneconomical and now almost entirely shelved.
Nor did Mr. Trump show the slightest interest in the downtrodden. Like the mega-preachers of the “prosperity gospel” that form his evangelical base, Mr. Trump paraded his own wealth as a token of economic success for the masses. If they couldn’t have wealth themselves, at least they could have a wealthy preacher or a wealthy president (even if Mr. Trump’s wealth is apparently offset by massive debts and perhaps tax fraud at a massive scale).
When COVID-19 hit early this year, Mr. Trump could only play-act as a leader by giving a daily reality-TV briefing filled with errant nonsense. Now the country has more than 220,000 dead, with the number rising daily by several hundred, with a mortality rate per million among the highest in the world. With the continued rapid transmission of the disease, the recovery from the spring shutdowns have stalled and the suffering has persisted.
The biggest mistake in economics is to judge an economy on the basis of quarter-by-quarter developments. Any demagogue, populist, or conman can make an economy seem bubbling and growing in the short term, through easy money and deficit spending. Just look at Venezuela for the first several years of Hugo Chavez’s “Bolivarian Revolution”: rapid growth followed by fiscal crisis and collapse. The trick is to make progress last. Long-term progress needs to be based on true social and environmental sustainability.
The U.S. needs tax justice (to have the billionaires pay their fair share), social support (health care and education for all) and sustainable energy. To put these pieces in place requires a strategy, yes, even a plan. Mr. Trump will provide none of these; he lacks the competence and emotional stability even to form a team to do it.
Mr. Biden, on the other hand, will surely get the U.S. pointed in the right direction, and with some good political fortune, will open the way for significant long-term progress. The first step would be a quick suppression of the pandemic early in 2021.
The stakes for the U.S. have not been higher since the Great Depression, and perhaps the Civil War.
Jeffrey D. Sachs is director of the Center for Sustainable Development at Columbia University. His books include The Price of Civilization: Reawakening American Virtue and Prosperity and Building the New American Economy: Smart, Fair, & Sustainable.
