The American Economic Crisis:Where Do We Go From Here?

Jeffrey D. Sachs

Student LectureColumbia UniversityNovember 23, 2010

Unemployment Rate, October 2008, Seasonally Adjusted

Poverty Rate in OECD Countries

Note: Poverty Rate defined as proportion of households below half of median income

Ratio of CEO Compensation to Average Production Worker Pay

Top Marginal Tax Rate

Figure VI.1 Wall Street Bonuses During 1990-2008

Public Social Expenditure as Share of GDP

Non-Defense Discretionary Programs (as % of GDP)

0.00

1.00

2.00

3.00

4.00

5.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Year

Per

cen

t o

f G

DP

Includes all discretionary programs in the following areas:Agriculture, Commerce, Education, Energy, Housing, Justice,Labor. State, International Development, Science and Technology, Space, Climate Policy, Infrastructure

Budget Proposals for 2009-2019

The key implication is that US systematically under-provides key public goods, including:

Income support for the poor

Education

Public health

Sustainable energy

Infrastructure

Civilian R&D

Overseas Development Assistance

The result, if continued, is a long slide to mediocrity, indebtedness, and increased social division.

The Reform Agenda

Breaking the Low-Skill Trap

Financing Higher Education

Investing in Sustainable Infrastructure

Cutting Military Spending and End the Occupations

Raising Taxes on the Rich

Public Campaign Financing

End Corporate Abuse of Politics: lobbying, disinformation, campaign financing, revolving door employment

Restore Social Ethics