How will the American century turn out?

ECONOMICS: DAN O'BRIENreviews The Price of Civilisation: Economics and Ethics After the FallBy Jeffrey Sachs The Bodley Head, 352pp. £20

MODERATE, THINKING AMERICANS in growing numbers despair about their country: its polarising politics are making its system of government ever more dysfunctional; declining social mobility is threatening the basis of the American dream; and the worst economic crisis since the 1930s is making all other problems more difficult to solve, and creating new ones to boot.

Jeffrey Sachs is a moderate, thinking American who believes his country has travelled a long way down the wrong path. A celebrity economist even before the crisis of 2008 propelled dismal scientists out of anonymity and on to television screens, Sachs is a figure of international influence. When communism collapsed more than 20 years ago he was one of the legions of experts who went east to help build market economies from the rubble of state socialism. For decades he has been a near permanent fixture at global gatherings of the powerful and a long-time advocate of the rich world doing more to help developing countries (a subject on which he will speak today at the Kilkenomics festival, in Kilkenny). He has street cred, too, in part because of the stardust his pal Bono sprinkles on him.

Despite its title and a half-hearted claim to global relevance, Sachs’s latest book is all about the United States. The first part is a diagnosis of US problems; the second is Sachs’s grand plan for making the US better. The first part is by far the more enjoyable. In it the author draws social, political, demographic, economic and intellectual threads together to weave a powerful narrative explaining why and how the US has changed.

His multilayered explanation of the shift to the right in the 1970s and 1980s – the most significant development in post-second World War US political history – is the best, and best-argued, aspect of the book.

One reason for this rightward shift, he believes, is demographic. As recently as the 1950s, most of the population lived in the northern snowbelt. Migration has radically changed that. Now most Americans live in the southern sunbelt, where libertarian traditions are much stronger than in the more Europe-influenced northeast.

Another reason comes from the realm of ideas. Sachs claims plausibly that the small- government brigade, which in the 1970s was led by the then sunbelt state governor Ronald Reagan, misdiagnosed the problems of that decade. The Gipper and his free-market allies maintained that high inflation and economic stagnation then were the fault of big government. Sachs argues, mostly correctly, that the economic crises of the 1970s were not caused by government, and accuses free-market advocates of exploiting the turmoil to convince many voters that shrinking the state would put the US on the right track.

Sachs believes that this analysis was not only wrong but that it was disastrous in consequence. The sort of proactive government leadership that had characterised policymaking since the 1930s was abandoned just when it was most needed. The retreat of the state (which Sachs overstates) has since prevented many big problems being tackled effectively, from the environment to education to infrastructure.

Sachs could be dismissed as just another leftist arguing for more government and less market were he doctrinaire. But, unlike his compatriot celebrity economist Paul Krugman, he is no partisan, and opposes many liberal-left positions and orthodoxies. He is against greater use of budgetary stimulus and money printing to spur the flagging economy, believing that both have greater costs than benefits. He acknowledges that immigration makes welfare systems harder to sustain – people in more diverse societies are generally less willing to pay for the newly arrived – and is thus ambivalent about it. He criticises examples of liberal overreach, such as positive discrimination in favour of minorities and enforced busing of children to schools against their parents’ wishes in the 1970s and 80s. Such policies alienated many Americans, he acknowledges, and pushed them to defect from the Democrats to the Republicans.

Sachs is both analyst and advocate. The United States is where it is. Solutions are needed. The entire second half of the book is devoted to offering them. In some considerable detail he proposes an eight-pronged policy approach, financed by higher taxes and made effective by political reform. A great deal of his programme makes imminent sense, but his call to fellow Americans to be more “mindful”, in eight different ways, is a preachy low point from a man not known to waver in his belief of his own virtue. I-know-best paternalism, which crops up again and again in this book, will irritate many readers and is unlikely to win over many to his cause in his homeland.

Writers and analysts are often sterner in the criticisms of their own countries than with others. That is true of Sachs. He understates the problems of Europe, whose northern countries his sees as models for the US, and downplays American achievements. He claims, for instance, that American society has become harsher but ignores entirely the astonishing decline in crime rates over two decades.

Sachs is also at risk of overstating the extent of the United States’ problem, as many others have done since that country became the world’s top dog in the first half of the last century. The Soviets would bury the US in the cold war, the humiliation of Vietnam would enfeeble it forever and Japan’s bubble-era economy would leave the United States’ in the dust. These are just some of the wrong calls the declinists have made over the decades.

Even if US politics continues to polarise, and even if its economy remains in stagnation, the United States’ global pre-eminence will last for some time yet. Three hundred million Americans still produce three times more than 1.3 billion Chinese, and US military preponderance is many times greater than any potential rival’s. For all its faults and missteps, the US remains a beacon of freedom for the planet’s downtrodden and oppressed. The American century is not over yet.

Dan O'Brien is Economics Editor of The Irish Timesand author of Ireland, Europe and the World: Writings on a New Century

Jeffrey Sachs takes part in three Kilkenomics events today. He is in conversation with David McWilliams, at noon; debates the impact on the world of China’s rise, with Fintan O’Toole, Will Hutton and Faisal Islam, at 3.30pm; and debates whether austerity has ever worked, with Martín Lousteau, Nitasha Kaul and Max Keiser, at 9.45pm