Wednesday, November 05, 2008

Obama's choice

This excellent article by Jeffrey Sachs sets out the real challenge that Obama will be facing when he takes office.

Since Reagan took office in 1981, the economic direction of the US has been pointed firmly towards the cliff it has now fallen off.

Here is what Sachs sees as necessary:

Our macroeconomic problems require major public investments in new technologies, infrastructure, public education, and poverty reduction. At some point soon, Americans will have to start paying for these investments themselves, rather than borrowing heavily from abroad. We are experiencing the structural shift from an economy relying on easy money and seemingly endless international borrowing to an economy that is gradually realizing that ultimately we will have to pay our way, especially if the United States wants to be a leading power. There are pressing domestic and global investment needs, and the money has to come from somewhere. The only place it can come from is an increased tax base, which requires abandoning the Reagan-Bush mythology.

In sum, the recipes since 1981 of small government and small-bore solutions are passé and dangerous for our very survival in the United States and on this planet. While Reagan was crudely ideological, Clinton mildly reformist, and Bush simply crude in the application of these small-government doctrines, none of the recent approaches will do. It's time to stop talking about who can give away more to the public in rebates and start talking about investing in our future in a way that can save the poor, sustain the rest, and build a decent world for our children. Those are the real family values.

That will require the kind of leadership we haven't seen in the US since FDR. Unfortunately, looking at the people that Obama has surrounded himself with does not make me hopeful that he can see the need for the political risks that have to be faced. A Clinton style administration of timid competence, paired with purely political calculations, will not cut it. Better a one-term presidency that sets off on a new road than a two-term collection of band-aids and compromises with the people who landed us in this mess.


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