Jeff Sachs Wants to Fix The Structual Problems In Our Economy

Jeff Sachs explains why short term stimulation of the economy won't provide the jobs that we need to achieve full employment. The strategy works for a downturn in the business cycle, but it cannot solve structural problems in the economy. The alternative strategy, advocated by Republicans, is to cut taxes on corporations and reduce government regulation. That is what we have been doing for 30 years and that has not worked either.

His view is that we must deal with the structural changes in the global economy. It has become increasingly competitive, and only the strong can prosper. For him, that means higher productivity from innovative technologies, and a highly trained workforce. He argues that we must invest in higher education which can be funded by requiring wealthy Americans to pay their fair share of taxes.

I believe, with Sachs, that we have to deal with structural changes in the economy that have reduced the number of jobs that can support a middle class life style. I also agree with his position on tax policy. Those who benefit most from government investments in infrastructure should pay their fair share. We need to make tax policy more progressive rather than less progressive. I'm not sure how we get there, however.

Sachs pointed out that one of our most innovative companies, Apple, has its products assembled in China and that it employs one million workers in China. In fact, Apple employs 10 workers overseas for every worker that it has in America. I don't believe that Apple could not find one million workers in America with the skills needed to perform the work that it offshore's to Asia. Consequently, even though I would like to make higher education available to more Americans, I don't believe that this would bring those jobs back to America. Apple has other reasons for offshoring its manufacturing to China. The labor force in China has ample skills to perform the required work, and it has been provided with expensive capital equipment that increases labor productivity. As long as labor in China is as productive as labor in America, and wages are lower in China, it is more profitable for Apple to offshore production to Asia. This has the additional benefit of increasing the market for Apple's products to the growing middle class in Asia.

I want to close by being absolutely clear about the point that I am making. I think that education is a public good and that we should do everything that we can to provide the best education possible to everyone in America. We already have the best universities in the world and we should remove economic barriers which limit access to our our universities. Our public schools are very good in most localities but they could be improved as well. Doing so, however, will not solve the structural problems in our economy. Even if every adult in America had a college education there would not be enough jobs in America to employ all of them at the wage levels needed to support a middle class life style. Education is not our major problem.