Economist Jeffrey Sachs traces the roots of the current Great Recession to 1979. He spoke November 14 at the Toronto Public Library’s Appel Salon Program, promoting his new book The Price Of Civilization: Economics And Ethics After The Fall.
1979 was the year American manufacturing was at its peak with 19 million people employed in that sector. It was also when globalization began to change the playing field, exporting jobs themselves to developing countries where manufacturing salaries were lower. This structural erosion in and of itself wasn’t catastrophic, said Sachs, and he believes America could have dealt with the challenge. But coupled with a game changer like U.S. president Ronald Reagan the following year, and the results led to economic inequality you’ve been hearing about from ongoing Occupy movements and on this program.
Why was the election of Ronald Reagan a watershed moment for the U.S.? In his must-read op-ed from this past Sunday’s New York Times, Sachs' wrote:
Thirty years ago, a newly elected Ronald Reagan made a fateful judgment: “Government is not the solution to our problem. Government is the problem.” Taxes for the rich were slashed, as were outlays on public services and investments as a share of national income. Only the military and a few big transfer programs like Social Security, Medicare, Medicaid and veterans’ benefits were exempted from the squeeze.
Reagan’s was a fateful misdiagnosis. He completely overlooked the real issue — the rise of global competition in the information age — and fought a bogeyman, the government. Decades on, America pays the price of that misdiagnosis, with a nation singularly unprepared to face the global economic, energy and environmental challenges of our time.
I bring this up today because those disappearing manufacturing jobs were once the heart of America’s, indeed our own, middle class. And the effect of the Great Recession on the middle class is the topic of our feature interview and debate this evening.
Don Peck, features editor of The Atlantic and author of Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It will join us from Washington D.C. to discuss his book and feature, “Can the Middle Class be Saved?” from the September issue of The Atlantic.
He’ll then be joined by Boston, Benjamin Friedman Professor of Political Economy at Harvard University, Linda McQuaig, political columnist for the Toronto Star, and co-author of The Trouble with Billionaires and Steve Maich, former editor of Canadian Business, to discuss the lasting impact of a prolonged economic downturn on young people and the middle class.
In the meantime, you can watch the rest of Jeffrey Sachs' Toronto appearance here. He paints a grim picture of how America lost its way and warns that Canada too is vulnerable to big lobby interests in our politics and government.