Interview with Jeffrey Sachs

Professor Jeffrey Sachs was late for his interview with Kathimerini. The Nicosia traffic however did not cause the delay. As he runs up the stairs of the Cyprus Institute and with the Ministers of Finance and Environment arriving to attend his lecture, he continued to have a captivating discussion on his phone. ''That was Bernie Sanders'', he said. ''He is running for President and he wants me to be an advisor to the campaign’’.

You are one of the world’s leading experts on economic development. Europe and the US face a resurgence of populism, both from the right and the left. Many believe that that is the result of liberal economic policies, globalization or even the euro. What is your view?

We can have economic development, fairness and peace if we put our mind to it. A lot of the reaction of the so called populism really is symptom of failing to have a fair economy and failing to keep the peace. The migrant crisis for example in Europe is a crisis actually of war, in Afghanistan, in Iraq, in Syria, in Libya. If there were fewer wars there would never have been that surge of migration. A lot of the populism also is about being left behind by globalization. But there are societies, especially in Scandinavia that don’t live people behind because they ensure that as the economy grows, that everybody benefits through public redistribution and through regulatory policies that insist on the gains being achieved on a wide spread basis.

My belief is that the populism does reflect failings of politics but we can identify where those failings came from and solve those failings.

There are efficient and inefficient policies, institutions that perform their function and institutions that need to change. How can we bring about institutional change in institutions that underperform?

It’s important to aim for efficiency and equity. Efficiency means economies that operate normally, that produce goods and services that are able to export and be competitive and at the same time it’s important that societies are equitable. That people are able to thrive in society. Sometimes politicians aim for equity but then they wreck the economy. The goal is to have both efficiency and equity. That requires intelligence of understanding of how an economy works. Social democracies in Northern Europe are open economies, export driven economies, they have made a good combination of efficiency and equity.

But you agree there has to be political will for an inefficient institution to change?

The problem of inefficiency is often monopoly power, either hidden or in public view.

You often say that Economics is really about how we direct resources to improve human wellbeing, to solve problems, not about market equilibrium. What is the secret to achieving sustainable development? Is it policy, vision, technology, economic literacy?

First we need the right goals. Adam Smith wrote the Wealth of Nations and the goal in the Wealth of Nations is wealth but I believe the right goal is the Greek concept of Eudemonia (wellbeing). If we just go for wealth we create a few billionaires but we don’t create Eudemonia. Sustainable development is about Eudemonia, it’s about not only prosperity or economic development but also social fairness and environmental sustainability. So the idea of sustainable development is about thriving not just about wealth making.

Desertification and drought are major risks for Cyprus and the region. You discussed with President Anastasiades about a Cyprus proposal to take an active role in coordinating efforts to address climate change?

The Eastern Mediterranean is highly vulnerable to climate change, which is alarming to me because this is also the cradle of civilization and I can say authoritatively as someone who’s visited all parts of the world, one of the most wonderful, remarkable, beautiful places on the whole planet, and yet it could be wrecked by climate change. Specifically for the Eastern Mediterranean and the Middle East drought is a huge crisis that is building year after year as the temperatures rise and it could become mega-drought in future decades. So I would like to see the Mediterranean and the Middle Eastern countries, raising their voice, raising the politics, committing themselves to move to renewable energy especially solar and wind power, to decarbonize the energy system and to demand of the rest of the world similar actions before this region faces a mega crisis. That’s the purpose of the Cyprus Institute initiative and the President of Cyprus that we will work over the coming year and a half to put forward very strong propositions. I hope that we will unite the countries of the Eastern Mediterranean and the Middle East around a common vision of how to fight climate and how to prepare for the climate change that is already underway.  

What is your advice to the leaders of a post conflict society such as Cyprus?

Conflict, of course, it’s easy to say but it is truly correct, it is a negative sum situation, everybody loses with the division of Cyprus and I believe it is huge benefits to find a suitable way forward. I spent a lot of time in Ireland where the fights were very serious for a long time and finally the border opened so that there can be free movement and the economic situation improved tremendously. This is one of the reasons why Brexit is proving so hard, because in the island of Ireland there is absolutely a commitment to an open border between Northern Ireland and Ireland for the reason that it is extremely beneficial for everybody. Cyprus is too small to divided, it should be a unified country, it should be a country that everybody enjoys, and it’s one of the marvellous places in the world. A couple of times Cyprus was close to a solution and I would urge all sides to go forward and really try to end the division because the benefits will be enormous.  

I have the impression that you are an optimist, how do we create more optimists? How does the future look like?

I am a conditional optimist. We have all the tools to solve our problems. We have all the reasons to solve our problems. On the other hand as human beings we have to acknowledge that we often make devastating mistakes at the societal level. So I am only conditionally optimistic because I know that having the means to solve problems and the ability to solve problems doesn’t guarantee that they will be solved. But they can be solved, that’s the most important point. My belief is that if we put clear goals, shared for the whole world as our main objective making the climate safe, ending extreme poverty, ensuring that our children are properly educated. If those goals become our main goals, not the squabble of day to day politics, then that would motivate us to find the real solutions.

Published in Kathimerini Cyprus 24/02/2019