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A warning as market pipes tune in America

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Ross Gittins: The Price of Civilisation

Libertarianism is the notion that the only ethical value that matters is liberty, but one of America’s leading economists, Professor Jeffrey Sachs, isn’t having a bar of it in his latest book, The Price of Civilisation.

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Just as it's taking the world a lot longer to recover from the global financial crisis than we initially expected, so it's taking a lot longer than we might have expected for voters and their governments to learn the lessons and make the changes needed to ensure such devastation doesn't recur. But the penny has dropped for some.

Jeffrey Sachs, of Columbia University, is one of the biggest-name economists in the world. Yet in his book, The Price of Civilisation: Economics and Ethics after the Fall, he admits America's greatest problem is moral, not economic. Actually, he says that at the root of America's economic crisis lies a moral crisis. He puts into words thoughts most of us have hardly dared to think.

America's political institutions have broken down, so that the broad public no longer holds these elites to account. 

Sachs says America's weaknesses are warning signs for the rest of the world. ''The society that led the world in financial liberalisation, round-the-clock media saturation, television-based election campaigns and mass consumerism is now revealing the downside of a society that has let market institutions run wild over politics and public values,'' he says.

<em>Illustration: Kerrie Leishman</em>

Illustration: Kerrie Leishman

His book ''tracks the many ills that now weigh on the American psyche and the American financial system: an economy of hype, debt and waste that has achieved economic growth and high incomes at the cost of extreme income inequality, declining trust among members of the society and the public's devastating loss of confidence in the national government as an instrument of public well-being''.

Even if the American economy is on the skids, he says, the hyper-commercialism invented in America is on the international rise. So, too, are the attendant ills: inequality, corruption, corporate power, environmental threats and psychological destabilisation.

''A society of markets, laws and elections is not enough if the rich and powerful fail to behave with respect, honesty and compassion toward the rest of society and towards the world. America has developed the world's most competitive market society but has squandered its civic virtue along the way.

''Without restoring an ethos of social responsibility, there can be no meaningful and sustained economic recovery.''

America's crisis developed gradually over several decades, he argues. It's the culmination of an era - the baby-boomer era - rather than of particular policies or presidents. It is a bipartisan affair: both Democrats and Republicans have played their part.

''On many days it seems that the only difference between the Republicans and Democrats is that Big Oil owns the Republicans while Wall Street owns the Democrats.''

Too many of America's elites - the super rich, the chief executives and many academics - have abandoned a commitment to social responsibility. They chase wealth and power, the rest of society be damned, he says.

We need to reconceive the idea of a good society. ''Most important, we need to be ready to pay the price of civilisation through multiple acts of good citizenship: bearing our fair share of taxes, educating ourselves deeply about society's needs, acting as vigilant stewards for future generations and remembering that compassion is the glue that holds society together.''

The American people are generally broadminded, moderate and generous, he says. But these are not the images of Americans we see on television or the adjectives that come to mind when we think of America's rich and powerful elite.

America's political institutions have broken down, so that the broad public no longer holds these elites to account. And the breakdown of politics also implicates the public. ''American society is too deeply distracted by our media-drenched consumerism to maintain habits of effective citizenship.''

Sachs says a healthy economy is a mixed economy, in which government and the marketplace play their roles. Yet the federal government has neglected its role for three decades, turning the levers of power over to the corporate lobbies.

The resulting ''corporatocracy'' involves a feedback loop. ''Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth.''

How have American voters allowed their democracy to be hijacked? ''Most voters are poorly informed and many are easily swayed by the intense corporate propaganda thrown their way in the few months leading to the elections.

''We have therefore been stuck in a low-level political trap: cynicism breeds public disengagement from politics; the public disengagement from politics opens the floodgates of corporate abuse; and corporate abuse deepens the cynicism.''

Sachs says globalisation and the rise of Asia risks the depletion of vital commodities such as fresh water and fossil fuels, and long-term damage to the earth's ecosystems.

''For a long time, economists ignored the problems of finite natural resources and fragile ecosystems,'' he writes. ''This is no longer possible. The world economy is pressing hard against various environmental limits, and there is still much more economic growth - and therefore environmental destruction and depletion - in the development pipeline.''

Two main obstacles to getting the global economy on an ecologically sustainable trajectory exist, he says. The first is that our ability to deploy more sustainable technologies, such as solar power, needs large-scale research and development.

The second is the need to overcome the power of corporate lobbies in opposing regulations and incentives that will steer markets towards sustainable solutions. ''So far, the corporate lobbies of the polluting industries have blocked such measures.''

In Australia, of course, the public interest has so far triumphed over corporate resistance. But the survival of both the carbon tax and the mining tax remains under threat.

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  • Typical Gittins article, exemplifying the intellectual dishonesty,
    or at best confusion in ‘progressive’ thought.

    As usual Ross introduces his ‘real’ thesis not in the introduction but in the conclusion, freeing him from any tedious obligation to construct a coherent argument.

    What connection American domestic social morality has to Australia's Mining or
    Carbon Tax is at best slender, and clearly undemonstrated in this article.

    The former has hardly inconvenienced corporate Australia through its failure
    to raise a single cent.

    Similarly the Carbon Tax was supposed to be about combating climate change
    not restoring civil values.

    I’m giving you an F for this effort Ross, please try harder.

    Date and time
    December 05, 2012, 8:45AM
    • Shooting the messenger AGAIN!
      Haven't you got another card to play?

      Date and time
      December 05, 2012, 9:40AM
    • SteveH - while I understand your argument and your position, Ross actually shows consistency, because the arguments against carbon abatement and the mining tax have employed the libertarian arguments that he and Sachs attack.

      The attacks on those taxes are underpinned by the philosophy that is being criticised.

      Date and time
      December 05, 2012, 9:42AM
    • The connection is this: both carbon price and mining tax attracted well-funded attacks orchestrated by PR flacks and funded by corporations. The two policies were delayed and watered down, and the government is likely to lose office because of those campaigns.

      Date and time
      December 05, 2012, 9:49AM
    • @ SteveH...... Progressive definition: Favouring or advocating progress, change, improvement, or reform, as opposed to wishing to maintain things as they are, especially in political matters: making progress toward better conditions; employing or advocating more enlightened ideas, new or experimental methods, etc.
      Sounds like your mates (Tony & Co) could use some of this.

      Date and time
      December 05, 2012, 9:51AM
    • So everything's OK with the world then, SteveH?

      So relieved.

      Gary Breen
      Date and time
      December 05, 2012, 9:56AM
    • Steve, its obvious you don't have any other cards, at least I can articulate my objections.

      Date and time
      December 05, 2012, 10:35AM
    • I would give an A to the article and say congratulations Ross for again pointing out what the
      right never wants to admit. Their responses to such issues reveal either an incapacity to understand what is being said or a willful determination to ignore it.
      The failure of the Mining Tax to raise money goes directly to the massive expenditure of millions by the groups discussed in the article (this case the mining companies ) to protect their interests at the expense of the nation.
      If the pricing of carbon ( an effort to protect the planet based on provable and observable facts) isn't a civic effort one wonders what would be

      Date and time
      December 05, 2012, 10:36AM
    • Really Steve?

      I thought that Ross demonstrated a clear argument that we need a "social morality" for our economy to have a "meaningful and sustained recovery". Ross then pointed to two markers of this, carbon tax (to tax environmental recklessness as well as the social advantage of low income tax discounts funded by this change.) and the mining tax (i.e. sanity/a plan that a few people should not be gifted huge resource booms). While these markers are in place in our current society, both have been heavily challenged (and the Mining tax weakened to such an extent that it is ineffective).

      All in all Ross is right, we lack a "Social Responsibility" like America and are heading closer to their failing system.

      Date and time
      December 05, 2012, 10:40AM
    • SteveH
      You accuse Ross of "intellectual dishonesty" and then use your own form of intellectual dishonesty to twist the facts on MRRT and Carbon Tax. The fact that these taxes were watered down is direct evidence of our major corporations failure in terms of social morality.
      But then, twisting the facts is your specialty isn't it.

      Date and time
      December 05, 2012, 10:50AM

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