Short-Term Solutions to Crisis Won't Cut It: Sachs

Economist argues for systemic adjustment
By Nick McMaster,  Newser Staff
Posted Nov 10, 2008 2:15 PM CST
President-elect Obama points down the table during a meeting with his economic advisory team in Chicago, Friday, Nov. 7, 2008.   (AP Photo/Pablo Martinez Monsivais)
camera-icon View 1 more image

(Newser) – The financial crisis can't be averted, and the Obama administration would be wise to accept that and concentrate on "a steady policy that will steer us through an unavoidable short-run recession to arrive at a much healthier economy within three to five years," writes Jeffrey Sachs for the Guardian. Proposals of tax cuts, spending increases, homeowner bailouts, and 0% interest rates are “panic, not policy,” warns the celebrated economist.

“The US needs not just a stimulus in spending, but structural change,” writes Sachs. Obama should try to raise US exports to offset declines in consumer spending, and stimulate domestic investment rather than trying to continue reckless foreign borrowing. The roots of a sensible solution to the current crisis lie in "a much sounder economic and social structure, including reforms to healthcare, energy policy, education and other infrastructural ailments."