Jeffrey Sachs: World Economy Needs Overhaul Toward Sustainability to Avoid Worse Crisis

Dig for Victory

by Jeffrey Sachs


The global economic crisis will be with us for a generation, not just a year or two, because it is really a transition to sustainability. The scarcity of primary commodities and damage from climate change in recent years helped destabilise the world economy and gave rise to the current crisis. Soaring food and fuel prices and major natural disasters played an important role in undermining financial markets, household purchasing power, and even political stability.

So an essential policy that developed and developing countries should pursue in overcoming the crisis is to build infrastructure suitable for the 21st century. This includes an efficient electricity grid fed by renewable energy; fibre and wireless networks that carry telephony and broadband internet; water, irrigation, and sewage systems that efficiently use and recycle fresh water; urban and inter-city public transit systems; safer roads; and networks of protected natural areas that conserve biodiversity and the habitats of threatened species.

These investments are needed in the short term to offset the decline in worldwide consumption spending that underlies the global recession. More importantly, they are needed in the long term, because a world of 6.8bn people (and rising) simply cannot sustain economic growth unless it adopts sustainable technologies that economise on scarce natural resources.

...every part of the world has a huge backlog of vital infrastructure investments. It is time for a concerted global effort to bring those projects on line...

...American and European economic advisers generally believe that a short sharp stimulus will be enough to restore economic growth. This is wrong. What will be needed is an overhaul of the world economy towards sustainability.

...policymakers in the rich world believe that they can continue to neglect the developing world or leave it to its fate in global markets. This is also a recipe for global failure, and even future conflict. Developed countries will have to do far more to help poor countries through the transition to sustainability. Whereas most of the"stimulus" legislation to date has been short term and inward-looking, increased funding for sustainable infrastructure in poor countries would provide a powerful boost to richer economies...

The G20 meeting in London on 2 April offers hope for a true global effort to repair the failing world economy. This is the time and place to launch the global drive toward sustainability. If we fail to meet the challenge, the global crisis will endanger the world for years to come.

March 23, 2008

for complete article:
http://www.guardian.co.uk/commentisfree/2009/mar/20/g20-globalrecession