U.S. Markets close in 5 hrs 5 mins

Sachs: U.S. Can Come Back by Rediscovering Virtue

Daily Ticker

Economists tend to speak in unemotional, non-judgmental terms. People and companies respond to incentives, or seek profits and efficiency. Economists tend to identify problems as issues having to do with the allocation or resources. But in his new book, The Price of Civilization: Reawakening American Virtue and Prosperity, economist Jeffrey Sachs discusses the plight of the U.S. economy in highly moral terms.

Sachs, director of the Earth Institute at Columbia University, has earned his stripes as a development expert, and is renowned for his work in places like Africa and the post-Soviet states of Eastern Europe. Now he is turning his focus to the world's most developed economy: the United States. "First I would like a return to legality," he tells me and Aaron Task in the accompanying video. "So much of the financial crisis was not only about poor judgment, but breaking the law." In addition to a real economy, "we need a moral economy -- if everybody thinks they can push every limit we're not going to have a functioning society."

The first half of The Price of Civilization, which describes how the U.S. went wrong and debased the middle-class society it had built, makes for pretty depressing reading. In a tone that is both learned and accessible, Sachs describes how deregulation, the delegitimization of government, a political system corrupted through campaign finance, globalization, and income inequality have created a toxic stew. While Sachs generally approaches economic issues from a perspective that is generally to the left. But he certainly doesn't spare Democrats. He laments that our political system is dominated by what he calls America's "two right-of-center parties." Expressing his disappointment with President Obama, he notes that "the administration is packed with individuals passing through the revolving door that connects Wall Street and the White House." Sachs also dips a toe into social psychology, tracing the malign impact of hypercommercialization and excessive television watching.

The second half of the book strikes a more upbeat tone. For Sachs believes the U.S. can come back from the brink if we all get a little more zen — i.e. if we learn to find meaning in work, become more compassionate, and treat the earthy much better. Instead of running around like a bunch of short-term, profit-seeking idiots, we all have to be more mindful. His call for collective action ultimately comes down to a plea for individual action. "It calls for each of us to strive to be virtuous, both in our personal behavior (regarding saving, thrift, and control of our self-destructive cravings) and in our social behavior as citizens and members of powerful organization, whether universities or businesses," he writes.

Sachs includes a specific set of goals for the U.S. economy to achieve over the coming decades, ranging from reducing deficits to raising U.S. test stores, from having 5 million electric vehicles on the road by 2020 to establishing "national metrics for life satisfaction." It recommends a holistic approach to the economy and personal lives that demands changes in behavior. The recommendation and rhetoric may sound high-flown and lofty. But the message is pretty basic: stop being a jerk, stop behaving stupidly, make better choices, think before acting, make better plans.

The Price of Civilization asks a lot from individuals. Sachs is advocating the wholesale reform of all our systems, from the political system to the transportation system. And it's easy to be skeptical of such ambitious goals. But I think a decent chunk of them are obtainable, and not because I think Americans are fundamentally altering their mindset.

One of the reasons I don't share the widespread pessimism about America's future is because we've been at this juncture many times in the past. We've had periods of self-doubt, and economic malaise, eras when foreign competitors ate our lunch and resources seemed scarce. And as we discuss in the video, the U.S. got out of it.

After the Gilded Age, when income inequality reached record levels and corporations ran riot, trust-buster Theodore Roosevelt helped re-establish the rule of law and ushered in the Progressive Era. After the collapse of the stock market in the 1920s, Franklin Delano Roosevelt and the New Deal pulled the economy back from the brink. As Sachs noted, "we've always had a social movement that pulled us back from abuse of power. And that's what we need today."

All it took was a little sustained, bold leadership — and a Roosevelt.

Unfortunately, we may not have another Roosevelt. It looks like we've got either an Obama or a Romney.

Daniel Gross is economics editor at Yahoo! Finance

Email him at grossdaniel11@yahoo.com; follow him on Twitter @grossdm

His most recent book is Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation