Jeffrey Sachs: Sow the seeds of long-term growth

"The striking feature in the current debate about austerity and stimulus has been the lack of attention to investment. Consumers will not provide the engine of recovery, nor should they after overspending for a decade. Instead, the US and Europe should ... promote long-term investments in physical and human capital as the proper way back to sustained growth.

... Obama tried to prolong the consumption binge by aggressively promoting home and car sales to already exhausted consumers, and by cutting taxes despite an unsustainable budget deficit. The approach has been hyper short term, driven by America’s two-year election cycle. It has stalled because US consumers are taking a longer-term view than the politicians

"By contrast, the administration’s interest in boosting investment has been haphazard. Mr Obama has shown a strange inability to articulate an operational and forward-looking policy framework in signature areas such as healthcare, energy, climate change, and long-term fiscal policy."

Er - Obama cut taxes?  And, I thought there was a big health care bill passed...  Strange inaccuracies on their face.  Still... point absolutely made, re need to articulate a developmental plan.   Sachs suggests five areas of attention:

1. Clean energy
2. Transport infrascructure
3. Education
4. Infrastructure for the third world
5. Long-term debt reduction plans; especially - cut wars.

I'm not so sure about #4 myself - and, #5 is sure a loaded discussion.

NB, also:  This stuff will require spending.  I think it's what the evil Keynesians have been saying:  Spend money now when you can borrow for low rates, and get jobs, which boost the economy short term and infrastructure which boosts the economy long term.

---Sachs, Financial Times, 7/21