Jeffrey Sachs: evaluation

Transcript context

…Preferential diagnostics. Yeah, and basically, by the way, he did, in my view, two things wrong. He misdiagnosed the 2008 crisis, and second, then, gave the prescription to it. The misdiagnosis, in my view, is it was not a Keynesian animal spirit’s crisis, meaning that suddenly there was just a collapse of investment and you needed fiscal stimulus to undo it. It was two things, I would say. If you want to classify it, it was a Hayekian displacement from a credit boom, but even that wasn’t enough to lead to a crisis. It was Lehman Brothers failing in September 14, 2008, that drove a financial panic. Addressing a financial panic is a condition that needs to be addressed as its own pathology. That’s my view that if you approached it that way — because I remember arguing with Summers that weekend, and many weekends after that — approach it as unlocking the financial panic, not as the need for reaching a $1. 6 trillion deficit in 2009. Just get credit going again. In that case, I think, Bernanke, by the way, did the right thing, which was flood the market with liquidity, make extraordinary purchases, QE, all the rest. I thought it was the right policy in 2008 to ’09, not the fiscal stimulus, because I didn’t think it would work. I didn’t think it was necessary. I thought it would lead to a big diversion of attention and public investment actually from longer-term things, which in a way is how I would interpret our recent political history. In other words, Obama used his political capital for the wrong thing in that fiscal stimulus. In any event, I have disagreed with Krugman all through these years about this. He kept saying, “We’re in a depression. We’re in a depression.” Then when we started to recover I said, “Oh, we’re recovering.” “No, no, we’re still in a depression.” Then when we really recovered he said, “Just as I said. We recovered because we had this 2009 stimulus.” We recovered in the context of a significant fiscal cut, actually, not what he recommended because fiscal policy wasn’t the decisive element of this business cycle. We have about five minutes left. I’ll give you two questions, and you can divvy up the time for them as you wish. First is to tell us a bit about your new work on “rise of the robots.” Also, do you view this as a description of what’s happening already or a prediction for the future? Second, tell us how to fix graduate education in economics. The floor is yours. [laughter]…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.