In an interview with CNBC, Sachs also stated that productivity measurement in the U.S. is outdated due to technological improvements in modern devices like computers and smartphones, and he expressed concern about artificial intelligence advancements, stressing a need for more regulation in the AI sector.
“The first thing we should do is tamp down the geopolitical risks. We should negotiate a peace in Ukraine,” Sachs told CNBC.
He said issues between China, Ukraine and Russia are major reasons why global profitability is low. Trade conflict between the U.S. and China is strained due to a history involving tariffs, tech rivalry and alleged spying. As a result, the U.S. government is dismantling long-standing supply chain relationships with China, creating supply shocks.
“If we want clear sailing on the economy. …we should reduce the tensions between the United States and China. I think this would not only cause the whole world to breathe a sigh of relief but really help businesses worldwide to get better oriented,” the bestselling author explained.
Professor Sachs also discussed productivity measures in the U.S., explaining that while we live in a service economy, we’re not accurately measuring the flow of services, and we instead only measure the costs of services.
He explained, “When you’re producing a ton of steel or a bushel of wheat you can talk about productivity pretty specifically, when you’re producing a range of services, a lot of which are now digital, or you’re providing education in different ways or information is flowing in different ways. Our government is so far behind in measurement issues that I personally don’t pay too much attention to the official data on productivity.”
Sachs also said the discussions around AI are not hype and will have a huge effect on jobs in the coming years but overall it’s a big win.
“Part of society is going to be so incredibly rich that they actually should pay some more taxes. And we need to even this out a bit. And we have not had either the quantification of those effects carefully studied yet, nor have we had really a policy debate about this except raising the idea of things like guaranteed basic income, which are ideas that will have to be on the table in an AI-rich world. It’s going to change a lot,” Sachs warned.
Watch the video above to see the full interview.