What the Democrats Must Do
Although the United States has entered a period of deepening social strife and economic depression, the Republicans who are in charge have neither the ideas nor the competence to do anything about it. The Democrats must start planning to lead, starting with a commitment to full employment.
BERKELEY – Like almost all other countries, the United States has become poorer since the COVID-19 pandemic began, because Americans can no longer engage in valuable activities that require close human contact. Millions of workers now need to find other productive things to do, and many of these new tasks will not be as valuable as the ones they replaced.
But there is no economic reason why the depression triggered by the COVID-19 crisis should be particularly deep or prolonged. The US leads the world in technological and organizational competence and is home to a highly skilled workforce. The problem is that recovery won’t happen by itself.
The fact that it took a decade for the US to recover fully from the 2008 financial crisis should inform today’s thinking. Back then, the US housing-construction sector had already shrunk back to its normal size before the subprime-mortgage crisis erupted, which meant that no sectoral structural adjustment was required. The challenge, rather, was to identify and reallocate resources to previously unproduced goods that would become more valuable in the future.