On the road to recovery, don’t drive too fast

Many are now arguing that the economy will soon bottom out. Indeed, it’s fast becoming the consensus view. There are some serious obstacles, needless to say, but the reason we can talk about recovery at all is because the government took strong action: An aggressive Federal Reserve policy, coupled with the Obama stimulus; some housing adjustment plan; and the ongoing bank rescue package, disappointing as it may be.

But now there is a danger. Some will argue that things weren’t all that bad to begin with and government overspent and overplayed. “We never needed the government spending in the first place,” they will say. “Look at all the debt we have.” This will be nonsense, but beware the media. They will give the claims at least equal time. Still, we would be in a far bigger hole now without the aggressive action.

But even more disturbing, we may lose the impetus to make the major reforms necessary to control the financial behemoth and to reinvest in the nation. The to-do list is terribly long: pre-k and other education investment; energy conservation and transportation infrastructure; union revitalization; higher minimum wages and more support for living wage campaigns; a restructuring of the financial industry; and most important, if one can even single something out, health care reform. The latter will determine the nation’s future more than anything else.

Imagine if the Depression ended before the New Deal got underway. Imagine all the necessary reforms and public works that may not ever have been undertaken. I am not rooting for a prolonged recession; I am rooting for American enlightenment.
Braintruster Jeff Madrick is a regular contributor to The New York Review of Books and a senior fellow at the Schwartz Center for Economic Policy Analysis at The New School.