Many people fear that the next global economic downturn is coming and there’s little we can do about it. As the stock market dives, gold spikes, and emerging economies find themselves mired in recession, the chance of experiencing a crisis grows here at home. That begs the multi-trillion dollar question: have we used all of our economy-saving lifelines should another economic monster terrorize us?
Many people believe that the Federal Reserve’s barely-above-zero interest rate policy is no longer working. Like a steroidal body builder who’s leveraged all he can from pumping his system full of testosterone stimulants, people are concerned that there’s not much more the central bank can do to prevent another recession.
Luckily, while the central bank may be running out of practical ways to ignite economic growth, there’s still a great deal Washington can do to get the economy back on its feet. There’s little doubt that common sense reforms, which both parties will probably consider heretical, can help get the economy growing again if we fall back into recession territory.
In the event of another crisis, the government would be forced to intervene and stimulate demand to prevent another Great Recession or even worse. We should go far beyond monetary policy on this go-around, and institute reforms that would ensure economic growth for generations to come. There are practical solutions from both the left and the right, but Democrats and Republicans will have to cooperate and sideline their ideology in favor of common sense. In a recession-prone America, infrastructure investment and widespread deregulation are two good starting points to help strengthen the economy.
If there’s another downturn, we should consider a trillion dollar investment in American infrastructure. The sad state of American infrastructure is a golden opportunity to stimulate demand. We all know that many of our bridges are deficient, our busy airports are gross and outdated, and our seaports need to expand to accommodate a growing economy. The richest and most powerful country in the world needs world-class infrastructure to stay on top.
The need to make substantial investments in our infrastructure is obvious, and this is the perfect time to do so because of the rock-bottom cost of borrowing. While this won’t be popular with Republicans because it will increase our national debt, these investments will eventually have to be made anyway–and there’s no better time to spend that money than when interest rates are low and the economy is stuck in neutral.
Another area ripe for common sense reform is deregulation. While Democrats will likely scoff at the idea of reducing regulatory burdens, it’s a poorly kept secret that the land of the free is no longer very free in the world of business. For anyone who has dealt with bureaucracies, you must recognize that many aspects of our system of governance don’t make any sense.
The possibilities on the deregulation front are seemingly limitless: just reforming our insane tax code would be a boon to the economy. Never mind getting rid of a potpourri of overreaching regulation that increases the cost of doing business and dampens economic growth. As long as we’re protecting public health and the environment, government should be helping businesses prosper. Today’s regulatory regime is enough to discourage even the most entrepreneurial Americans from starting new businesses.
We have a bad habit of kicking the can down the road in Washington. It shouldn’t come as a surprise to any of us that our political class has been on the sidelines for much of the Great Recession. While the extreme left and right have made repeated calls to “audit the Fed,” the Federal Reserve is the only institution in modern America that has actively tackled our most grave economic problems. Today, we need to look past the “Fed” for economic leadership, because monetary policy solutions have already been exhausted.
The best and brightest live in America, and we should refuse to feel helpless in the face of another economic crisis. We need to recognize that political cooperation in Washington could shield us from the worse effects of another recession. Infrastructure investment and deregulation are good starting points that would reinvigorate our economy. Common sense should lead the way to ensure America doesn’t doom itself to a lost decade of economic stagnation.
Photo by @Patrioticgirl86
David is the Editor of Bold. He's especially passionate about millennial economic empowerment. A former local news reporter, David is originally from the Little Havana area in Miami, and later became a pioneer resident of the Disney-inspired town of Celebration, Florida. David holds a Master’s in Public Policy from the Harvard Kennedy School.