First, the bad news.
In addition to the likely hundreds of thousands, if not millions, of deaths America is prone to sustain as we weather the COVID-19 pandemic, we are also experiencing a massive economic meltdown to boot. The latest economic forecast from Goldman Sachs is predicting a 34% reduction in domestic GDP and projecting that headline unemployment numbers will skyrocket to 15% in the second fiscal quarter (April through June) of 2020.
These numbers, if they even come close to fruition, would represent the grandest economic retraction in the history of the modern economy. For comparison, during the Great Recession of 2008, the American economy saw a GDP contraction of 4.2% (between the fourth quarter of 2007 and the second quarter of 2009). The Great Depression saw GDP fall 6.4% first in 1931 and 12.9% in 1932, the two worst years.
Now, for the good news.
Both these economic pitfalls saw drastic surges in economic growth in the years following. After recovering from the 2008 meltdown, America experienced nearly 11 years of uninterrupted economic expansion. The same was true for the decades following the Great Depression.
But more importantly, the crisis offers an opportunity to re-envision what the American economy looks like and how it should function. There exists already a framework for what American progressives think the reforms should look like in the Green New Deal, a legislative package proposed by Rep. Alexandria Ocasio-Cortez of New York.
Although the set of proposals certainly does not lack in its bold vision, it is unfortunately not an attainable goal given the hefty price tag — independent analyses estimate its cost to be between $52 to $93 trillion. Americans should instead opt for a more moderate set of proposals aimed towards futurizing the American economy without breaking the bank.
A central feature of the Green New Deal is its vision of an American economy that protects the environment and natural resources to a greater degree than we do currently. This is a noble goal and an aim worth fighting for, but there are more pragmatic ways to attain that outcome than the policies proposed in the legislative package. Potential routes exist as alternatives, and they would not have the same hampering effect on economic growth than certain aspects of the Green New Deal.
One such alternative would be a carbon tax. A bipartisan letter signed by 55 top economists in early 2019 endorsed the idea of taxing carbon emissions, saying “A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”
The utility of taxing carbon is simple and twofold. First, it is a means to fund research in green technology as the primary function of taxes is to raise revenue for the government. Secondly, the tax itself would incentivize businesses to move away from carbon-emitting sources of energy and toward more renewable sources.
Another policy route to combat climate change would be an “all of the above” approach to renewable energy generally, and an embrace of nuclear energy specifically. Nuclear energy is an option that should not be off the table due to its many upsides. It produces very little waste and does not emit carbon or air pollution. It is also cost-effective, so much so that many eastern European countries such as Hungary, Slovakia and Ukraine all rely on nuclear energy for more than half their power, presumably to ease their reliance on Russian oil. Looking to western Europe, nuclear power amounts to 71.7% of France’s energy economy, showing it is clearly a viable option for green energy.
Beyond the realm of possible policy changes brought on by the option to reset various aspects of the economy, there are likely to be other aesthetic changes to how we do business. This pandemic may be the final nail in the coffin of brick-and-mortar retail, an industry that’s already on its last legs due to the advent of the modern marvels of Amazon, media streaming and the internet retail enterprise writ large.
We should welcome such changes and use this as an opportunity to construct a futuristic society less pessimistic of the many benefits of technological innovation, both in the everyday economy and especially in the tech sector.
Former Chief of Staff to President Obama, Rahm Emanual once said in relation to the Great Recession that America should “never let a good crisis go to waste.” Twelve years later, that message remains as necessary as America has the opportunity to remake the American economy. We should not squander this chance.
Dylan Meisner is a sophomore studying political science and international security and conflict resolutions. Follow him on Twitter @DylMeisner.
