Economic Policy for the Real World

The nation's economic challenges are daunting. Restoring robust American prosperity and widespread economic opportunity will not be easy. But, as Hyman Minsky stressed, "Economic systems are not natural systems…. Policy can change both the details and the overall character of the economy." It's clear that what we are now facing is not simply a cyclical crisis, or even an employment crisis, writes Charles J. Whalen. Rather, it is a standard-of-living-and-economic-opportunity crisis—the latest phase in a decades-long "silent depression." In order to resolve it, our policy response must reflect that we are dealing with a deep-seated structural problem, one rooted in the evolution of U.S. economic development. Policymakers must pursue an agenda of recovery and reform that includes, at minimum, a major assistance package for state and local governments; more relief for the unemployed and those facing foreclosure; tougher supervision of financial institutions; stronger automatic stabilizers (e.g., public service employment); policies that foster economic opportunities for working families; improved retirement security; and labor law reform that gives workers a more realistic chance to organize and bargain collectively.