Think of the economy as being in the state that it was on December 7, 1941. The problem we faced then was not sustaining aggregate demand. It was the problem of converting from peacetime production to wartime production. We also had to anticipate a later problem of converting from wartime to peacetime, but note that the latter problem took care of itself quite easily. The Depression that Samuelson and others anticipated would follow the reduction in government spending in 1945 never materialized.
Right now, we don’t need TSA screeners, if we ever did. But Amazon and Wal-mart need people in order to ramp up their logistical capabilities. Jobs maintaining our infrastructure in health, electrical power production and distribution, and Internet capacity are essential. Jobs at amusement parks and casinos are not.
Production of more face masks and coronavirus test kits is essential. Some other production is less essential.
We are acting as if our biggest worry is how to get back to our “normal,” pre-war economy. Our biggest challenge instead is to win the war, after which we will transition to an economy that looks considerably different, just as the post-WWII economy was quite different from the pre-war economy.
For conversion, the government should spend where it is needed–on the health care supply chain, testing and development of treatments and vaccines, improving the logistical infrastructure for a social-distance economy (pay to ramp up 5G? Develop policies and systems to rapidly increase the use of drone delivery?), etc. It needs to cut spending on inessential services, such as TSA.
By worrying about the conversion back to peacetime now, we are getting ahead of ourselves. Once we get back to peacetime, there will be pent-up demand for. . .we don’t know exactly what right now. In the 1950s, we built Levittowns and Holiday Inns and K-Marts, none of which were anticipated in 1941.
Interesting analogy. After reading Yancey Ward’s comment about our collective inability to learn and I thought of the parallels between our current situation and 1854 London as John Snow figured out how cholera was spreading through the Broad Street well.
Miasma was a much more intuitive meme than germ theory but good evidence with feedback changed the world. Public health and public sanitation set the stage for the second industrial revolution. Our global system of highly connected mega cities has created an unstable equilibrium. The low priority problem of dealing with human excrement became critical in 1854 London. The low priority problem of respiratory infections has become critical in 2020.
The Golden Rule has to adapt to a new equilibrium. We can no longer expect others to live with our infected droplets from coughs and sneezes anymore than 1854 Londoners could live with human excrement. The irritation turned deadly.
The vaccines and other easy solutions are no longer a sustainable option. We need to start on the hard work of building the institutional know how to isolate respiratory infections; an equivalent to 20th century sewer systems and indoor plumbing to deal with our infected cough droplets.
I agree with you to a point. Just remember that crises aren’t necessarily one per customer. Hurricanes, wildfires, and other disasters will occur without regard for the quarantine. Intelligent adversaries will deliberately take advantage of weakness, so defense spending may be more important going forward than it has been. When it rains it pours.