A Global Depression: An Opportunity?

While it may seem dismal to label the situation as such, we are entering a global depression. The new coronavirus has devastated economies all around the world and it has highlighted all the flaws in the global economy, as well as flaws in each nation's economy. It is a bigger crisis than 2008, because this has gone beyond banks. Governments have to somehow get buying power to those who need it.

Especially in America, COVID-19 has shown everyone that the working class has a bigger impact on the economy than banks and hedge funds. Supply lines are going to change, demand for things is going to change. What happens after is an opportunity for a complete restructuring of the financial system and how our economy is going to function.

Hedge fund manager, Ray Dalio, appeared in a virtual TED talk to offer his insight on how this pandemic is going to change our economy, (and at this point its no doubt that it will.) One of his most notable arguments, while he is hesitant to say, is that we are not in a recession, but a depression very analogous to America in 1930-1945. There's too much production of money and credit, 0% interest rate, and a general question of "Who's going to be able to pay for all this?"

During the restructuring of the economy, there's a lot of risk for conflicts, competition, and just a lot of uncertainty in general. As mentioned before, the pandemic has shown everyone how blatantly extreme the wealth distributions in this country are. 3/5 of Americans have been paid hourly and a lot of them are unemployed now.  Dalio also says there might be a retreat from globalization in order to revitalize local economies.

With the neoliberal economist mindset of higher taxes and government regulation stunting economic growth, the top 1% have grown 21 trillion dollars richer, while the bottom 50% have grown 900 billion dollars poorer. These wealth distributions have been shown before but never as clearly as today, and not with this much opportunity for change.

But to restructure the economy peacefully, there's going to be 4 main things. Debt forgiveness, redistribution of wealth through taxes, printing money, and most importantly: innovation. Innovation companies and staple companies are the least impacted by this, and are going to bounce back. By staple companies I mean meat, food, fruit companies.

On a more optimistic note, during the restructuring of the economy, we can invest in better education, not just on the individual level, but on a national/societal level as well, because only that way are we able to take a step towards a fair way of the most efficient allocation of resources. Overall, there is going to be a much higher appreciation for the working class. But most importantly, as a country, we are at least getting a better idea of how much better our economy needs to be in terms of providing basic healthcare and better education for more equal wealth distribution.