We knew the crisis was serious back in 2008. The banks got their bailout. Some of the money went to bonuses. Little of it went to lending. And the economy didn’t really recover.
Even if we fully repair the banking system, we’ll still be in deep trouble—because we were already in deep trouble. The fact is the economy in the years before the current crisis was fundamentally weak, with the housing bubble, and the unsustainable consumption to which it gave rise, acting as life support.
The trauma we’re experiencing right now resembles the trauma we experienced 80 years ago, during the Great Depression, and it has been brought on by an analogous set of circumstances. Then, as now, we faced a breakdown of the banking system. But then, as now, the breakdown of the banking system was in part a consequence of deeper problems.
The problem today is the so-called real economy. It’s a problem rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with. The real economy has been in a state of wrenching transition for decades, and its dislocations have never been squarely faced.
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