Getting the US Economy Working Again

By Frank-Jürgen Richter

December 10, 2020

The US dollar has shown a marked decline, with a top American multinational investment bank predicting that it could drop by “as much as 20 percent in 2021 should COVID-19 vaccines become widely distributed and help revive global trade and economic growth”. Another American multinational investment bank goes further and “recommends selling the dollar in favor of stocks and credit”. This is attributed to several reasons. While some analysts reckon it is primarily on account of its ballooning trade deficit, others think it is only a cyclical trend that will reverse as it has in the past. In the meanwhile, the US dollar continues to be the reserve currency of choice.

Even in the years preceding 2020’s pandemic, its economic growth did not stand on firm footing although certain sectors such as technology, automobiles, aviation, and defense have been strong pillars. The pandemic has further strained the US economy and fiscal efforts announced by the government are already pushing federal deficits to levels seen more than half a century ago.

Horasis believes that a robust recovery response can be achieved by developing a working consensus that cuts across disciplines and industries by demonstrating a willingness to work towards shared goals. In an effort to encourage discussions, Horasis is organizing the ‘Horasis Extraordinary Meeting on the USA’ on 18 March 2021. The virtual event will have multiple sessions paneled by senior members of the Horasis Visions Community.

Plans of the New Leadership

US President-elect Joe Biden has drafted an economic recovery plan termed Build Back Better. This initiative seeks to create millions of well-paying jobs for US citizens and aims to pave the path to economic recovery. The focus will be to first contain COVID-19 and then to fuel the economy.

It will be necessary for the new administration to place US citizens at the core of its recovery plan. As with any other economy, working-class families make up the largest share of the population. It is only fitting, therefore, to address their concerns and extend enablers to ensure recovery is swift.

The new US administration plans to change America’s increasing dependence on other countries for its critical supply chain requirements. They propose to achieve this by building a strong industrial base supported by a small business-led supply chain. And supporting this will be the proposed sustainable infrastructure powered by clean energy systems. The renewable energy focus is definitely worthy of commendation.

However, growing interdependence among nations is only a natural part of evolution, and indeed, multilateralism. To attempt and impose laws that favor techno-nationalism will only open a Pandora’s box of problems. Rather, policymaking will have to acknowledge that the current prevailing trend of globalization benefits all. Globalization has been a gradual process over decades and there is little possibility that all economic activity can be reshored within the geographical borders of one country alone.

Small Business Must be Prioritized

Should the plan to keep small businesses as a cornerstone to economic recovery be implemented, it will bode well for the economy. Much as it is the case in emerging economies, small business is crucial to the US economy too. And this sector has faced several hardships over the recent past.

President Biden has addressed the hardship working mothers and women have to face in terms of caregiving. Acknowledging this, he has also announced plans to make child care more affordable, while increasing remuneration for professional caregivers and educators.

Most importantly, the new administration also seeks to address issues of social division. An economy cannot make progress by marginalizing certain sections of society. The Biden administration proposes to achieve this by investing in Black, Latino, and Native American entrepreneurs and the communities they live in. Focus will be on progress regardless of “race” or “zip code”.

The incoming government’s recovery plan checks all boxes – one that will likely ensure a well-rounded recovery embodying collaborative and sustainable approaches.

Collaboration Must Trump Isolationism

Governments and businesses will need to actively push for more public-private-partnerships to ensure growth is attained while striking a balance between revenue and sustainability. The pandemic highlighted shortcomings in preparedness to health emergencies and the haphazard measures that have been employed to contain it. But for solid economic recovery to begin, the approach will have to be streamlined and measured.

Collaboration, rather than self-sufficiency, should be the mantra going forward. The growing tendency to adopt protectionist positions stands to further augment socio-economic predicaments. COVID-19 has likely pushed global progress back by a decade at least, and cross-disciplinary cooperation is the need of the hour. Precious time has already been lost and differences will have to be set aside to find common ground for the greater good. And the ‘Horasis Extraordinary Meeting on the USA’ sets out to do just that.

Photo Caption: The Manhattan skyline. A lot of hope is pinned on the incoming Biden administration. Image by Pexels from Pixabay