The Case for Optimism in 2021

For many we'd like to wipe the year pandemic 2020 for our memories.  On the plus side, Trump was not reelected.  On the negative side of the ledger, Republican political whores and sycophants continue to attempt to overthrow the election results and, if they hold control of the U.S. Senate will likely engage in economic sabotage against the Biden administration under the guise of being "fiscally conservative" after they and Trump blithely added $8 trillion to the national debt.  Despite these likely evil GOP machinations, one economist is optimistic that 2021 will be the beginning of a strong economic recovery that should improve the situation for many Americans, especially those who engage in personal responsibility, stay in school and reject the embrace of ignorance which is now a major requirement to be a modern day Republican. A column in the New York Times looks at the bumpy start of 2021 which hopefully then unfolds on a more positive note.  Here are highlights:

The next few months will be hell in terms of politics, epidemiology and economics. But at some point in 2021 things will start getting better. And there’s good reason to believe that once the good news starts, the improvement in our condition will be much faster and continue much longer than many people expect.

OK, one thing that probably won’t get better is the political scene. Day after day, Republicans — it’s not just Donald Trump — keep demonstrating that they’re worse than you could possibly have imagined, even when you tried to take into account the fact that they’re worse than you could possibly have imagined. One of our two major political parties no longer accepts the legitimacy of elections it loses, which bodes ill for the fate of the Republic.

But on other fronts there’s a clear case for optimism. Science has come to our rescue, big time, with the miraculously fast development of vaccines against the coronavirus. True, the United States is botching the initial rollout, which should surprise nobody. But this is probably just a temporary hitch, especially because in less than three weeks we’ll have a president actually interested in doing his job.

And once we’ve achieved widespread vaccination, the economy will bounce back. The question is, how big will the bounce be?

Our last economic crisis was followed by a sluggish recovery. Employment didn’t return to 2007 levels until 2014; real median household income didn’t regain the lost ground until 2016. And many observers expect a replay of that story, especially if Republicans retain control of the Senate and engage, once again, in economic sabotage under the pretense of being fiscally responsible.

This 2020 crisis, by contrast, was brought on by a headwind out of nowhere, in the form of the coronavirus. The private sector doesn’t seem to have been particularly overextended before the pandemic. And while we shouldn’t minimize the hardships faced by millions of families, on average Americans have been saving like crazy, and will emerge from the pandemic with stronger balance sheets than they had before.

So I’m in the camp that expects rapid growth once people feel safe going out and spending money. Mitch McConnell and company will, no doubt, do what they always do when a Democrat occupies the White House, and try to sabotage the recovery. But this time the economy won’t need support as badly as it did during the Obama years.

And I suspect, although with less confidence, that the boom will go on for a long time. Why? Because like a number of other people, I’m getting optimistic about the future of technology.

Lately, however, I’ve been hearing a lot of buzz around new physical technologies that reminds me of the buzz about information technology in the early 1990s, which presaged the productivity surge from 1995 to 2005. Biotechnology finally seems to be coming into its own — hence those miraculous vaccines. There has been incredible progress in renewable energy; I’m old enough to remember when solar power was considered a hippie fantasy, and now it’s cheaper than fossil fuels.

This new wave of innovation doesn’t have much to do with policy, although progress in renewables can be partly attributed to the Obama administration’s promotion of green energy. But the Biden administration, unlike its predecessor, won’t be anti-science and won’t try desperately to preserve the coal-burning past. That will help us take advantage of progress.

I’m less confident in my techno-optimism than I am in my expectations for a rapid employment recovery once we’ve been vaccinated. But all in all, there’s a pretty good chance that Joe Biden will preside over an economy that surprises many people on the upside. Happy New Year.