How the economy will recover
Things may look grim now, but history shows that the economy will recover -- with a little government intervention.
The following is not a full transcript; for full story, listen to audio.
Washington and the rest of America is currently obsessed with stimulus plans and bailouts. But in this Sunday's magazine, the "New York Times'" David Leonhardt argues that the U.S. economy will eventually recover. David Leonhardt joins "The Takeaway" to discuss how quickly the economy should grow as it bounces back.
Leonhardt: "What seems to have worked in the past is a pretty active role alongside the private sector for the government in making investments. It's funny, the government does a lot of things pretty poorly -- there's no doubt about that -- but if you look at some of the basic investments its made -- it built the Internet, it built the highway system, it in many ways built the modern bio-technology industry through NIH Grants.
"It really has an excellent record in making some ... basic investments, and the amount of investing that our government does in these sorts of things has declined, really rapidly, between the 1950s and now."
"I think one of the big lessons of this crisis and this crash is that, government plays an indispensible role. That doesn't mean it runs the economy; that doesn't even mean it needs to be as involved as the European governments are in the European economy. But the government we've had has not been involved enough. It allowed for all these terrible things to go on in the financial system, which then in turn forced the government to get more involved ... so I think the government does play an absolutely vital role in a number of places. Education is one of them -- there is no better bet for economic growth than education."
According to Leaonhardt, the amount of debt we're currently in, isn’t going to stifle our growth: "We're going to end up with a debt-to-GDP ratio of maybe 60 percent in a couple of years -- after World War II it was above 100 percent, and we all look back at the 50s and 60s as the golden age of economics. We can grow with this level of debt."
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