Why We Need a Full-on Reset

More and more economic experts are saying the U.S. economy is headed for a "double-dip" recession. But actually it's much more serious than that. Earlier this week, Paul Krugman speculated that the U.S. is headed for a Third Great Depression, noting that while recessions are relatively common and depressions quite rare, he fears our current economic circumstance is coming to look more like the Great Depression of the 1930s or the Long Depression of the late 19th century.

The first chart below from David Leonhardt of The New York Times shows the recent downturn in private-sector unemployment.

The second chart from Leonhardt's Times colleague Catherine Rampell (one of the most statistically savvy reporters around) compares the current economic downturn to previous ones. Krugman's point taken: This doesn't look like any run-of-the-mill downturn.

While some do not want to face the looming reality, it is becoming clearer every single day that what we face is not any typical recession but a full-blown economic reset. My own look at the previous two similar crises shows that Great Resets like what we are now going through are generation-spanning events which require deep changes in economic, institutional, and spatial structures.

Are our economic policymakers ready for the enormity of the challenges we face - the deep and fundamental changes in our economic system, from what we produce to what we consume - required to restore economic prosperity?