Henry M. Paulson Jr. is a former U.S. treasury secretary, chairman of the Paulson Institute and co-chairman of the Aspen Economic Strategy Group.

The pandemic crisis has laid bare the fact that while our economy was fundamentally strong before the crisis hit, we have unsustainable levels of income disparity in the United States, with too many people living paycheck to paycheck, afraid of the wolf at the door. 

The more quickly we are able to safely restart the economy, the less hardship Americans will bear. Now, we have to get through the night, and there is broad consensus that massive government intervention is necessary to keep our economy from drowning.

But let’s look ahead and make today’s investments count. Indeed, when the recovery begins, the policies we put in place will be more important than the coronavirus crisis itself in determining the economic prosperity of generations of Americans and the effectiveness of the United States’ political system and global leadership, both of which are rooted in economic strength.

We must maintain our innovative spirit and economic dynamism based on market-based principles. History has proved that capitalism is by far the best economic system in the world. But we must modernize and adapt capitalism to fit the post-coronavirus circumstances so that more Americans can participate in our future economic success. Otherwise, that success will be fleeting. 

Here are the fundamental principles we must keep in mind:

1. Our economic model should protect those most in need. We must significantly upgrade our social safety net while maintaining incentives to work. Without a job, millions of Americans lack the savings to meet next month’s rent or mortgage payment without government assistance. When workers such as those in the hospitality sector have an annual average income of only $20,000, lectures about the need to save are ineffective. We need a more robust system of supplemental income and monthly food, rent and health insurance assistance.

2. State-of-the-art infrastructure is essential to economic competitiveness. It’s time for a modern-day domestic Marshall Plan that includes massive government and private investment to rebuild and create the infrastructure of the future. This program can play an important role in spurring the recovery, creating jobs and giving the market a lift. But it must be future-oriented, not only repairing and maintaining roads and bridges but also investing and making regulatory changes to create a best-in-class national digital infrastructure.

3. Human capital is what differentiates us. To bolster the productivity and resilience of our economy, we need big, smart, forward-looking investments in education. We must commit more public dollars and resources to support institutions of higher education and to foster a workforce that has the skills to be innovators, business builders and job creators. We also need an immigration policy that attracts, educates and trains the best minds from around the world.

4. Protectionism will destroy our competitiveness. Trade fosters American competitiveness and innovation. We need to strengthen our investment in trade linkages rather than retreat into self-destructive isolationism.

5. Our environment is vital to long-term prosperity. We need to protect the clean air, water and biodiversity that are essential to our long-term economic prosperity and implement policies and investments to mitigate the economic risk of climate change. As a start, it’s time to adapt our policies and build the infrastructure to withstand the weather-driven shocks that are a short-term certainty.

6. Capital is the lifeblood of the economy. We must nurture best-in-class capital markets with a regulatory and oversight regime that ensures financial stability and consumer protection while encouraging the innovation that has made them the envy of the world. Capital markets, ranging from venture capital firms to leading global banks and asset managers, facilitate economic growth by financing businesses that create jobs and support American families.

7. Massive debt will cripple our ability to achieve long-term prosperity. The aim of the recovery must be to get more Americans working, spending and paying taxes. When the recovery is behind us, we will have to begin the long but essential process of reducing our national debt. It makes sense in the short term, while interest rates are so low and the need so great, to fund strategic investments with long-term debt. But in the end, more revenue will be necessary, and wealthier Americans will have to pay higher taxes. A major overhaul of our tax system can raise substantial revenue without hurting competitiveness. And we can reduce federal expenditures if we make reforms, such as fixing our inefficient and expensive health-care system.

This crisis will test our political system, our grit, our patriotism and our willingness to sacrifice for the common good. We will emerge stronger only if we are able to reshape our policies so that, while still retaining the magic dynamism of capitalism, they are responsive to dramatically different circumstances.

We will avoid the horrors of the Great Depression because we are a rich country with strong institutions and a history of overcoming daunting challenges. Now we are being called upon again. Our nation will never be the same, but we can emerge stronger and retain our role as a global leader — if we are smart about the rebuilding to come.

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