A cyclist passes by the New York Stock Exchange in New York, on May 26, 2020.

Wang Ying | Xinhua News Agency | Getty Images

It has long been evident, though not necessarily obvious to all, that the ground of America's economy was shifting beneath our feet.

The very institutions that laid the foundation upon which the "American Dream" was built, were in decay.

Their facades may still have been bright and reasonably well-maintained, but their interior walls became discolored and their support beams rusty and fragile.

A dozen years ago, it became increasingly apparent to me that something more than half-measures and lip-service were required to re-lay that foundation to ensure prosperity for all, particularly, for the next generations to come.

Indeed, when I first thought of writing this column, I was among those recommending that the U.S. rebuild the entirety of its infrastructure to stimulate an economy ravaged by the Great Financial Crisis (GFC) and subsequent Great Recession while using that crisis to bring the U.S. economy fully into the 21st Century.

Sadly, amid the building hyper-partisanship in Washington, President Obama was only able to pass $800 billion in relief and stimulus. That was far short of the estimated $4 trillion required to do the job.

The bill that was passed barely allotted any money for rebuilding anything.

Instead, it was used to fill state and local budget gaps, extend unemployment insurance and offset a small portion of the $17 trillion in capital losses accumulated in the GFC.

Rebuilding our physical infrastructure; hardening our critical infrastructure; updating the nation's electrical grid; modernizing federal, state and local technology and procuring productivity-enhancing tools simply has not been, and still isn't, a true priority of the Federal government despite the obvious and increasingly pressing need.

While this was exposed, in stark relief, during the Great Financial Crisis, it was illustrated even more clearly, only a decade later, as America faced its first great plague in over 100 years.

Like the GFC, the emergence of the coronavirus and subsequent economic lockdown, made quite plain the structural reforms needed to revive the U.S.

It also exposed the deepest of racial divisions that still plague this nation.

The deaths of George Floyd, Ahmaud Arbery, Tony McDade or Breonna Taylor, along with a disproportionate number of people of color killed by the coronavirus, have made, more clear and vivd than ever, the institutionalized racism that has prevented every citizen, no matter their race, creed, color or religion, from obtaining equality of opportunity, if not outcome.

Beyond that, there remains a pressing need to make America truly great for a next generation of Americans while also supporting a recovery strong enough to restore normal daily life to the citizens of today.

Consider the implications of the virus-induced recession that has toppled the domestic and global economy.

America's longest expansion was stopped dead in its tracks by the Corona virus pandemic.

While the virulence of this illness is not unprecedented in human history, the Bubonic Plague and the "Spanish" flu killed more people, the sudden impact that disrupted economic life in 2020 is without parallel.

Within only a matter of weeks, 90% of the American population was told to "shelter-in-place." By early April of 2020, some 25%-50% of the nation's economic output was completely shut off.

In the first ten weeks of the American pandemic alone, some 41 million Americans filed for unemployment benefits, many times the number of the previous peak in filings.

It has been estimated that the unemployment rate will top 30%, exceeding the highest jobless figures of the Great Depression, while the economy could contract by as much as 30-60% when all is said and done, marking the deepest economic decline on record.

Economists hope that recovery from the pandemic will be speedy, both in terms of the human and economic toll. But such optimism, while typical of Americans of all stripes, may be misplaced.

For the first time in modern history, we've witnessed just how deeply our most cherished institutions have fallen into disrepair.

The anti-science approach of President Trump has led to delays and mixed messages from infectious disease experts, likely exacerbating both the human and economic toll.

His divisive comments, as race riots erupted around the country, propelled us back in time, much as his economic policies are wont to do, to 1968 and to that summer of violence and discontent that scarred an entire generation of anti-establishment youths.

As a consequence, the disruption and associated behavioral changes that took place as the pandemic, and subsequent violence, spread may well have long-term consequences.

That does not mean the U.S. won't ultimately recover. And with the proper policies and incentives, the economy of the next 50 years could be, quite conceivably, far stronger than the economy of the last 50 years.

Working from home (WFH), social distancing, limited physical contact and increasing dependence on technology via telecommuting and telemedicine, may radically alter how we live and work for years, if not decades, to come.

The Federal Government and the Federal Reserve will have spent, or lent, untold trillions of dollars to support large and small businesses and replace much of the personal income lost to the rapid shutdown of the U.S. economy.

In this "whatever it takes" moment, deficits be damned as a the first few rounds of government assistance have provided as much as $6 trillion, or roughly one-third of U.S. GDP, to help right the ship of state. There is likely more, maybe even much more, yet to come.

Even that assistance, however, has been unevenly distributed, despite the government's seemingly best efforts.

Still, at some point in the relatively near future, therapeutic medicines and, ultimately, a coronavirus vaccine, will allow us to return to some sort of normality.

Medical technology and innovation will heed the call to action and deliver solutions both to control future pandemics and measures to ensure that our work-a-day world becomes more flexible and more resilient over time.

However, the septic shock that the economy has suffered, both on the supply and demand sides of the economy, and along political and racial lines in society, has also given us pause time to reflect on the type of world to which we want to return once this crisis has passed.

As nature abhors a vacuum, it has been fascinating also to observe that the global work stoppage has significantly reduced, or eliminated, the pollution clouds that are visible over vast areas of the world.

In China, Europe or the U.S. CO2 levels fell by 35% during the period when human travel plunged precipitously.

The Himalayas became visible from miles away, Los Angeles smog was wiped away while blue skies reappeared around the world.

It stands as testimony, and confirmation, that anthropogenic activities have greatly affected the environment and also proves that we are capable of taking steps to more quickly address climate change than previously assumed, provided we show the wisdom and the will.

Having said that, the resumption of production in China has already brought the clouds back. That will soon be true elsewhere in the world, as the global economy re-starts its engines of growth.

Clearly, this shock should prove to be a wake-up call, not just to America, but to the world, as well.

How can we re-create the relative peace and prosperity of the post-World War II period? This is the critical question that we all must address.

Can we restore and improve upon multi-national alliances, and address the political, economic and social imbalances in the United States that have been laid bare by an invisible enemy we were ill-prepared to fight, or one we have not battled with for far too long? The simple answer is yes. But, getting to yes may be far more complex.

The U.S. has many inherent strengths, but also some glaring weaknesses that have been brought to light in an extremely short period of time.

The U.S. has the most sophisticated higher education system in the world, the most vibrant valleys of innovation, a robust financial infrastructure and a resilient workforce that, historically, has overcome world wars, prior pandemics and other dislocations, only to emerge stronger in the end.

However, those institutions were hamstrung by a lack of leadership, both in the public and private sectors, the former focused on power rather than policy and the latter focused too much on profits over shared prosperity.

As in prior period of restructuring and reform, a new class of leaders and a new enlightenment among the elite will be required.

This time, however, that will likely not happen without a top-down restructuring of how America handles the challenges of the future, without looking to the past.

These challenges that include everything from the distribution of healthcare to a radical re-thinking of how it does business.

The focus needs to be on the governed and not the government on all stakeholders, not just shareholders.

America can be re-built, and it can be as prosperous as it once was. But it will need visionary leadership that has a keen and perceptive eye on the future.

It will require reimagining a U.S. economy built for 2050 and beyond, not 1950 and before.

We must not look to the past to restore America's greatness. The triumphs of yesteryear are relics of an age gone by. Coal, steel and smokestacks are not America's future.

Enlightened governance, enhanced technologies, advanced infrastructure, lifelong learning and adaptability are the keys to our economy's future success.

We desperately require a new image of an America that, while already great, can renew its domestic power, project an image of global vitality and industriousness, and re-engage with our allies, upon whom we so obviously rely, to realize the restoration of a peaceful and prosperous world that shares its riches with all and holds malice towards none.

Continued here:
Ron Insana: Rebuilding the American economy to bring peace and prosperity to all - CNBC