Policymakers appear to be approaching the coronavirus pandemic sing the same playbook as the 2008 financial crisis.

But instead, the US needs to change its policy response and address the supply constraints caused by the coronavirus.

We need to produce basic essentials like masks, other personal protective equipment, and ventilators, so the American economy can get moving again.

We've done this before in the Great Depression and World War II and we can do it again.

Robert Hockett is a professor at the Cornell Law School.

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Something must be wrong with me. I keep looking for signs that the clock has turned back to 2011

Why?

Because so many friends and allies for well over a decade , are still denouncing austerity, saying we're all modern monetarists now, talking of keystroke money, even $1 trillion 'platinum coins' again.

But the coronavirus pandemic is not the last crisis, and our response should not be the same.

Stop fighting the last crisis

The crisis of 2008 and its aftermath were almost entirely a demand-side crisis. There was no serious national question of goods or services shortages.

What we lacked was sufficient effective demand, under debt-deflationary conditions, for all those abundantly available things to be purchased and thus spark continued production and employment.

Relative to the dramatically contracted supply of credit and money there were in effect gluts of the things that we need and consume.

Against that backdrop, cries about 'deficits' and demands for 'belt-tightening' austerity were as bizarre as could possibly be. And so I argued myself hoarse that we had to sand down the overhang in our private sector from both sides – writing down debt on the liability side, pumping up prices on the asset, and thereby closing the gulfs between that which we owned and we owed.

We won that fight – sort of. Of course the austerians made a fuss and did all that they could to impede the progress. And they even succeeded in slowing us – to the point that many have died or been ruined since 2008 because financial and physical help came too little or too late. Those of us arguing for greater government expenditures nevertheless won, in the sense that Republican hostage-taking was finally stared-down in the autumn of 2013 and —yes —we all are post-Keynesians now.

But that means the current pandemic ain't 2011. It is not even 2008. That is because this crisis is twice the crisis that 2008's was – not so much quantitatively speaking as qualitatively speaking.

What to do about this crisis

What I mean is that this crisis – the one that is seriously threatening to ruin if not kill people – is a supply side crisis in addition to a demand side crisis. We are not producing what, or as much as, we need right now,. And so all those 'runs' we are hearing about are on bathroom tissue as often as they are on assets.

Medical equipment storehouses and grocery stores are as 'failing' as banks and financial markets right now. That's scary.

It isn't hard to see why, is it? We might be in large part a 'knowledge' or 'information' economy in which people can collaborate productively even while remotely. But we are still also a service and manufacturing economy. And social distancing breaks up the synergies – indeed it's now ending the very activities – on which both production and service depend.

Put simply, we still have to have people under the same roofs to produce the goods we need. And right now we can't.

We don't have the masks, the protective clothing, or all the other protective gear that we need to enable people to work – literally, physically work – together again. And like so many of our economy's greatest challenges, this one too works in recursively self-worsening fashion – if you don't have what you need to work physically near one another, you don't have what you need to make more of the necessary clothing itself.

What do we do then? It's really not all that hard. Our US Army Corps of Engineers, with 37,000 directly employed or contracted workers, is the largest construction and production team in the world.

Should we not, then, be using the Defense Production Act — which Mr. Trump has invoked but mysteriously is only starting to use — to suit up and mask up our Corps of Engineers personnel and set them to manufacturing?

We can easily phase-in the ramp-up: first, more of the masks and protective clothing items that are needed to get people back to work.; Second, with help from a steadily growing private sector labor force now able to procure masks and such clothing themselves, all needed medical equipment including pulmonary ventilators; and third, all other essentials in which shortages might soon come to appear?

Such measures are anything but unprecedented. When the US entered the First World War, Congress and President Wilson established a Defense Industries Board to ramp-up production of war materiel and related essentials.

After Pearl Harbor, President Franklin Roosevelt and Congress did the same thing with the War Production Board. And even before Pearl Harbor, President Herbert Hoover's and Roosevelt's Reconstruction Finance Corporation mobilized productive infrastructure and manufacturing activity to boost national productivity even while putting millions of Americans back to work.

We don't have a moment to lose here.

Robert Hockett joined the Cornell Law Faculty in 2004. His principal teaching, research, and writing interests lie in the fields of organizational, financial, and monetary law and economics in both their positive and normative, as well as their national and transnational, dimensions.