Conventional wisdom is getting whipped around by this pandemic. Remember in January, when China was first getting locked down because of coronavirus? Conventional wisdom (and by conventional wisdom I mean the Trump administration) said China's loss would be America's gain. Commerce Secretary Wilbur Ross said, "I think it will help to accelerate the return of jobs to North America." Could coronavirus hurt America in any way? In the same interview, Ross said, "I think it’s almost physically impossible for there to be a recession this year." When you put an out-of-touch grifter in a responsible government position, you get what you should expect, political hackery, not expertise. Unless you live under a rock, you know where this goes next.
Fast forward to today. American business is shutting down rapidly. Federal Reserve Bank of St. Louis President James Bullard predicts, "the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product." Quite the opposite of what Trump's Commerce Secretary was predicting less than two months ago. Conventional wisdom changes rapidly.
Looking ahead, some see a rescue of sorts coming from...where else but China. China was the first nation hit by the pandemic and looks like it'll be the first to recover. That's good for America. According to Wired's Zachary Karabell, "Chinese—and Japanese and South Korean—factories are coming back to life and ramping up production. The result: We now have the odd potential to have sufficient supply on hand just as demand starts returning in the West at some point later in the spring." Conventional wisdom about global supply chains (and by conventional wisdom, I mean my own thinking as much as anyone's) flips again.
Are global supply chains bad when pandemics break out? Yes. Are they good because they speed recovery from pandemics? Yes. Which is it? Are global supply chains bad? Are they good? Darned if conventional wisdom knows.
No comments:
Post a Comment