A Remembrance and Being Obvious

Last Friday I attended a memorial for Bill Brock and was reminded again of how much we will miss him and how badly we need more people like him. Bill Brock was many things in his 90 years: congressman, senator, chair of the Republican National Committee, U.S. trade representative, and secretary of labor, to mention only his public service. I knew him in only one of those capacities—U.S. trade representative—but it was striking to hear his eulogists, who knew him from different parts of his life, use many of the same words I have used. Gentleman. Gracious. Wise. Thoughtful. He was the product of an era when politics was not a blood sport, where one could disagree without rancor or personal attacks, and where one could work with the other side for the greater good of the people. He was partisan—he was instrumental in rebuilding the Republican Party after the 1976 election—but with the goal of having a vigorous two-party system rather than one of fomenting gridlock.

You could call him a throwback to an earlier time, but it was a time we would do well to have back. On a personal level, he taught me to listen more carefully, an often neglected skill in a town full of talkers. He spoke slowly with a bit of Tennessee drawl and sometimes took a while to get to his point. That’s why listening was so important—his point was always worth waiting for—and when he talked, people listened. I will miss him personally, but, more importantly, the country will miss him.

In the remaining space today, I want to offer a few conclusions about our economy now that we seem to be gradually emerging from the pandemic. Most of these thoughts are blindingly obvious, but it might be useful to collect them in one place.

First, of course, recovery, both personal and macroeconomic, is not like throwing a light switch. Covid may subside, but it is not going away, and it will continue to be a shadow that darkens many lives and disrupts our efforts to return to normal life.

Second, the new normal will be different from the old one. Many people, including me, discovered that they like working from home, and employers learned that many businesses can thrive that way. Returns to the office will vary as companies adopt different policies and as employees make their own choices about their preferences and what they believe to be safe.

Restaurants, for another example, will be different. They faced some of the greatest challenges and responded with some of the greatest creativity. Conversion to carryout and delivery, outdoor dining pods, limited menus that travel well, and more distant inside spacing that leads to quieter meals are not all going to disappear when restrictions are lifted.

Third, after a year of arguing over which letter of the alphabet best characterizes economic recovery, most observers seem to have settled on “K,” which was not one of the early leaders. “V,” “U,” and “W” dominated in the early days and then yielded to the square root sign and the Nike swoosh. While recovery of production of goods has been faster than some predicted, services continue to lag, particularly those that involve direct people-to-people contact. With an economy that is more than 75 percent services, that means a lot of people remain out of work or are not back full time.

That takes us to the fourth conclusion, which is one of the few that was widely predicted and turned out to be accurate: job recovery is lagging production recovery. On the services side, sectors like travel and hospitality are coming back much slower than the rest of the economy. On the industrial side, companies did not stop making technology improvements last year, and, as always, many of them replaced workers. Uneven school openings and uncertainties about day care have kept some parents home, and some Republicans have argued that over-generous unemployment benefits are deterring workers from returning. Several red states are testing that hypothesis by cutting back benefits and restoring requirements that beneficiaries demonstrate they are actively looking for work, so we should find out eventually if that was a legitimate concern.

Finally, the pandemic has exposed supply chain vulnerabilities in some unexpected ways and brought out undesirable human behavior in some entirely predictable ways. From toilet paper to personal protective equipment, vaccines, semiconductor chips and, most recently, gasoline, we have been reminded that we don’t always have everything we want at the moment we want it. That, in turn, has led to panic buying and hoarding, which only make the situation worse. The root causes for these shortages vary. Some, like gasoline, are due to supply interruptions that can be quickly overcome. Others are due to supply-demand imbalances that are not quickly resolved, like semiconductors. From a trade perspective, the danger is these lead to demands for autarky—a belief that we need to make everything ourselves. In a world as complex as ours, that not only makes no sense but is impossible to achieve. The administration’s relentless talk about buying American only feeds this semi-hysteria. Domestic capabilities and greater resilience are important when there is a national security link, but that also demands a sane definition of national security. Hopefully, the various supply chain studies the administration initiated will provide such a definition and will also leave room for the trusted partner approach CSIS has recommended rather than expecting reshoring to solve all our problems.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.

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