Doing better than expected with Covid as economic plunge bounces back with a climb from pit of despair
Keeping in mind that the Covid-19 - in and of itself - did little economic damage, no more than global warming - we must nonetheless weigh the real harm done by our response to it. That is, if we still measure damage in terms of actual damage done, rather than damage feared might be done if no draconian action were taken.
It is true that a few more people died a little sooner than expected, because those who died were very old or very sick whose passing did as much economic good as it did harm. Inheritances were inherited and money was spent in ways and at rates that may well not have been spent if these people not have died when they did.
Surprisingly, after what looked like a worldwide catastrophic economic plunge, in the second quarter, things perked up throughout the second half, and news continued good into 2021. This gave rise to talk of new diplomatic alliances that might be forged to impact world trade, once Covid was firmly put in the rear-view mirror. Beyond the Covid, there was an aggressive Chinese foreign policy to be addressed, one regarded with growing alarm at its authoritarian if not totalitarian domestic ways.
Yet dealing with Covid and its aftermath was the first order of business. As economic recovery continues to evolve, it was becoming clear that disruptions caused by Covid would impact shipping and trade and trigger deep shifts in the overall operating landscape.
Potential shifts ranged from changes in globalisation patterns to alterations in supply chain design, just-in-time production models, technology uptake and consumer spending habits. Depending on how these patterns unfolded and interacted, the implications for maritime transport were potentially transformational.
Further, risk assessment and management, as well as resilience-building to future-proof supply chains and maritime transport, were likely to become increasingly relevant on policy and business agendas. While maritime transport could emerge as a catalyst supporting some of these trends, it will also need to brace itself for change and adapt and ensure that it is also well prepared to enter the post-Covid world.
There were other problems to be faced too. Whether a flood of worldwide stimulus spending will come to bite us is a question yet to be faced. While we paid state-employed school teachers not to teach in the western world, laid off millions of workers and put others on half-pay, we cannot expect those measures to produce an economy capable of generating a tax base needed to pay the exponentially expanding debt load.
This is not like the aftermath of World War II, when the economy was generating wasteful replacement products needed to fight a war. Unlike today, when the when war ended, the postwar population was in high production mode ready to produce goods and services upon which a soaring economy could be built.
This time the west appears to have fostered a population of idle slackers. While it is reasonable to expect a negative outcome, it has not turned out that way. After a deep dive with the first panicky response to the lockdowns, a state of recession and depression soon followed. But after the second quarter most everywhere, the climb out of the pit of despair began, and by the end of the fourth quarter the US and made up for lost ground and gained some.
January numbers showed greater improvement still. Not only in the States, but through many ports and terminals - a bad 2020 first half followed by a phoenix-like rise in the second half. Ports of LA-Long Beach, New York-New Jersey, Houston, Savanah, Charleston, Rotterdam, and Antwerp all had good things to report.
The whys and wherefores are complex, but the reason that surfaces most often is the growth of e-commerce. Unable to get to pub Friday nights because of the universal lockdowns, the man of the house has jumped into home improvement. Even eating out has been largely replaced with service from super-efficient delivery from "dark kitchens", which have teams of cooks produce food products from a multiplicity of restaurant franchises, switching from one to another, and being so numerous and widely scattered they can effect speedy delivery to any point in the widest metropolitan area.
With things going so well on the economic front, the next thing to worry about is trade and diplomacy. This concerns relations with China. With the Congressional midterm elections not far away, the ruling Democrats dare not drop former President Donald Trump's hardline China policies. First there is an antipathy towards China's president-for-life Xi Jinping. There is his Orwellian Big Brother social credit surveillance, religious persecution and Muslim Uighur re-education camps.
This is quite apart from his bullying of Australia because of their demand for an external inquiry into China's role in the Covid crisis, the seizure and militarisation of the Spratly Islands, worrying aspects of its Belt and Road policy, military border clashes with India, stationing fishing fleets and coast guard cutters off Papua New Guinea, threats to Taiwan, and interference with the internal affairs of Hong Kong.
China said it feels that the west is imposing a policy of containment on China. The corollary of that is that China now wishes expand, to control tomorrow what it does not control today. Thus, China become a place with which it is becoming harder and harder to do business with good conscience. Hence talk of a new diplomatic alliances called the D-10, a bloc of representative democracies to counter the dreams and schemes of totalitarian states which are neither democratic or enjoy rule of law.
British Prime Minster Boris Johnson’s plan to host an expanded Group of Seven summit in June has worried some who fear the UK may be trying to reshape the forum of wealthy nations through the back door.
South Korea, India and Australia were invited as guests to this year’s meeting as Prime Minister Johnson tries to establish a D-10 coalition to champion global action and democratic values. While it is standard practice for a G-7 host to invite more countries to the summit, the involvement of guest nations will take play more than the usual observer role and enjoy a status closer to that of members, as a step toward restructuring the G-7 as something more than the world's top economies. But such expansion is opposed by Italy, Germany, France and Japan, reports Bloomberg.
There is also the growing CANZUK (Canada Australia New Zealand United Kingdom) movement to consider which has generated favourable public approval rating of between 60 and 70 per cent in all countries. But is mostly supported by the conservative elements in all countries and opposed by socialists as well as the bulk of the media, academic and bureaucratic complex worldwide. Nonetheless the movement dovetails easily with the G7 expansion plan.
Taken together, shipping should fare well, though it is likely to employ fewer people as we move towards a truly efficient door-to-door world with less effort and better products delivered more efficiently to more people. But if the industry is to expand, customers must be produced. And the way to create them is to keep them busy doing things of value that others are willing to pay for.