My guest for the 32nd episode of the Hale Report is a former Chicagoan, Dr Phil Levy. He now serves as Chief Economist at Flexport where he leads qualitative and quantitative economic research informed by proprietary logistics data. He holds a PhD in economics from Stanford.
· Before joining Flexport, Dr Levy spent two decades researching and making global trade policy. He served as Senior Fellow on the Global Economy at the Chicago Council on Global Affairs, which is where we met, and as Adjunct Professor of Strategy at Northwestern’s Kellogg School.
· Before that, Dr Levy served twice at the White House on the President's Council of Economic Advisors, most recently as Senior Economist for Trade.
We spoke about global trade, labor, energy, technology, the environment, inflation, productivity, and the role of supply chains:
The measures most likely to ease supply chain pressures are those which curtail demand. The measures most likely to bring resilient supply chains are those which facilitate global sources.
His conclusions are built on his experience as a policymaker, his research, and proprietary trading data generated by his firm. He believes, as his Senate testimony shows, that sourcing from abroad is not the problem and that onshoring is not the answer. The development of specialization within the global manufacturing universe has simply evolved beyond that point. That means that impediments to international sourcing will only exacerbate the problems we now have that are helping to fuel our current high inflation.
Last week I was in Washington for the Australian American Leadership Dialogue, the first in-person meeting since Covid. A key theme in DC these days is the perceived tradeoff between security and the economy with a heavy emphasis on security. That is a dangerously false dichotomy. There is no security without a healthy economy, and no prosperity without security. While some might feel that globalization has ended and a split into two economic spheres is inevitable, a world with two sets of trading partners, rules, and standards will be a world that takes a lot longer to recover from the effects of the pandemic.
Dr Levy’s Work
July 11, 2022 / Flexport
While the economy appears to be contracting and retailers worry about increased inventories, the job market in May and June continued to show strength. These hot and cold conflicting signals about the economy are highly unusual.
July 7, 2022 / Flexport
What is the state of global trade? Will demand remain robust? Have inventories been refilled? The latest data is analyzed to determine whether we are on the cusp of a downturn or if elevated activity will continue.
March 22, 2022 / Senate Committee on Banking, Housing, and Urban Affairs
July 10, 2022 / Wall Street Journal
Shippers are trying to reset contract agreements to cut expenses, but costs remain several times higher than before the Covid-19 pandemic
July 8, 2022 / Alpha Sense
Inflation surged — in part — thanks to a broken supply chain and skyrocketing shipping costs. Now that things are getting better, can we get back to normal?
June 22, 2022 / Council on Foreign Relations
The WTO Hangs On
WTO members confounded expectations last week by concluding a deal on fisheries subsidies, the first major multilateral agreement in nearly a decade. But the trade body is not out of the woods yet.
June 3. 2022 / Peterson Institute for International Economics
To fight inflation, cutting tariffs on China is only the start
Megan Hogan and Yilin Wang
If the administration is serious about fighting inflation, cutting the China tariffs is only the start.
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The global economy is running hot and cold at the same time. There are a slew of new initiatives by the US to create trading blocks to compete against China, like the Initative for Pacific Economic Cooperation (IPEF). As Inu Manak at the Council on Foreign Relations writes, it doesn’t look like a traditional trade deal, but it has features of a strategic agreement.
At the same time, there are new security deals such as AUKUS that have features of a trading agreement, based on multi-billion dollar submarine acquisitions. It is confusing, but it keeps policymakers busy. Then there is the QUAD, and now Partners in the Blue Pacific, and last week, a major new US security & aid initiative in the Pacific Islands. We have inflation not only in goods, but in an alphabet soup of new US-led regional organizations primarily in Asia, while the ones we already have like the WTO are clearly languishing.
DNA replication is the process of creating two identical copies of DNA from one original DNA molecule. Essential to biology, is a dual trading architecture an efficient and effective way to promote global growth and prosperity? Or is it a retreat to a more fragmented past?
I hope you enjoy this podcast. Please feel free to comment, or ask questions below.