Deglobalization
When your trusted partner is not so trusted!
If the Covid pandemic has taught us anything, our world trading partners are not our partners at all. Peace, prosperity, and a drive for cheap goods gave us an illusion of who to trust and do business with. It became a bigger priority than watching our backs and protecting our nation.
If you have not noticed, China really does not like us much. we appreciate their cheap goods, but at what cost? Stealing our intellectual property has always been their primary goal. When the United States Special Forces took out Osama Bin Laden, there was a reason they torched our helicopters on the way out. Our enemies are dying for our technology, with Defense Technology being the highest priority.
Russia continues to terrorize the world. Unlike China, which provided low-cost labor, Russia offered low-cost natural gas to Europe. Lots of it! If you ever drive to the coast of Louisiana and Texas, you will see massive LNG plants ready to help provide an alternative to Russia. The United States is loaded with natural gas because of an innovation called Fracking.
High fuel cost to Europe and higher price of goods for Americans leads to bumps in inflation. It is the modern-day version of the '80's. Your friends are your friends, and it is not hard to figure out your enemies. All this leads to higher costs because of the reversion of old trade practices.
Innovation
How do we get out of this mess? No one can say for sure, but it will likely come from some innovation, a technology that has yet to hit our radar screen. Just last month, I read about this start-up, Speedy Eats! It will allow a restaurant to operate in a space the size of a parking space serving delicious chicken tenders and pizza. The labor only requires two people to run the show and put out delightful products. It is a vending machine on steroids.
Put a problem out there that seems unsolvable; someone will figure it out if the opportunity is big enough. I remind you man used to pick our crops by hand before the invention of the Combine. I used to get homesick from college, call my mom on a calling card, and get charged a crazy fee. Today my daughter can FaceTime us as if she is around the corner. I do not know what is next for this country, but there has always been doubt and fear and we have always figured it out.
It might be different this time, but I doubt it!
VK2022-0914 Robert W. Baird & Co. Incorporated does not offer tax or legal advice.