Oddly enough, when writing this month's column, I originally intended to discuss likely economic recovery scenarios and how those could affect our industry's return to some degree of normalcy. How dull, economics. But after viewing the recent U.S. presidential debate between Donald Trump and Joe Biden, normalcy may prove hard to attain, and economic growth may remain elusive for some time to come. How crazy, a mud fight.
For anyone following the U.S. presidential race, it's clear that the United States is struggling through a period of significant change. Indeed, many of the policies enacted by various government administrations since Ronald Reagan — such as globalization and free markets — have collided with deep-seated social anxiety.
So there's a lot more at stake than simple economics recovery scenarios (e.g., L, V, W, K, or "swoosh" shaped recoveries). Of course, short of some unforeseen catastrophe, the global economy will recover after the pandemic, but will it recover enough to offset our toxic politics and divided culture, at least in the United States?
Toxicity: A Four-Letter Word
Here's my take: the U.S. is mired in political polarization as well as societal stagnation. The country may or may not have peaked as a global power, at least in relative terms, but a day of reckoning is fast approaching the country's citizens. Serious problems confronting the nation have been left unsolved for too long -- scuttled to the side by both political parties.
There once was a time when Americans worked together to develop pragmatic solutions to the most complex problems. Today, it seems, we're left with tired ideologies, splintered messages, and a desire to break the institutions that made the country great in the first place. It's like we're eating our own.
But beyond the societal implications, what about the economy? For our industry, economic solvency is critical. From my viewpoint, I see the American economy as a mix of Milton Friedman and Ayn Rand — libertarian free markets — with resulting cultural and economic stress. Throw in a pandemic, and we have a formula for societal distrust at a minimum — and cultural decay and unrest at a maximum. Not great times.
A Time of Great Change
However, these changes are not limited only to the United States as the same societal, and economic forces have buffeted countries worldwide, affecting both developed and developing countries.
Indeed, the seeming serenity brought about by decades of globalization, and consistent global growth has almost overnight collapsed, crashed by toxic politics, nationalism, deteriorating international relations, a pandemic, and growing distrust of national and global institutions.
Some of the carnage is cultural, while some are political in nature, but in the end, it's the economy that encapsulates the unsettling implications of rapid change. The significant shifts in trade, manufacturing, and technological development worldwide have brought about unforeseen consequences worldwide over the past three decades.
After all, free trade, in particular, was supposed to act as a balm to ease what ails society, provide jobs for all, low prices for consumers, and prosperity for wider swaths of the population. And lessen the likelihood of some honorific worldwide conflagration. War. And it succeeded, only with unforeseen costs to cultures around the world. The U.S. presidential race is just the most recent manifestation.
Our Industry
For our industry, then, this leaves everyone scratching their heads, asking, what's next? And therein lies the rub: no one really knows. Forecasting the future is always a difficult, if not futile proposition. But during days of extreme challenges, a look ahead is more important than ever as plans have to be made.
Furthermore, because we can't really know the future other than through educated guesses (or not), we're left with today's reality and yesterday's lessons. Today is tough; that's a given. Bankruptcies, plummeting sales, skittish consumers: well, you get the idea. We know what we're looking at, and it ain't pretty.
Yet we have the past to perhaps glean some valuable lessons. For instance, after the collapse of the global financial system in 2008, we learned that recoveries from such calamities can take time to recover from, while the lessons from the excesses that led up to the collapse tell us that economic recoveries take a long time from which to recover. Remember the old adage about bankruptcy? It happens slowly at first, then happens all at once. Poof!
So our industry has to muddle through. And deal with some big questions that don't have simple answers. Do we return to fast fashion or not? After all, millions of workers worldwide depend upon global supply chains, western buyers, and stoked demand. But today (or even tomorrow) is that realistic? And, for sure, huge fortunes were made thanks to fast fashion.
But fast fashion left the industry brittle and vulnerable. Over-leveraged and overstored, our industry and some other industries were an early casualty of the pandemic. The big question remains if our industry will want to return to fast fashion days regardless of the risks?
A Cracked Crystal Ball
In the developed world today, there's an entire generation that has lived through 2008 and now today. I read somewhere that the parents of this generation, the so-called baby boomers, enjoyed a standard of living higher than that of their children, the millennials, at the same age. Something's askew. I was brought up believing that each generation would do better economically than the previous one. It's a central tenet of the American Dream — or was.
If we're witnessing a generational collapse of consumer buying power, what happens to apparel consumption?
And, of course, lost in all of this is sustainability. A casualty of the times? Let's hope not, but a challenge remains for backers of sustainable production to keep such efforts relevant and essential. Neanderthals roam the earth again.
And now, we have a potential Section 301 case against Vietnam for alleged currency manipulation. That's how the trade row with China began — with a Section 301 investigation. Moreover, it's hard to ignore the accusations of forced labor in the Xinjiang province of China.
So, other variables make forecasting the future of our industry harder. Does the U.S. impose punitive tariffs on imports of clothing from Vietnam? For so many brands that moved their sourcing out of China into Vietnam to escape the U.S.-China trade fight, I offer one word: yikes.
I believe that the Trump administration is quite pleased with its handling of trade matters with China. It sets a precedent that could set the stage for further Section 301 actions, like Vietnam, for other suppliers. In effect, it will establish a "whack a mole" approach to trade policy.
And then there's the question if a Biden administration would continue this approach to trade. It's hard to know in the fog of the campaign. My gut tells me that Biden will maintain many of the tariffs imposed on China by Trump, only that we'll work to smooth over the relationship with China's President Xi, assuming that's possible. I'm not sure Biden will continue pressing China on Xinjiang or not as it's not clear if any such sanctions could be enforced.
Regardless, it's difficult to know if Biden will continue Trump's hard line on trade. Some suggest he won't, but he's not a Clinton free trade democrat. Biden wants to be seen as helping the working man. But how he would develop a trade policy that addresses long-standing grievances from many American companies while also easing tensions with trading partners won't be an easy task.
Note: This article was originally published on just-style.com on October 20, 2020.