The Beginning of a New Decade: The 2020s

We have now entered the first new year since the beginning of the Reiwa era. It is also the first year of the 2020s. In Japanese we have an expression--"juu-nen hito-mukashi"--which means that so much changes over the course of ten years and anything ten years ago seems like ancient history. Also, in English, there is the word "decade," which means a period of ten years. What this tells us is that, in both cultures, this period of ten years has long been accepted as a significant division of time.

Looking back at the Japanese economy during the Heisei era in 10-year segments, we could see distinctive features emerging that characterize each decade. It goes without saying that the 1990s were marked by the collapse of the bubble economy, and the struggle to deal with its aftermath. Moving into the 2000s, just as we had finally finished handling the effects of that collapse, a global-scale financial crisis occurred, and Japan was dealt another major negative blow. The 2010s can then be characterized as a period of dealing with the aftermath of that crisis, brought on by the collapse of the global bubble. Over the course of that process, various structural problems which had previously been hidden by the economic bubble came to the surface, and the state of the global economy today is very different from what it was a decade ago.

The way in which numerous structural problems all surfaced at once after the collapse of the global bubble is something that is shared in common with Japan during the 1990s. Looking back on the Japanese economy at that time, Japan was about to finish catching up with developed Western countries, and was then faced with the need to change to a business model in which it would explore new businesses, on the very front line of global competition. On top of that, there was also the burden of dealing with the problems of its aging society and shrinking population.

In the global economy, too, during the 2010's, the economies of developed countries experienced major structural changes under the effects of globalization after the fall of the Berlin Wall, and the information and telecommunications revolution. The speed of change was very fast, giving rise to certain social demographics that were unable to adapt sufficiently to these changes. The discontentment of those demographics manifested itself after the end of the financial crisis in the form of the anti-globalization movement, which can probably be linked to subsequent developments such as the Brexit movement (withdrawal from the European Union) in the United Kingdom, and the rise of President Donald Trump in the United States.

In the same way, stern and scrutinizing eyes are now being turned toward the wave of new technological innovation referred to as the Fourth Industrial Revolution. After the First Industrial Revolution in the 18th century, too, disgruntled craftsmen who had lost their jobs as a result of technological innovation took to destroying machines in what became known as the Luddite movement. When technological progress began to steal the jobs of humans, it gave rise to social antipathy against progress itself.

By contrast, the Second Industrial Revolution led by the United States during the 19th century saw the development of electricity into a source of driving power, and the invention of the internal combustion engine. The era of factory-based mass-production began, and technological progress generated jobs for factory workers, along with a wide range of other employment opportunities. This resulted in the formation of middle-income demographics, stabilizing society and leading to economic growth.

In which direction, then, will the current Fourth Industrial Revolution head? If we fill our hearts with hopeful optimism, in the true spirit of New Year, we can envisage that the education and training of human resources, who are capable of responding quickly to new employment opportunities created by the emergence of new technologies, might progress smoothly, and that various organizations might become able to offer new ways of working that fit in with people's diversified personal happiness. If this happens, we can enjoy a new wave of prosperity. On the other hand, we can also envisage any number of negative scenarios. Which path we choose is something that we ourselves, living in the present, must decide. I wish we can make the 2020s a good decade for everyone.