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Let's Move Forward, into the Future

Jun 30, 2020

Bird View

President
Takashi Kozu

In Japan, the state of emergency declared to prevent the spread of COVID-19 infections was lifted, and we entered the stage of seeking a post-COVID-19 economic society. Major shocks such as this one can have the effect of accelerating the speed of inevitable changes that were already making headway under the surface.
 
The bursting of the Japanese economic bubble in the 1990s accelerated moves to shift the financial and economic structure up to the 1980s, which was optimized to catch up with the developed countries of the West, into something that would fit moves towards a new form of globalization. However, it unfortunately took a great deal of time before the true nature of that shock came to be widely understood.
 
Even during the global financial crisis that occurred a little over a decade ago, various flaws were revealed in the globalization that had taken place after the Berlin Wall collapsed, throwing the areas in need of correction into sharp relief. Those areas included the expansion of financial transactions that stood apart from the real economy, growing wealth disparities in developed nations, and the destruction of the global environment. As the days went on, it was increasingly pointed out that unless some sort of structural response was made with respect to each of these areas, in the long-term it would be difficult to maintain the stability of global society.
 
And that brings us to the spread of the coronavirus we now face. Going only by how the coronavirus affects people's lives, its impact has extended widely through society at large, beyond the financial economy. And for the economy, it is hard to conceive of globalization again accelerating in the same way as before. Of course, global connections have become a great deal stronger, and bring significant benefits with them. But this new factor of reducing physical closeness has rapidly risen in importance.
 
On the financial side, under markets that demand even higher growth and greater returns, to date monetary easing has been strengthened and debt-to-net worth ratios (debt leverage) in the corporate sector have increased. In the immediate future, however, it will become difficult to be highly profitable at the macro level. Under these circumstances, the question is whether we could ever have maintained the same old growth patterns in the midst of current technological innovations such as artificial intelligence and robotics. That will likely be increasingly problematic.
 
On another front, there is a sense that society's ideals will also change. At the very least, the population concentration in cities and the concentration of day-time work locations in those cities will undergo a major rethink. The same goes for the balance between work and home life. With everyone in the same boat in terms of feeling fear in life-threatening situations , perhaps many people's thoughts have gone to things like "what is happiness in life?"
 
The power to stimulate these changes on multiple fronts is, in each case, something that had already begun to work. This coronavirus situation will be the catalyst that accelerates those changes. Moving forward, if widespread changes are to occur, there is ample room for each person to make social contributions by supporting those processes. And that is not limited to individuals; the same can be said of various organizations from companies to government and non-profits. From here on, we will seek a new society and build one. That effort will not be just building back what was lost, but building forward. Let's move forward, into the future.
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