What is needed is “resilience” with the world economy of Wiscorona June 5 at 18:53

What kind of world is waiting in the dark tunnel? The three winners of the Nobel Prize in Economics agree that they will never return. On top of that, three people say that what is required in the “with corona era” is “resilience”. What does that mean? Consider the words of Joseph Stiglitz, Lawrence Summers, and Myron Shoals. (Department of Economics Kaori Iida)

What the Corona Crisis posed

Professor Joseph Stiglitz of Columbia University in the United States has long appealed to correct the economic disparity. From the early days, we have highlighted the problems of inequality hidden in America, the world's largest economic power, and made recommendations for the realization of social justice. “The economy will never return to its original state,” asserts a professor who won the Nobel Prize in Economics in 2001 and was involved in the administration of American economic policy.

Professor Stiglitz:
"I'm scared to go shopping or work, let alone travel, thinking that many people may be infected. As a result, supply and demand will both be massively shocked." It was an unprecedented situation.Because of the globalization, the shock spread to the whole world at a certain degree.The future uncertainties continue, and we are always conscious of a pandemic, just like a hangover. Will be done.''

“When the new coronavirus infection began to spread, many people expected the economy to recover in a V-shape if they managed to withstand the government's economic stimulus measures. If they stopped economic activity for a couple of months, I thought that it would return to the place in a short period of time after that. It was just a hopeful observation. In the United States, there were a series of bankruptcies in the retail industry and a series of bankruptcies in the retail industry. I went all over the country to find out that an online conference was enough, and a pandemic will accelerate the structural transformation so far."

What is the exposed "health gap"?

In the fall of 2011, a protest called "Occupy Wall Street" spread in the United States. Young people dissatisfied with the high unemployment rate gathered on Wall Street. Professor Stiglitz, along with the youth, also appealed to "change the current state of inequality." “Becoming economists,” who have traveled around the world, point out that the corona crisis has exposed social weaknesses, exposing both economic and health disparities.

Professor Stiglitz
"The new coronavirus has spread especially among the poor. It also highlights the situation where workers are unable to receive leave allowances when they get sick. The weaknesses of American-style capitalism are clarified. We have to expose the world. We have to work harder than ever to correct inequality after the corona crisis.”

"I'm worried about the spread of pandemics in emerging and developing countries. I'm underprepared more than in the United States because it could lead to a hotbed of infection due to living in a small house and insufficient medical system. When the economy worsened We cannot afford it. If the infection spreads in such countries, we may fall into a debt crisis due to the irresponsible lending attitude of financial institutions in developed countries.”

Realizing a society prepared for puncture

Furthermore, Professor Stiglitz emphasizes the need for “resilience” to stand up from the impact of economic and social impacts.

Professor Stiglitz:
"We have taken a short-sighted response after the financial crisis of 2008, and we have gone all the way to the efficiency-focused road, so to speak, we made a car without spare tires. I didn't even think about when the tires were flat, and I have to prepare for the next crisis after I have left this crisis. What I should aim for is an economic crisis, an infection crisis, and a crisis caused by climate change. It's an economy and society with a resilience to stand up to."

Just in case idea

Lawrence Summers, a professor at Harvard University, urged Japan to revive the economy and deregulate Japan with confidence in American capitalism when he was the finance secretary of the Clinton administration. He says the corona crisis is pressing for a radical overhaul of capitalism.

Professor Summers
“In the world of after-corona, business trips will be reduced, meetings will be held online, and more people will be working from home without going to work. Individuals, companies, and society will be asked to have “resilience” against shocks. Emphasis on efficiency And from just-in-time methods of procuring what you need and when you need it, from just-in-case methods to prepare inventory and spare capacity in case of emergency We have to shift our feet. Every company is forced to rethink its strategy.”

“The global supply chain that we have spread around the world will not be global in the future. The good thing about a global supply chain is its efficiency, but it will not be effective in the future. As China's confrontation deepens, companies in each country will prefer to return domestically rather than expand their supply networks globally."

A shift from "merciless capitalism"

Former Treasury Secretary Summers points out that the spread of the new coronavirus is threatening both public health and the global economy, and that businesses are inevitable.

Professor Summers
“Society will pressure companies to value their employees and invest in their communities. It's outdated to think about investors only. Anglo-Saxon sympathy in recent years. It will lead to a transformation from relentless and cold capitalism to a new form.''

"The corona crisis will bring a bigger change to the United States than any other event in the 20th century. It was unthinkable to block the city half a year ago. The use of IT technology, which would take several years, took a step forward. It will also change the relationship between nations more than any other post-Cold War event, and the pandemic hopes to play the role of a wake-up call, calling for international cooperation. Whether it's dealing with a financial crisis or controlling infections, we should overcome it by international cooperation, not by conflict between nations.''

Do you need a toilet break?

The 1997 Nobel Prize-winning economics professor, Myron Shoals, professor at Stanford University, claims that the corona crisis will be an "accelerator" that pushes the course.

Prof. Sholes
"The introduction of robots at the production site will dramatically accelerate due to the pandemic. It is impossible to maintain a social distance of 2 meters at the site. Then, people, robots, robots, human beings, etc. You're going to have to work with a robot between people, who work for hours without having to rest or go home."

“When a shock occurs, the most important thing is “resilience.” Survival against a shock requires the ability to stand up. The corona crisis will change the economy and society in ways that we have never thought of before. Let's see, the changes that we thought would take years to complete will accelerate at once.”

With Corona Era

All three said in the same expression that what is needed now is "resilience." You can't get back to where you were, but once you're beaten up, you need to be ready to get up with dust and dust. He emphasized that it is important to prepare "spare tires" in preparation for the "just-in-case" situation. Expansion of economic activities and economic disparities that prioritize efficiency. I feel that I couldn't look away from the corona crisis. Our “resilience” is being tested during the Wiscorona era.

Joseph Stiglitz (77)
Professor at Columbia University, USA. After serving as chairman of the Clinton administration's Presidential Economic Advisory Committee, he is the chief economist of the World Bank. He received the Nobel Prize in Economics in 2001 for information asymmetry.

Lawrence Summers (65)
Professor at Harvard University. Treasury Secretary of the Clinton administration. After serving as the president of Harvard University, he was chairman of the National Economic Council of the Obama administration.

Myron Shoals (78)
Professor at Stanford University. He won the Nobel Prize in Economics in 1997 for the construction of the "Black-Scholes equation" that calculates the theoretical price of stock options.

*The interview of the three people was broadcast on the NHK Special "How to Rebuild Japan in a Difficult Way to Survive the "With Corona Era" on May 24th.

Economic Department Desk
Kaori Iida
Joined in 1992,
and has been in his current position after working at the Kyoto Department, Economic Department, Washington Branch, etc.