photo by markus winkler on unsplash
I will describe it by referring to the recent article in the Nihon Keizai Shimbun.
▼ Japan’s measures against the new coronavirus have been greatly eased and economic activities are restarting, but if there is a sign of the arrival of the second wave, it will immediately return to the declaration of emergency and hope for a “human life first” policy response.
▼Nobel Prize economist Professor Paul Krugman recently criticized President Trump’s policy of urgently resuming the economy, saying, “The economic value of the lives of people saved by a lockdown is significantly lost by the suspension of economic activity.” “New York Times International Edition”.
▼ Economic value of human life
Economics replaces human life with economic value based on the idea of non-life insurance.
According to a recent study from Columbia University, the lockdown by the beginning of May saved the lives of 36,000 Americans, and its economic value is five times the loss of gross domestic product (GDP).
Many experts seem to think that it takes one and a half to two years to develop and commercialize a vaccine. Until then, it is imperative to continue restricting behavior centered on social distance.
Needless to say, the economic impact caused by it will reach an unprecedented scale. We should be prepared to replace human lives.
Recovery from the Lehman shock took almost five years on a GDP basis.
This time, which the International Monetary Fund (IMF) sees since the Great War before the war, may take a longer time.
▼ The problem is “after corona”.
What will the Japanese economy look like in the long run?
The growth rate will decrease further. The request for close action avoidance puts workers and small and medium-sized enterprises, mainly in the service industry, whose income streams were blocked, at risk of survival.
The propensity to save will increase for the economy as a whole.
This is correct as one hypothesis, but of course it is different from the government’s thoughts and speculation.
Consumption demand and investment demand are stagnant. On the other hand, the progress of artificial intelligence (AI) and robots will increase the supply capacity, so the growth rate will decrease and the deflationary economy will become more economical.
This can be understood with a simple textbook-like explanation.
The financial situation will get worse. According to the “estimation on medium- to long-term economic and financial conditions” announced by the government in January immediately before corona, even if we expect growth of 2% in real terms and 3% in nominal terms, we will show whether the basic budget balance can be covered by tax revenue alone. We will have to wait until 2027 for it to become profitable.
The premise of this “growth realization course” has been completely destroyed by the fact that the government debt has increased sharply and the growth rate has decreased due to measures against corona.
There is an urgent need for a fundamental review of fiscal consolidation measures for the future after Corona.
By the way, it goes without saying that we must at least prepare ourselves as to what trials will await.
