It is said that the Rust Belt supporters are heavily involved in the birth of President Trump in the United States. During Japan's high-growth period, many have lost their jobs in the manufacturing industry of the United States, which lost competition with the Japanese manufacturing industry. The society that has been built up for generations has collapsed, people have migrated or the vulnerable have been left behind.
In Japan, after the appreciation of the yen and the collapse of the bubble economy, the manufacturing industry moved overseas. The People's Republic of China and ASEAN countries have broken free from subcontracting, and China in particular is becoming the center of the world economy. However, the Chinese economy is also suffering from the trade dispute with the United States initiated by President Trump, and is falling into a situation similar to the collapse of Japan's bubble economy. The transition to the Biden administration has not changed this.
It is truly a chain of misfortune. International companies are looking for cheap labor. It is a good thing that this will lead to the transfer of technology and the growth of industries in the destination country. But what will happen to the unemployed left behind after the withdrawal? There are no easy solutions to the negative aspects of economies of scale, especially in agriculture and manufacturing.
The United States government has designated a trading partner as a currency manipulator to eliminate trade conflicts because it believes that the partner country keeps prices and wages unreasonably low, and Japan and the People's Republic of China Has been criticized. But that is not always the case. That's not the only cause. International corporations only consider selling cheaply, as Mahatma Gandhi opposed in the past colonial rule. Mass production and consumption cause external diseconomies of labor, and international companies that rob jobs are the true enemies of the United States. Their act is a deprivation that abuses the market economy and free trade. If this external diseconomies are left unchecked, it will become more oligopolistic.
Importing from countries with undeveloped Labor Standards Act, not just in the United States, is a poor import. Cheap prices and low wages will eventually close the gap, but if a company moves its manufacturing base to a country where workers are not protected by law, the workers in that country will be unhappy. The press emphasizes low prices and wages, but in reality, disposable workers, such as migrant workers in the People's Republic of China, are being sacrificed. In such cases, tariffs on under-lawed countries should be strengthened or sanctions should be imposed on international companies to promote the protection of workers. In free trade, lower tariff rates are better, but should we do so to the unhappiness of domestic and foreign workers?
In fact, imposing tariffs would be difficult because, like environmental tariffs, retaliatory tariffs would be imposed. If that is the case, how about certifying international companies that are environmentally friendly and operate under good working conditions, like the certification in which Nestle participates, and giving them preferential treatment in terms of tariff rates? This would allow us to operate without changing the existing tax rates. If we set up a certification system based on the Sustainable Development Goals (SDGs) of the United Nations, and give preferential treatment to certified companies in terms of tariff rates and corporate tax rates in order to internalize the external diseconomies of international companies, inequity will be reduced. It is the scoring of external diseconomies.
NHK aired a BS1 special, “Learning from Shibusawa Eiichi: SDGs for a Sustainable Economy,” on April 3, 2021, in connection with the historical drama, “Seiten wo Tsuke (Reach Beyond the Blue Sky)”. In the program, the efforts of companies that Shibusawa was involved in management were introduced. Market forces are truly the law of the jungle or “The weak are meat, and the strong do eat”. Market forces are so strict that external diseconomies are created. The tax system should favor companies that contribute to society.
It has been a long time since people talked about the hollowing out of industry. Japan's manufacturing industry has moved overseas, even to subcontractors, but has any industry developed to absorb the lost jobs? The same can be said for the Rust Belt of the United States, which lost out to Japan. There is a stark difference between the area where programmers actively established themselves and revitalized the economy, and the area depicted in the movie “NOMADLAND”. The only way to bring back the liveliness to a place that has lost the competition is to support business startups.