＜prologue＞
I started a blog called “The Baby Boomer Generation’s Miscellaneous Blog”（Dankai-sedai no garakutatyou:団塊世代の我楽多（がらくた）帳） in July 2018, about a year before I fully retired. More than six years have passed since then, and the number of articles has increased considerably.
So, in order to make them accessible to people who don’t understand Japanese, I decided to translate my past articles into English and publish them.
It may sound a bit exaggerated, but I would like to make this my life’s work.
It should be noted that haiku and waka （Japanese short fixed form poems） are quite difficult to translate into English, so some parts are written in Japanese.
If you are interested in haiku or waka and would like to know more, please read introductory or specialized books on haiku or waka written in English.
I also write many articles about the Japanese language. I would be happy if these inspire more people to want to learn Japanese.
my blog’s URL:団塊世代の我楽多（がらくた）帳 | 団塊世代が雑学や面白い話を発信しています
my X’s URL:団塊世代の我楽多帳（@historia49）さん / X
As the global pandemic caused by the novel coronavirus pneumonia (COVID-19) continues for a long time with no end in sight, there are growing concerns that a major depression may occur.
In this article, I would like to consider this issue.
1. The possibility that the novel coronavirus pneumonia may trigger a major depression
In a speech on April 9, International Monetary Fund (IMF) Managing Director Kristalina Georgieva pointed out that “COVID-19 will cause the global economy in 2020 to experience its largest contraction since the Great Depression.”
The global economy is predicted to experience an even greater contraction than the 0.1% contraction experienced during the 2009 financial crisis.
However, countries around the world are preparing to deploy $8 trillion (approximately 870 trillion yen) in fiscal stimulus, and they claim that “a partial recovery will occur in 2021.”
The Institute of International Finance (IIF), which represents the world’s major financial institutions, has estimated that the global economy will contract by 1.5% in 2020.
The global economy experienced continued negative growth around 1930, and Managing Director Georgieva recognized that a contraction similar to that experienced then is inevitable in the short term. She argued that maintaining the financial system through interest rate cuts, capital injections, and other measures is essential to limit the economic downturn to a short-term one.
2. What was the Great Depression?
(1) What was the Great Depression like?
The Great Depression (or world economic crisis/panic) refers to the severe, prolonged recession (panic) that occurred worldwide in capitalist countries following the New York Stock Exchange crash on October 24, 1929 (Black Thursday) and the subsequent crash on October 29 (Tragic Tuesday).
The stock market crash caused anxiety, leading to panicked banks and the resulting bank failures. As a result, companies to which the banks had lent money also went bankrupt, as did factories that had received work from those companies, resulting in the loss of employees and a domino-like effect.
Incidentally, a “crisis” is a sudden, severe economic downturn that occurs during a booming economic cycle.
The American recession continued until 1933, and the economy stagnated throughout the 1930s. By 1932, stock prices in the United States had fallen by 90% and real gross domestic product had fallen by 30%. The unemployment rate temporarily rose to 25%, and wages fell sharply.
(2) How Was the Great Depression Overcome?
President Franklin Roosevelt (in office: 1933-1945) advocated the “New Deal” from 1933 to 1939, issuing large amounts of deficit bonds to raise funds and invest in public works projects. As a result, the Great Depression was overcome.
This was a policy of active government intervention in the market. It set three goals: “Relief,” “Reconstruction,” and “Reform,” and specifically implemented the following policies:
① Emergency Banking Act
② National Industrial Recovery Act (NIRA)
③ Agricultural Adjustment Act (AAA)
④ Tennessee Valley Authority (TVA)
Of these, item ④, TVA, is particularly famous. It launched large-scale public works projects, primarily the construction of over 30 dams, and employed large numbers of unemployed people.
Furthermore, the Great Depression led countries to create closed economic zones, pushing the world economy toward blocs and sparking World War II.
(3) Causes and Background of the Great Depression
1) Taking over from Europe, devastated by World War I, the United States became the leading producer of industrial and agricultural products, exporting surpluses and leading the American economy to a steady boom and becoming the center of the world economy.
2) Urbanization within the United States led to increased demand for housing, road construction, and the automobile industry, resulting in a tremendous economic boom.
3) As mutual funds became more popular, more Americans turned to American corporate stocks in an attempt to increase their wealth, leading to increased speculative trading.
4) Investing in American stocks was seen as more attractive than buying stocks from war-torn European companies. The idea that buying American company stocks was more profitable spread not only among American investors but also around the world.
⑤ However, around this time, American companies were experiencing overproduction due to excessive capital investment, resulting in unsold goods.
⑥ Despite the rapid production of goods, low-income earners could not afford them. As the economies of European countries began to recover, American industrial and agricultural products gradually became less available.
⑦ There was no point in holding stocks in companies that produced unsellable goods, and a widespread trend of selling stocks spread. Concerns about the future led to further selling, leading to the Great Stock Crash of October 1929.
3. What is the Showa Depression?
(1) The Showa Financial Crisis (1927)
The Japanese economy, which had expanded rapidly during World War I, was hit by the post-war reactionary depression (1920) and the Great Kanto Earthquake-related depression (1923), and entered the Showa era barely avoiding bankruptcy thanks to inflationary bailout measures.
However, in 1927 (Showa 2), it became clear that corporate assets had deteriorated significantly due to the disposal of “earthquake bills” issued in large quantities after the Great Kanto Earthquake. In particular, it became clear that the Bank of Taiwan had lent Suzuki & Co. a 350 million yen bad loan. This rapidly spread anxiety about bank management, leading to numerous bank runs and closures.
The financial world was in a state of panic for around two months, from March to April 1927, but the situation finally calmed down by May thanks to a “moratorium” (payment postponement) at the end of April and special bailout loans from the Bank of Japan.
This was the “Showa Financial Crisis.”
(2) The Showa Depression (1930-1932) due to the impact of the Great Depression
This was the result of the Great Depression, which began with the New York Stock Market Crash of October 1929 and spread to Japan.
Combined with the lifting of the gold embargo and austerity measures, this led to a collapse in stock prices and commodity prices, a decline in production, rising unemployment, and a worsening balance of payments. The collapse in agricultural product prices, particularly raw silk and cotton, dealt a particularly severe blow to the rural economy. This continued until 1932, when the “war boom” brought about by the Manchurian Incident brought it to an end.
4. Measures to Take in the Event of a Prolonged Recession Due to COVID-19
I believe the government and the Liberal Democratic Party will consider various comprehensive national measures, but I have the following three ideas in mind.
The key is to reduce dependence on foreign workers and foreign agricultural products as much as possible and instead rely on the Japanese people to procure as much labor and food as possible domestically.
(1) Deploying unemployed workers as agricultural labor.
Until now, agricultural workers have relied on foreign workers from China and Southeast Asia. However, with restrictions on the influx of foreigners expected to continue for a long time, I believe we should concentrate unemployed Japanese workers in agriculture.
Furthermore, in the future, I hope that these workers will become full-time employees, rather than part-time workers, as a means to increase agricultural production and improve Japan’s food self-sufficiency rate.
If the current global spread of the novel coronavirus pneumonia (pandemic) continues for a long time, there are concerns that we will no longer be able to import sufficient food, or that even if we can import it, prices will skyrocket. In order to protect the lives of our citizens, I believe that improving food self-sufficiency is an urgent issue.
(2) Deploying unemployed workers as labor in the service industry, such as convenience store clerks and nursing home staff.
Until now, service industry workers have relied on foreign students and others, but I believe that we should make greater use of unemployed Japanese workers in the future.
(3) Deploying the unemployed as factory workers and other laborers in the manufacturing industry.
Until now, factories have been built in China and Southeast Asian countries, but the hollowing out of Japan’s manufacturing industry has reached its limit.
Going forward, I believe we should accelerate the “return of factories to Japan” and make full use of the unemployed as factory workers.