Over the past half-century, events unfolding in the United States have fueled discontent and anxiety within society. Populism has stoked divisions, leading to the current political turmoil in America. Half of the American people even cheer on President Trump's extraordinary words and actions. These two phenomena stem from a shift in policy. It began with the Reagan administration, where neoliberal policies—free competition (deregulation), small government (tax cuts), and financial emphasis (money supply)—became a watershed, steadily exhausting society and the economy.
While the U.S. continues economic growth by driving technological innovation, the real wages of half its citizens have remained flat for nearly 30 years, while the wealthy have grown richer. Domestic industries moved overseas, the IT revolution accelerated, and many domestic workers were forced into unemployment or low-wage jobs. Simultaneous cuts to welfare budgets and public services compounded the hardship, making recovery difficult for the disadvantaged and shattering the American Dream. Furthermore, economic collapse in South America and conflicts worldwide led to a surge of immigrants and refugees into the United States. Immigrants began to be seen as the primary cause of job loss for unskilled workers and, to conservatives, as destroyers of culture. Repeated U.S. wars and massive tax cuts increased government deficits, forcing further reductions in public services and foreign aid. An overemphasis on monetary policy and deregulation backfired, leading to recurring bubbles and financial collapses, which further widened the wealth gap.
Thus, while the world's wealthiest individuals concentrated in the United States, the ranks of the poor swelled. Compounding this, excessive deregulation (dismissing media fairness, removing limits on political contributions) proved disastrous, making biased, inflammatory reporting and money-driven politics inextricable. Consequently, politics and the media became manipulated by financial power, reducing democracy to a mere formality. The majority of citizens were exposed daily to extreme wealth inequality. Despite politicians repeatedly proposing novel reforms, the situation has only worsened over the past 40 years. To escape this predicament, a strong leader was sought. This figure declared the problem easily solvable, pinpointing the root cause as the Deep State and vowing to crush it.
This situation in the United States appears to be a harbinger of tragedy, reminiscent of the precursors to the rise of the Nazis. It seems nothing more than a refusal to confront the true causes of decline, seeking instead a scapegoat. The shift to neoliberalism that created this situation can be summed up in one phrase: “The wealthy and conservative classes launched a counterattack against citizens and the working class, and succeeded spectacularly.” This vendetta dates back 150 years. As the Industrial Revolution drew to a close in Britain, workers rose up demanding improvements to their deteriorating working conditions. They subsequently achieved various rights (the right to strike, universal suffrage) through the first half of the 20th century. This led Western nations to embrace aspects of the welfare state (progressive taxation, expanded public services). Backlash against this grew among the wealthy and conservative classes, and using the oil crisis as a catalyst, they launched a counteroffensive.
Japan faced not only the problems of neoliberalism but also two additional burdens, making it the only advanced nation to see its national strength continuously decline. This was largely due to its bureaucratic state since the Meiji Restoration (feudal-clan bureaucracy, military dictatorship) and the occupation by the GHQ (subordination to the US, long-term single-party rule). This could be attributed to democracy failing to take root, and its detrimental effects are starkly evident in Japan's labor movement history and the privatization of the national railways. These manifest as union busting, increased non-regular employment, civil service cuts, a declining labor share of income, and yen depreciation. These factors have also contributed to Japan's current workplace environment ranking lowest among developed nations.
However, there are nations worldwide that have parted ways with the neoliberalism championed by Japan, the US, and the UK. Countries in Southeast Asia, the Indian Ocean region, and Northern Europe have improved capitalism within the globalized economy, achieving greater national well-being. China, despite being a communist state, has achieved what was thought impossible: remarkable economic development and technological innovation. Furthermore, protests challenging the status quo are occurring globally, and scholars are sounding the alarm and proposing solutions.
The current deterioration in the US and Japan has unfolded exactly as American economists predicted two decades ago, though unfortunately, many remain unaware. Those deeply entrenched in vested interests, including politicians, fail to convey the truth. Their solutions are either superficial or designed solely to protect those interests. In the 1980s, they claimed wage increases caused inflation and pursued policies to suppress wages. Now they claim deflation is the problem. Deflation is simply the result of suppressing wage growth. Therefore, it offers no improvement for the majority of the population.
I wrote this first part to make this current situation easier to understand. The second part showed how this situation could lead to dictatorship or war. In the third part, I introduced encouraging signs that inspire courage, aiming to break through the current impasse.
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