Speaker 1: Hello, Welcome to Stephano Mixed, the podcast that brings the
Speaker 1: COVID global economy to you, and we're spending some time
Speaker 1: in Japan this week. The world's third largest economy has
Speaker 1: done much better than most containing the spread of the coronavirus,
Speaker 1: but allows a job of protecting women workers from the effect.
Speaker 1: It was Prime Minister Shinzo Abbe's signature initiative to boost
Speaker 1: the economy by bringing more women into the workforce, and
Speaker 1: he was eight years on finally making progress. But COVID
Speaker 1: nineteen is turning the clock back for women in Japan,
Speaker 1: just as it is in many other countries. We'll have
Speaker 1: more from economy reporter Yuko Takeo in a few minutes,
Speaker 1: but first I wanted to have a brief chat about
Speaker 1: creative destruction, the bold economic experiment, which always sounds like
Speaker 1: a brilliant idea just as long as it's happening to
Speaker 1: someone else. Now, some of you will know the phrase
Speaker 1: creative destruction was made popular by the Austrian economist Joseph Schumpeter.
Speaker 1: The idea is that great things can come from disaster,
Speaker 1: and government shouldn't stand in the way of that process
Speaker 1: by rescuing firms that would otherwise go bust. As I say,
Speaker 1: tends to be really popular with everyone except policymakers who
Speaker 1: are right in the thick of a crisis and companies
Speaker 1: that are themselves about to go bust. But it has
Speaker 1: taken on particular resonance in the COVID crisis because we
Speaker 1: just don't know how much of the economic destruction we're
Speaker 1: seeing might be creative in the end, and how much
Speaker 1: government should be doing all they can to avoid. US
Speaker 1: Federal Reserve reporter Rich Miller has been thinking hard about this,
Speaker 1: and he wrote an interesting piece for Bloomberg with France
Speaker 1: economy reporter William Horrobin about the potential differences between the
Speaker 1: US and Europe in this area. He's with me now
Speaker 1: to discuss it with Eurozone economist may for Kusa. Welcome
Speaker 1: both of you, and thanks for joining me. Rich. I
Speaker 1: guess you should just explain the premise of your piece,
Speaker 1: what are you setting out to talk about, and and
Speaker 1: and maybe just give us a glimpse of the conclusions
Speaker 1: that you drew. Sure, thank you for having me um.
Speaker 1: The US traditionally has been seen as being better able
Speaker 1: than Europe to re orient its economy after recessions it's
Speaker 1: it's got two advantages. One on the labor market, it's
Speaker 1: easier for companies here to fireworkers. And then two on
Speaker 1: the sort of going bust. The bankruptcy courts here tend
Speaker 1: to be friendlier to entrepreneurs, so it's easier to go
Speaker 1: bust and then come back and start restart a new business.
Speaker 1: So as a result, most economists see see the US
Speaker 1: as having a leg up in the in the creative
Speaker 1: descruption business eiso to speak. But as you as you
Speaker 1: alluded to, you know, this crisis is uh, you know,
Speaker 1: perhaps like no other in the side of the speed
Speaker 1: and the severity and maybe even more important than tremendous uncertainty.
Speaker 1: So we don't really know, uh, we never know completely.
Speaker 1: But but even more so now it's hard to know
Speaker 1: whether you know, if a firm goes bus now, is
Speaker 1: it viable in the longer term and is it just
Speaker 1: sort of going bust because we have a temporary collapse
Speaker 1: and demand due to COVID And if you know six
Speaker 1: months from now, you that Vietnamese restaurant on the corner
Speaker 1: would be a viable enterprise once we get a vaccine.
Speaker 1: And that's the conundrum that the policymakers are grappling with
Speaker 1: do you think I mean, may just just turning to you,
Speaker 1: would you recognize this contrast between US and Europe. I mean,
Speaker 1: we definitely tend to think that it's easier to fail
Speaker 1: and start again in the US. Um, you can go
Speaker 1: bankrupt certainly more easily. Do people worry about that in
Speaker 1: the current context, that it's not going to be easy
Speaker 1: enough for people to fail and then reinvent themselves coming
Speaker 1: out of this. Yes, I think that was one of
Speaker 1: the reasons. I think the cost associated with recreating existing businesses,
Speaker 1: existing job relations relationships and matching between the workers and
Speaker 1: the vacancies is higher in Europe generally, so it made
Speaker 1: more sense to try and protect those relationships and those
Speaker 1: businesses as much as possible so that the this reset
Speaker 1: up cost could be could be lowered and could be avoided.
Speaker 1: There's more tape, there's this problem of restrictriation which is
Speaker 1: not as smooth, and there are different attitudes from the
Speaker 1: public as well on the role of government and how
Speaker 1: much government should protect people against the economic risks and
Speaker 1: economic hazards. So I think all that together meant that
Speaker 1: there was both a lot of um, some economic sense
Speaker 1: in prodicting, in protecting more, and a lot of political
Speaker 1: wadingness to protect more. So yes, I think different, very
Speaker 1: different setups could explain some of the different emergency reaction
Speaker 1: to the crisis. But I guess I mean, rich of
Speaker 1: you look at how the US has responded to this crisis.
Speaker 1: They have in a sense tried to make the US
Speaker 1: sort of less American in the sense of, you know,
Speaker 1: try and reduce the number of bankruptcies and reduced this
Speaker 1: kind of destruction, maybe out of fear that it's it's
Speaker 1: not so creative. I mean, how how much of a
Speaker 1: contrast is there and things like bankruptcy is relative to
Speaker 1: pass recessions at least so far, um well, so far
Speaker 1: on the bankruptcy for the bankruptcy filings are actually down
Speaker 1: about eleven percent, you know, a year over year, and
Speaker 1: and that is generally ascribed to you know, all the
Speaker 1: programs and all the huge trillions of dollars that the
Speaker 1: government is pumping in not only for consumers but but
Speaker 1: but also to give so that they have money to
Speaker 1: go and spend at these companies, but also for the companies.
Speaker 1: Just so just to be clear, there's fewer companies than
Speaker 1: normal I mean than a year ago, are actually going
Speaker 1: bust even though we have this historic recession thus far.
Speaker 1: I mean, you know, we have a big question mark
Speaker 1: now over what comes next one when the stimulus that
Speaker 1: this huge amount of stimulus has put into the economy.
Speaker 1: You know, there's a big question mark here in the
Speaker 1: States about how much of that, how much more the
Speaker 1: US is going to put in. I guess there's also
Speaker 1: a question in Europe to about that. But uh, and
Speaker 1: there's a fear that you will see bankruptcy and even
Speaker 1: in a normal recession, bankruptcy filings go up by about
Speaker 1: fift that's in a normal recession. And the fear is
Speaker 1: that if you had sort of let unbridled creative destruction go,
Speaker 1: you you would have got clogged I mean really on
Speaker 1: bankruptcy courts, and that would would also hurt the economy. Maybe.
Speaker 1: How do you think that European governments are grappling with
Speaker 1: this dilemma? It strikes me we're at a different stage
Speaker 1: of the crisis now when it comes to the economic response.
Speaker 1: You're not just trying to fill the whole. I think
Speaker 1: we've talked about it in the past. You know, you
Speaker 1: look at the hit to incomes that you think is
Speaker 1: coming from the virus, and you're just trying to match
Speaker 1: it to get money to households to try and keep
Speaker 1: the economy afloat. But now are at a point where
Speaker 1: you're trying to encourage growth and also perhaps encourage businesses
Speaker 1: to adjust to a situation where we still have social distancing,
Speaker 1: where we haven't got rid of the virus. Have we
Speaker 1: seen that affect the programs that people are or how
Speaker 1: long programs last? I mean, certainly in the UK recently
Speaker 1: there's been an ongoing debate about how long that furlough scheme,
Speaker 1: that John Protection scheme last, and actually it's supposed to
Speaker 1: still expire in October, even though a lot of companies
Speaker 1: feel that they will still need support from the government
Speaker 1: in October and will probably have to lay people off
Speaker 1: if it's not if their wages aren't going to be
Speaker 1: paid by the government. How is that trade off being
Speaker 1: managed in Europe? In other parts of Europe, yes, we
Speaker 1: are starting to see some shifts from protection to something
Speaker 1: that is maybe a bit closer to re allocation or
Speaker 1: thinking about re allocation. So if you take the case
Speaker 1: of hunts, for instance, the program the Fellow scheme has
Speaker 1: been made a bit less generous for employers already and
Speaker 1: starting from October it will be made less generous for
Speaker 1: both employers and employees, so that employers are encouraged to
Speaker 1: decide what they want to do with their workforce, either
Speaker 1: they take them back or they actually decide that they
Speaker 1: may not need as many people as they used as
Speaker 1: much stuff as they had before. But also if the
Speaker 1: program is less generous, and it used to be at
Speaker 1: the moment, it's a bit more general that unemployed and benefits,
Speaker 1: So if it becomes less generous than unemployment benefits, then
Speaker 1: it creates an incentive for people to start looking like
Speaker 1: becoming an employed and looking for a new job that
Speaker 1: they may not have had with those very generous schemes.
Speaker 1: So we are seeing that altho, clearly they are still
Speaker 1: maintaining self safe some safeguards. So in France it will
Speaker 1: be possible for employers to negotiate with unions and the
Speaker 1: administration to have a longer term plan where they can
Speaker 1: stay on this more generous scheme. But for that they
Speaker 1: will have to have a plan on how they see
Speaker 1: the development unemployment, how quickly they will bring back bring
Speaker 1: back people. Do they need to ra structure, do they
Speaker 1: train people for new jobs and things like that. So
Speaker 1: this is a progressive, gradual shift. But that's going that's
Speaker 1: going on in Spain, for instance, they are playing more
Speaker 1: with the incentives. So if you are starting to bring
Speaker 1: back more workers, then it's more like a wage. They're
Speaker 1: thinking about wage subsidies, so going from retention schemes to
Speaker 1: which subsidies. If you start bringing back more workers, then
Speaker 1: you will pay less of um social contributions for the
Speaker 1: entire workforce and things like that. So it's a it's
Speaker 1: a it's a difficult balance they have to strike because
Speaker 1: they have invested that bit a lot of money on
Speaker 1: this and now they want to make sure that actually
Speaker 1: they don't um lose everything by removing support. But they
Speaker 1: are playing by the year and they are moving step
Speaker 1: based step depending on the evolution of the situation. But
Speaker 1: how do you think, I mean, overall, do you think
Speaker 1: they're still at the stage where they're going to air
Speaker 1: on the side of protecting too many jobs or you know,
Speaker 1: if you're looking down the track and thinking what it
Speaker 1: could be twelve months that the economy is operating seriously
Speaker 1: blow potential and a lot of these businesses are not
Speaker 1: viable in that environment where we still have COVID nineteen.
Speaker 1: Do you think they should still air on the side
Speaker 1: of protecting jobs or should they be thinking a bit
Speaker 1: more about how to help people reinvent themselves. I think
Speaker 1: they will. They are clearly waiting for the summer to see.
Speaker 1: Uh and the tourism question is is a big one
Speaker 1: and it's a big unknown, So I think they are
Speaker 1: really waiting to see. These schemes are expensive. I think
Speaker 1: they will probably keep a lot of protection initially, especially
Speaker 1: if they have some hope that those jobs will become
Speaker 1: vailable in the near future. UM it was the main
Speaker 1: limit to that, I think in their view will be
Speaker 1: the cost rather than the risk of impedding creative creative destruction.
Speaker 1: But I think they will air on the side of custion. Now, Rich,
Speaker 1: I'm going to give the give the last word to
Speaker 1: you because I know how many, many many years that
Speaker 1: you've been covering the US economy. Thank you very much,
Speaker 1: thinking thin and I wonder, I mean it was it's
Speaker 1: been such an extraordinary amount of support coming out of
Speaker 1: the federal government, a lot more than we had in
Speaker 1: the global financial crisis, which itself was considered to be
Speaker 1: a pretty big US fiscal stimulus. Do you do you
Speaker 1: see that the support for that evaporating quite soon? Do
Speaker 1: you see it as a temporary thing. Do you think
Speaker 1: we are going to see America sort of shift back
Speaker 1: to a more sort of an ethos that favors creative
Speaker 1: destruction or will we see that same kind of balance
Speaker 1: that maybe's talking about people actually wanting to protect rather
Speaker 1: than have companies go to the war. Yeah, difficult question,
Speaker 1: and obviously with an election coming up that would also
Speaker 1: affect it. But um, I think there would There would
Speaker 1: still probably be more I think in the short term,
Speaker 1: and I think maybe is rightly that they will the
Speaker 1: emphasis will be on protection, though maybe perhaps in the
Speaker 1: in the in the longer term it might be more
Speaker 1: on reinvention. But there's a lot of moving parts going on,
Speaker 1: and the US is both Republicans and Democrats are moving
Speaker 1: arguably towards in a little bit more of the direction
Speaker 1: of industrial policy type, and that is not necessarily creative destruction.
Speaker 1: That's government sort of playing a bigger hand. Uh So,
Speaker 1: But I would I would think that that the US
Speaker 1: ethos is still towards more reinvention than protection, and that
Speaker 1: would probably you know, um went out so to speak,
Speaker 1: in the longer run, I guess one of us. So
Speaker 1: I was just thinking one of the other question one
Speaker 1: might have is whether the US has gone a bit soft.
Speaker 1: You know, we've heard a lot of talk about big
Speaker 1: tech giants kind of dominating certain companies and they're being
Speaker 1: a lot less competition and maybe less creative destruction in
Speaker 1: those sectors. We've there's the the mobility numbers have gone down,
Speaker 1: so people seem to be less willing now to change
Speaker 1: to move across the country for a job as maybe
Speaker 1: they used to in the pose used to associate that
Speaker 1: with American workers. So is that is there is there
Speaker 1: an element of that rich that maybe it was never
Speaker 1: was not really as creatively destructive environment in the US
Speaker 1: and hasn't been for quite a long time. Well, I
Speaker 1: think that there's definitely an element, and that that they
Speaker 1: know that the differences between the two regions maybe maybe less.
Speaker 1: Then it's sort of commonly portrayed. And if the Democrats win,
Speaker 1: you'll you'll have you know, an emphasis more on worker rights,
Speaker 1: more on union power, which will tend to look a
Speaker 1: little bit more like the European model and not anywhere
Speaker 1: near like that, but it would be moving in that direction.
Speaker 1: So the gaps between m hm us and Europe narrowing,
Speaker 1: and not just on this podcast. But thank you very much,
Speaker 1: Rich Miller and Vakuza. Thank you, Thank you m h
Speaker 1: Now that story I promised you. From Japan, here's economy
Speaker 1: reporter Yuko Takeo speaking from a special location in Tokyo.
Speaker 1: COVID nineteen has turned two thousand and twenty into a
Speaker 1: year postperments, and Japan is no exception. I'm here outside
Speaker 1: Tokyo's Olympic Stadium, where thousands of visitors from around the
Speaker 1: world should have been enjoying the now postponed games and
Speaker 1: cheering on the country's medal hopes. But even without the virus,
Speaker 1: there's one goal Japan's male dominated society never looked like
Speaker 1: achieving this year, filling leadership positions for women. Back in February,
Speaker 1: I've met fifty year old aspiring politician Multiple Missing at
Speaker 1: an event in the area of Customer Gazipi, the heartland
Speaker 1: of Japanese politics, whose name roughly translates to the gated
Speaker 1: miss organized by the Academy for Gender Parity. Two female
Speaker 1: and Peace were speaking there about some of the ups
Speaker 1: and downs they faced in the high stressed world of
Speaker 1: Japanese politics. Later, Momuticle also taught me about some of
Speaker 1: the gender disparities that possist. If you're a man going
Speaker 1: into politics, often there's a positively you go kind of
Speaker 1: push for them. Their wife often helps them, and the
Speaker 1: manpower at least doubles. But when a woman like me
Speaker 1: tries to do the same thing, everyone says, don't do it.
Speaker 1: Unless political parties decide they want to increase the number
Speaker 1: of women, it doesn't really. According to the World Economic
Speaker 1: Forum's latest rankings of gender based disparity in things like
Speaker 1: economic participation, health, education, and political empowerment, Japan ranks a
Speaker 1: hundred and twenty first in the world. That's below the
Speaker 1: United Arab Emirates and Sierra Leone. Only ten percent of
Speaker 1: Lower House MPs are women unless than one percent of
Speaker 1: CEO is a companies listed on Japan's stock exchange. Our
Speaker 1: female that hasn't stopped prime ministicians areb from ruling the
Speaker 1: government's progress, especially in the jobs market. The women's labor
Speaker 1: participation rate has dramatically increased under abets tenure. Still, the
Speaker 1: coronavirus has a wound. Some of these games, revealing the
Speaker 1: fragility of progress. In April, the number of working women
Speaker 1: fell for the first time in more than eight years.
Speaker 1: This is an only a japan story. Around the world,
Speaker 1: the pandemic has hit women harder because they are more
Speaker 1: likely to work part time or beyond short and contracts,
Speaker 1: and they often work in sectors like tourism and hospitality,
Speaker 1: which have been worse out back in Marge I talked
Speaker 1: forty eight year old Nick Orson, one of the more
Speaker 1: than three million women who joined the workforce under Abbey's tenure.
Speaker 1: She started working part time at a local bakery two
Speaker 1: years ago after her youngest sons started school can keep.
Speaker 1: I thought it would give me a change of scenery
Speaker 1: and we would need the money going ahead. My eldest
Speaker 1: is starting middle school, so we would need money for
Speaker 1: a cram school. There's fees are expensive, so our outgoings
Speaker 1: are going to get larger. My younger son is doing
Speaker 1: more extra curricular activities as well, and these extra expenses
Speaker 1: of the two kids are a big way on our
Speaker 1: household budget, and the ro looked at what's going play.
Speaker 1: Fast forward two months and the Yokohama resident is no
Speaker 1: longer an example of progress under Albe. Instead, she's one
Speaker 1: of more than three hundred thousand women who lost their
Speaker 1: jobs in April and May. That was during Japan's state
Speaker 1: of emergency, when people were urged to stay home and
Speaker 1: work from home as much as possible. When does things
Speaker 1: of the emergency was announced that bakery was temporarily closed.
Speaker 1: We were supposed to go back once the emergency was lifted,
Speaker 1: but without any revenue, the bakery, like many others, wasn't
Speaker 1: able to open again without a downsizing. The bakery disclosure
Speaker 1: cave as a shock, but really goes looking for new
Speaker 1: part time work, and she's happy that her two sons
Speaker 1: can now go to school again. When the pandemic prompted
Speaker 1: school closures, the building of more childcare fell on women
Speaker 1: more than men. All that mirror developments in other nations
Speaker 1: across the world. Women in Japan were already carrying a
Speaker 1: higher burden than in other advanced For colomies one couples
Speaker 1: with young children, Japanese wife's spent six times the amount
Speaker 1: of hours in child care and health work than the husband's.
Speaker 1: In the US, France and Germany, the ratio is roughly
Speaker 1: only double. Nichols says she's happy to have been able
Speaker 1: to watch her son's grow up, but she's also had
Speaker 1: to basically be a single parent for years when her
Speaker 1: husband's job first took him to Shanghai than another prefecture
Speaker 1: in Japan. Was toughest. When I like to say, my
Speaker 1: parents don't live that close, so there was no one
Speaker 1: I could rely on. The first year after my husband
Speaker 1: moved to China, I was really sick and my youngest
Speaker 1: was about one year old. That was the toughest time,
Speaker 1: and it was difficult that my husband wasn't there when
Speaker 1: I was ill, but in a different part of Japan.
Speaker 1: Multiple the women I've met at the politicians event back
Speaker 1: in February, it's been trying to represent people like Rumical.
Speaker 1: That's a tough route given Japan's female representation in parliament
Speaker 1: rights a hundred and thirty five in the world according
Speaker 1: to the World Economic Forum. Multiple built her career in
Speaker 1: the field of aerospace, and she beams when she talks
Speaker 1: about space. She worked at Jackson, Japan's version of NASA
Speaker 1: for nearly three decades, and it's planning on running for
Speaker 1: the next lower House elections. But as a working mother
Speaker 1: who has no previous choice of politics, she says it's
Speaker 1: not an easy ride. Yeah. In Japan, it's difficult to
Speaker 1: enter politics unless you have a political family, fame, or money.
Speaker 1: Right now, it's mostly men in this world, so unless
Speaker 1: there's a major support, you can't step in. Another challenge
Speaker 1: is balancing it with everything else all the moments. I'm
Speaker 1: running for office despite being a single mother, so of
Speaker 1: course people have a lot of opinions. I've worried a
Speaker 1: lot over that. But my conclusion is that I can't
Speaker 1: bear to hand over Japan as it is to my
Speaker 1: children and their generation. I can't stand it when I
Speaker 1: pass it over to the next generation. I want to
Speaker 1: be able to do it with confidence. I don't want
Speaker 1: to say I'm sorry, Japan is in this state. Please
Speaker 1: do your best with it. Took your governor Urico procle
Speaker 1: one re election earlier this month in a race which
Speaker 1: faced twenty one challenges, but while she has gone it
Speaker 1: praised for her faster response to the pandemic than the
Speaker 1: other administration. She's one of only two female leaders in
Speaker 1: Japan's forty seven prefectures. Caffee Matson, vice chair of Golden
Speaker 1: SAX Japan, coined the term women no Mix back in
Speaker 1: she has normally. The commic argument to boost the female
Speaker 1: representation in both the public and corporates is so based
Speaker 1: on our analysis, if you could close Japan's gender employment
Speaker 1: gap and encourage were women to work full time as
Speaker 1: well as the part time, you could live Japanese GDP
Speaker 1: by as much as fifteent, which is huge. Aspiring politician
Speaker 1: Motorco argues that more women in parliament will also have
Speaker 1: a host of positives policy making that's more in hune
Speaker 1: with normal people's lives, better representation of women's concerns, and
Speaker 1: more innovation through diversity. What decides the core of Japan's
Speaker 1: future is politics. I finally realized this at nearly fifty,
Speaker 1: after I'd lived for five decades. But if I'd realized
Speaker 1: this when I was younger, maybe I would have taken
Speaker 1: that past sonn probl B News. I'm Muko Teco. Thanks
Speaker 1: for listening to Stephanomics. We'll be back next week with
Speaker 1: more on how COVID nineteen is transforming the global economy.
Speaker 1: Remember you can always find us on the Bloomberg terminal, website,
Speaker 1: app or wherever you get your podcasts. And for more
Speaker 1: news and analysis from Bloomberg Economics, follow at Economics on Twitter.
Speaker 1: This episode was produced by Magnus Hendrickson, with special thanks
Speaker 1: to Rich Miller, Mava Kusin, William Horrbin, and Paul Jackson
Speaker 1: in Tokyo. Lucy Meekin is the acting executive producer of
Speaker 1: Stephanomics and the head of Bloomberg podcast is Francesca Levy.