Economy

The Bank of Japan (BOJ) raised its main interest rate from -0.1% to between 0% and 0.1%. In 2016, the BOJ made the rate less than zero to help Japan’s economy.

The decision to raise rates depended on big companies increasing their workers’ wages to deal with the higher cost of living. Recently, Japan’s biggest companies agreed to increase wages by 5.28%, the largest increase in over 30 years. Wages had not increased since the late 1990s as prices rose very slowly or even fell.

The BOJ said there won’t be more rate increases for now. With inflation slowing down, it’s likely that workers will ask for smaller wage increases next year.

Money is a tool we use to achieve a goal. Different people have different strategies for what to do with money.

Some spend everything on consumer goods or recreational activities, such as enjoying a meal in a restaurant or going to a cinema. Others are in a situation where they can’t save money at all. They have to live from paycheck to paycheck. Such people are said to be living hand-to-mouth.

Other people save money for a rainy day. They can keep their money at home or in a bank. Still, other people invest their money. They invest in safe places such as properties or precious metals, or stocks of large companies. Some invest in risky places such as cryptocurrencies. They hope to gain a large return on their investments.

In the US, the labor market is slowing down. Around 250,000 workers found new jobs and the unemployment rate fell to 3.4%, last April.

However, few jobs are hiring at the moment. Employers are looking for highly skilled individuals and cutting unnecessary jobs. Some of the industries hiring are professional and business services, health care, leisure, and hospitality. There is also high demand for specialized construction contractors and food service experts. Professional and business services had the biggest increase, adding 43,000 jobs. Employees in this industry made an average of $40.20 per hour.

The standard measure of economic performance, the gross domestic product (GDP), measures the value of goods and services produced within a country over a given period. However, the GDP doesn’t measure social factors like income inequality, domestic violence, drug addiction, or the impact of today’s actions on future generations. It also ignores sustainability and environmental destruction. It’s a very short-term view of market factors without respect to what’s happening on the social and environmental levels. As a result, the GDP gave us no warning of the impending global financial crisis in 2008.

But we continued to base our economic predictions on that metric. And it began to show economies recovering and growing—so everything’s going well again, right? But what if we factor in social and environmental realities?

The UK agreement

A new free trade agreement with the UK allows New Zealand to remove export tariffs during the next 15 years. This deal promises a GDP boost of up to $1 billion.

On top of the economic elements, the agreement includes conditions for the environment, tackling climate change and creating equity in economic advancement. According to New Zealand Prime Minister, Jacinda Ardern, it is the country’s “first bilateral trade agreement to include a specific article on climate change”. 

Another unique point of that agreement is a separate Māori trade chapter featuring the acknowledgement of the relationships between the Māori people and the British, who colonised the country. In addition, the chapter included the protection of Ka Mate haka, in which the UK promises to protect the famous ceremonial dance. 

According to Vox Media, the idea of a basic income was, for decades, something of a policy fantasy. However, the last few years have seen it become less fringe and more mainstream. In fact, we now have many limited basic income programs running around the world.

The general idea—that the government should give every citizen a regular infusion of money with no strings attached—has been around since the 16th century. However, the COVID-19 pandemic has given the idea fresh momentum, with the crisis generating significant financial loss and uncertainty.

Critics worry that UBI will disincentivize work and hurt the economy. They also say that it is unaffordable for the government to pay every citizen enough to live on, regardless of whether they work. So far, the evidence has not supported these critiques.

This simple equation is at the heart of the global economy: One person’s spending = another person’s income.

It’s referred to as “supply and demand”—producers will supply as much as consumers demand. So if consumers aren’t buying anything, producers won’t be able to sell anything. In other words, whenever you buy something, you pay someone else’s wages.

So the current COVID-19 pandemic is not just a global health crisis but also an economic one. When people are told to stay at home, they stop going to restaurants, bars, and movies. They can’t travel, so they don’t spend money on gas or airfare, and they don’t stay at hotels. And when no more than 10 people can be together in one place, everything from birthday parties to music festivals to major world sports events are canceled.

The idea of universal basic income (UBI) has been gaining steam around the world. A Japanese billionaire and an American presidential candidate, among others, have both thrown their weight behind it.

The concept is simple: the government provides unconditional money to their citizens. The theory is that in order to provide basic services for all citizens and to stimulate the economy, a small amount of money can be given to each person, equally. 

In the United States, presidential candidate Andrew Yang has even given away $12,000 to a random Twitter follower. In his plan, each adult would receive that amount of money every year. Yang argues people will continue working, even with UBI. $12,000 a year is barely enough to live on in many places and certainly not enough to afford much in the way of experiences or advancement. To get ahead meaningfully, people will still need to get out there and work.

The Japanese government and the bank of Japan have announced that they will renew the ¥10,000, ¥5,000 and ¥1,000 banknotes in 2024.