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Hitachi Research Institute

President Column

Column by the President of Hitachi Research Institute, Mizoguchi

#8:Is the “world’s best hope” still alive?

I returned to my “second home,” Washington D.C. for the first time in 10 months. The main purpose was to consider research themes that Hitachi Research Institute should focus on in the new fiscal year. I was lucky enough to get the 2024 White House Christmas ornament, which goes on sale every year on President’s Day (Monday February 19th this year). Aiming at fruition in 2030, our proposed research themes include the following questions: “How to envision scenarios for the geopolitical situation?”, “How will the world’s energy transition change?”, “What will happen to growth areas and value creation in each major region?”, “How will the form of service provision evolve as the social implementation of generative AI progresses rapidly?”, “How will AI accelerate industries and products derived from biotechnology?”, and “As the proportion of corporate intangible assets in the capital market increases, how should they be utilized?” I was able to meet many authorities and experts in Washington and New York, from whom I received a variety of valuable suggestions.

The topic that came up in most of the meetings was the U.S. presidential election in November. I heard opinions such as “Donald Trump’s return is a done deal,” “President Biden’s chance of re-election is even greater,” “A scenario in which Biden withdraws is possible,” “A strategy to change the vice-presidential candidate from Kamala Harris is actually being considered,” and “A third party is the key this time.” The U.S. presidential election can be said to be the major event in the geopolitical world. There is almost a consensus that if President Trump were to return, it would have a major impact on the foreign-policy field. In particular, a major shift in U.S. involvement in the two wars and a 180-degree turnaround in environmental initiatives would have traumatic effects for Europe. The impact on Asia was seen as relatively small, and I heard expectations for Japanese leadership everywhere. On the economic front, U.S.-centricity has been passed down from Presidents Trump to Biden, and if Trump returns as president, I see no radical change in that trend. The approach of expanding investment, creating jobs, and preventing the leakage of advanced technology from the United States is now shared by both the Democratic Party and the Republican Party. How taxes are levied differs significantly from president to president, but it is difficult to implement extreme tax policies because Congress, which is likely to have a slight difference in the number of seats held by each party, acts as a brake.

One change in the United States that should be of concern is the shake-up in the separation of the three powers. In June 2022, the U.S. Supreme Court overturned the 1973 Roe v. Wade decision that made abortion a right of women guaranteed by the U.S. Constitution. As a result, the legality of abortion varies from state to state. That decision was made possible by the appointment of three Supreme Court justices during the Trump administration, which has resulted in six of the nine justices now being conservative. Consequent changes in judicial decisions will have a wide and long-lasting impact on U.S. society. A major issue that will require judicial decisions in the future is the Supreme Court’s decision regarding the “Chevron doctrine.” The 1984 Chevron decision, which gives the executive branch the right to interpret ambiguous laws passed by Congress, could be overturned by the Supreme Court in June of this year. In that case, even if there is some ambiguity in the content of the law, it will be difficult for the government to make detailed judgments and decisions. For example, the Treasury Department actively interpreted the Dodd-Frank Act and responded to the 2008 financial crisis, but such a quick U.S. government response may become difficult. If President Trump is re-instated, he is expected to expand his involvement in the judiciary and, if another Supreme Court justice is replaced during his term, it would have a significant impact on U.S. society.

On the economic front, the position of the United States as the strongest is unassailable. Thanks to its diverse human resources, energy independence, food-production capacity, power of innovation, position of the key currency, and significant improvements in labor productivity, the United States is the only country in the world that can survive without “the rest of the world.” Although U.S. society is becoming increasingly fragmented, the economic foundation of the United States is solid, and its transformation is supported by an abundance of investment capital. However, it is difficult to predict whether the divisions in society will lead to improvements in the future or whether they will also have a negative impact on the economy. Party politics began under the administration of the first president, George Washington, with “Federalists” and “Republicans.” Thomas Jefferson, an iconic Republican, became the third president of the United States when he defeated incumbent President John Adams, a Federalist. In his inaugural address, Jefferson called the United States “the world’s best hope” and said, “…every difference of opinion is not a difference of principle. We have called by different names brethren of the same principle. We are all Republicans, we are all Federalists.” Opinions on whether the United States continues to be the world’s best hope may differ, but there is no doubt that the United States will continue to hold the fate of the entire world in its hands.