How Should Individuals Live in an Era Where Corporations Become Stronger Than Nations?

Will an era come where nations fall under the control of corporations? The new relationship between nations, global corporations, and individuals

I previously thought that a time would come when nations would be placed in a subordinate position to global corporations.

While global corporations can move capital, technology, information, data, talent, intellectual property, and production bases across borders, nations remain stuck with their territory and citizens.

Corporations can choose the nations in which they operate by comparing tax systems, regulations, electricity costs, labor costs, and market size. Furthermore, data itself easily transcends national borders.
On the other hand, even if a corporation withdraws, a nation must continue to take responsibility for the citizens living there, social security, roads, schools, healthcare, and public safety.

If this asymmetry expands, nations will no longer be the entities that control corporations, but rather the ones being chosen by them. Furthermore, one might wonder if an era is coming where nations will be under the control (or at the beck and call) of global corporations.

That is what I thought.
However, looking at what is happening now, the structure is not that simple.

It is not the case that nations are unilaterally subordinate to corporations, nor that corporations have become completely free from nations.

Rather, we are in an era where nations and giant corporations are so deeply dependent on each other that they are competing for dominance.

President Trump is trying to bring corporations back under the control of the nation

In that respect, President Trump's politics are interesting.

President Trump is not letting prominent global corporations operate freely outside the nation, but is instead trying to reintegrate them into the strategy of the United States as a nation through tariffs, export controls, government procurement, subsidies, national security, and domestic investment requirements.

If you produce abroad, you will be taxed.
If you export critical technology to competing nations, you will be regulated.
If you want to use the U.S. market, you are required to invest within the U.S., build factories, and create jobs.
He treats semiconductors, AI, steel, automobiles, energy, defense, and telecommunications not just as private industries, but as part of national security.

This can be seen as a move to return from an era where corporations choose nations to an era where nations impose conditions on corporations.

Of course, giant corporations have not completely submitted to the nation.

Corporations still hold capital, technology, employment, data, and infrastructure, and possess strong bargaining power against nations.

Even so, the U.S. can use its weapons—market size, the dollar, military power, technology regulations, and government procurement—to force corporations to comply with its national interests.

Here,what is important is not that nations will disappear, but that the gap is widening between nations that can force corporations to comply and nations that can only be chosen by corporationsthat is.

Strong nations can incorporate corporations into their national strategy.
Weak nations have no choice but to offer tax cuts, subsidies, and deregulation to get corporations to come to them.

In the world to come, the power gap between nations may become more prominent and important than the power relationship between nations and corporations.

Global corporations, too, cannot exist without nations

Global corporations operate across national borders.
However, they are not completely independent of nations.

Corporate activities depend on the infrastructure provided by the state.
Laws, contracts, property rights, currency, financial systems, roads, ports, electricity, telecommunications, education, human resources, public safety, diplomacy, military, and security.

Semiconductor companies depend on state subsidies and export controls.
AI companies depend on electricity, data centers, copyright systems, and government procurement.
Defense companies depend on the national budget itself.
Energy companies depend on shipping lanes, resource diplomacy, and military protection.
Financial institutions depend on central banks, deposit insurance, payment systems, and public support during crises.

Even companies that appear to rule the world at first glance operate within markets and systems created by nations.

Even if companies can transcend nations, they cannot make nations unnecessary.

Nations, too, must keep global corporations alive.

On the other hand, nations also need giant corporations.

Giant corporations are responsible for tax revenue, employment, exports, technological capabilities, research and development, finance, cloud services, telecommunications, defense, energy, payments, and data.

If semiconductor companies weaken, not only industrial competitiveness but also defense capabilities will decline.
If cloud companies weaken, the foundations of administration, finance, and corporate activity will become unstable.
If energy companies weaken, the nation's supply capacity will be lost.
If companies that earn money overseas weaken, it will also affect the current account balance and the credibility of the currency.
Nations need to regulate giant corporations.

However, if companies are weakened by regulation, the nation's own tax revenue, technology, security, and pension management will also weaken.

Therefore, modern nations must regulate corporations while simultaneously fostering them.

There is a major contradiction here.

If companies are not made strong, the nation will become weak.
However, if companies are given too much freedom, profits will not return to domestic wages, tax revenue, and capital investment.

What modern nations need is not simply to control corporations, nor to support them unconditionally.

It is to connect the power of corporations to the power of the nation.

Japan has changed from an 'exporting nation' to a 'capital income nation'.

Looking at Japan's current account balance, this change is easy to understand.

The Japan of the past was a country that earned a trade surplus by exporting automobiles, machinery, and electrical products.

However, the current structure is not one that consistently generates a surplus from the trade balance of goods alone.

We import crude oil, LNG, food, and raw materials, and in the digital field, we continue to make payments for overseas cloud services, advertising, software, video streaming, apps, and intellectual property.

So-called digital deficits are recorded primarily in the service balance, not the trade balance.

Even so, the reason Japan can maintain an overall current account surplus is due to the large primary income balance, which includes dividends, interest, and profits from overseas subsidiaries earned through foreign investments.

In short, Japan is shifting from a country that earns money by producing domestically and selling abroad to one that receives income from companies and financial assets held overseas.

If we compare the nation as a whole to an individual, it is less like someone living solely on labor income and more like an asset holder who owns foreign companies, stocks, bonds, and real estate, receiving dividends and interest from them.

Japan, at the national level, is enjoying benefits akin to the capitalist class.

A current account surplus does not necessarily mean the public becomes wealthy.

However, even if the nation as a whole earns capital income, those profits are not distributed equally among the entire population.

Those who are more likely to receive direct benefits are large corporations with overseas subsidiaries, shareholders, financial institutions, insurance companies, pension funds, and households that hold investment trusts or stocks.

On the other hand, people who hold almost no financial assets are less likely to benefit from overseas profits.

In fact, they may only bear the burden of a weaker yen, higher crude oil prices, and rising import costs.

What is important here is reinvested earnings included in the primary income balance.

Even when Japanese companies' overseas subsidiaries generate profits and reinvest those profits abroad, they are recorded as Japanese income in balance of payments statistics.

However, that capital does not necessarily return to Japan to be used for domestic wages, capital investment, consumption, or tax revenue.

Therefore,

having a current account surplus is not the same as having more funds available for use within the country.

The nation may be wealthy, but households are struggling. Corporate profits may be rising, but domestic wages are not growing. Overseas assets may be increasing, but local employment and public services are declining.

Such a situation is entirely possible.

Japan's problem is not just that it is failing to earn money abroad;
it is also that the channels to connect profits earned overseas to domestic society are weak.

The reason for trying to direct pension funds toward domestic investment

This issue is also the background behind the government's attempts to direct GPIF, public funds, and household financial assets toward domestic investment.

If Japanese pension funds and household savings are invested in foreign stocks and companies, they support the growth of those foreign firms, and Japan can receive a portion of the profits.

This is a rational investment strategy and is also necessary from the perspective of international diversification.

However, while funds continue to flow abroad, if sufficient capital does not flow into domestic companies, infrastructure, research and development, startups, and regional industries, Japan's domestic productive capacity will weaken.

Therefore, the government wants to maintain foreign investment while also encouraging the return of capital to the domestic market.

However, public pensions are not a source of funding for government industrial policy or stock price support measures.
Their primary purpose is to secure the investment returns necessary for future pension payouts.

If the policy goal of domestic investment is prioritized and funds are directed toward low-profitability projects, pension contributors will bear the losses.

Simply returning funds to the domestic market is not inherently correct.
What matters is whether we can create companies, technologies, and infrastructure within the country that are worth investing in.

If funds are poured in without high-quality investment targets, it will only serve to inflate stock prices and real estate values.

The most dangerous state in the relationship between the state and corporations

The interdependence between the state and corporations is inevitable.

The problem is how the profits and losses generated from that relationship are distributed.

The most dangerous scenario is a structure where
the state bails out corporations when they fall into crisis, with the public bearing the losses, while profits remain with shareholders, executives, and overseas subsidiaries when the companies grow.

is the structure.

Losses are socialized, and profits are privatized.
In this state, even if the state supports corporations, the lives of the people will not become more prosperous.

If the state is to keep corporations alive, a mechanism is needed to ensure that corporate profits are returned to domestic society in exchange.

Wages, employment, capital investment, research and development, tax revenue, human resource development, regional industries, pensions, and shareholder returns.

If corporations are to be integrated into national strategy, it is necessary to demand that they also take responsibility toward domestic society.

So, what should individuals do?

As the relationship between the state and corporations changes, individuals are likely to be at a structural disadvantage if they only work as employees.

In an era where capital income supports the entire nation, if individuals rely solely on labor income, they will unilaterally bear the burden of stagnant wages, rising prices, taxes, and social insurance premiums.

That does not mean, however, that everyone should become a speculator.

What is necessary is to connect to multiple entities—nations, corporations, markets, and communities—and not rely too heavily on any single one.

1. Become an asset holder while remaining a worker

The first thing an individual should do is convert a portion of their labor income into assets.

Through stocks, investment trusts, NISA, iDeCo, and corporate pensions, gradually capture corporate profits and global economic growth for yourself.

The goal is not to make a large sum of money in a short period.

It is to shift your position, even if only slightly, to the side that receives capital income.

The gap between those who become wealthier when stock prices rise and suffer when prices rise, and those who only bear the burden of rising prices, will widen over time.

2. Do not rely solely on your home country

As long as there is uncertainty regarding Japan's population, domestic consumption, social security, and public finances, concentrating personal assets only within Japan carries risks.

Diversify country-specific risk by combining global stocks, foreign bonds, foreign currency assets, and Japanese companies with high overseas sales ratios.

However, there is no need to convert your living expenses into foreign currency.

Secure the funds necessary for daily life in yen, and diversify long-term assets globally.

It is practical to separate your living currency from your investment currency.

3. Possess skills that are applicable outside of your company

Neither nations nor corporations will protect individuals forever.

You need to possess abilities that can be used even if you change organizations, rather than skills that are only valid within the company or municipality you belong to.

Information organization, problem discovery, data analysis, design, sales, negotiation, accounting, legal affairs, security, AI utilization, field operations, and customer understanding.

The important thing is not to look for work that cannot be replaced by AI.

It is to become someone who can use AI to enhance their own processing power and value.

4. Observe the relationship between your employer, your investments, and the state

When evaluating companies from now on, it is necessary to look not only at sales and profits, but also at how those companies are connected to the state.

Do they have government procurement contracts?
Do they possess critical infrastructure?
Are they involved in national security, energy, telecommunications, food, or healthcare?
Are they protected by regulations?
Conversely, is there a possibility that their business could be halted by international politics or export controls?

The more the interdependence between states and corporations strengthens, the more this connection will influence corporate value.
However, being a state-sponsored enterprise does not necessarily mean it is safe.

There are also risks such as policy changes, dependence on subsidies, political intervention, and inefficient management.

5. Do not trust systems too much, but use the systems that are available

The state is deeply involved in an individual's life through pensions, tax systems, healthcare, education, housing, and subsidies.

Systems should be utilized.
Use NISA and iDeCo.
Check your pension records.
Research subsidies and deductions.
Understand the social security system.

However, you should not fully believe that the systems will continue under the same conditions in the future.
Using a system and entrusting your entire life to that system are two different things.

6. Keep fixed costs low and maintain the capacity to refuse choices

In reducing dependence on the state and corporations, fixed costs are just as important as the amount of assets you have.

Housing costs, cars, insurance, communication expenses, loans, and subscription services.

The higher your mandatory monthly expenses, the harder it becomes to quit your job, turn down work, or change where you live.

Freedom is not simply having a high income.

It is having the capacity to reject undesirable options.

7. Diversify globally while maintaining connections to your local community

While diversifying assets and work globally, there is no need to completely anonymize your living foundation.

In daily crises such as disasters, illness, unemployment, or caregiving, what actually provides support are concrete relationships with your local community, family, acquaintances, clients, and professionals.

The state provides systems.
Corporations provide employment and products.
The market provides opportunities for asset formation.

However, the final support in daily life is often the people who are nearby.

Diversify assets globally, and connect your life to the local community.
This two-layered structure will become even more important in the future.

Countries that can place corporations under the state versus countries that are chosen by corporations

In the world to come, it is not a simple composition of whether nations lose to corporations or corporations lose to nations.

Nations that have the power to incorporate businesses into national strategy. Nations that continue to lower conditions to keep businesses from leaving. Nations that can negotiate with giant corporations. Nations that are too afraid of giant corporations withdrawing to demand anything.

The gap between them is widening.

President Trump's politics, at least regarding the United States, is an attempt to use the nation's market, currency, military, and regulations to place corporations under the national interest, rather than the nation falling under the corporations. While I think there are pros and cons to his political methods and approaches, the actual decision-making is for the sake of the nation and its people (and himself and his allies), which can be called the method of a true nationalist (egoist).

Whether that will succeed in the long term is unknown.

Tariffs and regulations may increase corporate costs and prices, potentially weakening the U.S. itself. Even so, it shows that a future where nations are subordinate to multinational corporations is not the only possibility.

The problem is that not all nations can do the same thing.

It is because it is the U.S. that it can make corporations comply. It can present conditions because it has the U.S. market, the dollar, military power, and technological prowess.

If other countries, including Japan, implement the same policies, corporations and capital might simply flee abroad.

Therefore, what will become important from now on is not for the state to forcibly make corporations comply.

It is to create rational reasons for corporations to remain in the country, invest, and repatriate profits.

Conclusion

I once thought that an era would come where nations would be placed under global corporations.

However, what is actually happening is not the disappearance of the nation. It is an era where nations and giant corporations depend on each other and compete for dominance.

And the gap is widening between nations that can incorporate corporations into their national strategy and nations that are merely chosen by corporations.

If a nation cannot keep global corporations alive, it will also face hardship. However, if corporations grow, it does not mean that the people will automatically become wealthy.

How to return corporate profits to wages, employment, capital investment, tax revenue, pensions, and local communities. How to connect the nation's current account surplus to the richness of individual lives. Only when that is designed can corporate growth become the growth of the nation and society.