日本経済再生 閉塞感の打破へ政策を転換せよ

The Yomiuri Shimbun (Jan. 5, 2011)
Policy changes needed to break economic deadlock
日本経済再生 閉塞感の打破へ政策を転換せよ(1月4日付・読売社説)

The Japanese economy's recovery has slowed to a stall.

Amid ongoing deflation, the working population has started to decline, and the impact on production and consumption is very worrying.

Will Japan, which was once an economic giant second only to the United States, follow a path of decline without doing anything?

Many people must now feel they will be unable to lead a stable postretirement life in light of the possible collapse of social security and the nation's finances.

To break through the growing sense of stagnation, the government needs to drastically change its economic policies.

The Japanese economy has overcome the global recession and somehow turned around since spring 2009.  世界同時不況を切り抜け、日本の景気は2009年春から好転した。

However, this was made possible by the temporary tailwinds of major economic stimulus measures and short-lived expansion of foreign demand pushed by the growth of other Asian countries.
The unreliable nature of the economy in terms of maintaining sustainable growth is quite clear if one looks back at the economic standstill since autumn of last year.

Automobile sales sharply declined due to the termination of eco-car subsidies in September. The scaling down of the eco-point system for household appliances in December put a brake on sales of flat-screen TVs and other appliances.

Furthermore, growth in exports is almost flat because of the yen's appreciation and the slowdown of overseas economies.


Govt policy no help

The employment situation is also severe. The unemployment rate remains at a high level in the 5 percent range. Many young people, freezing in the midst of the so-called job-hunting ice age, have been struggling in their "shukatsu" job-hunting activity.

Yet the government and the Bank of Japan maintain their forecast that overseas economies such as those in other parts of Asia will steadily pick up and the Japanese economy will also recover on a possible increase in exports.

Many people will neither feel satisfied with nor see any relief in such an optimistic scenario that depends on other countries. Repeated policy mistakes by the Democratic Party of Japan-led government since the party took the helm of government in September 2009 could prevent the Japanese economy from recovering.

One such recent policy mistake by the DPJ-led government is its decision not to officially participate in talks for the Trans-Pacific Partnership strategic economic partnership agreement.

The TPP is designed for participating countries from the Asia-Pacific area to mutually abolish tariffs and liberalize trade and investment. Nine countries including Australia, Singapore and the United States are now negotiating a final agreement.

Japan has fallen behind its Asian rivals, including South Korea, in economic partnership agreements. If Japan does not participate in the TPP, it will be excluded from the framework of free trade and investment.

This would be a fatal blow to the nation, which is a trade-oriented country. Even so, Prime Minister Naoto Kan easily put off a decision to join the framework for some later occasion.


He did this because he listened to the opinions of the Agriculture, Forestry and Fisheries Ministry and Diet members backed by voters in farming areas. They argued that abolition of tariffs would invite massive imports of cheap foreign agricultural products and Japan's agriculture would collapse.

But the value of farm products affected by abolishing the tariffs is relatively small. Even that of rice, the nation's staple food, does not reach 2 trillion yen. That for konnyaku potato, the tariff rate of which is 1,700 percent, is only 14 billion yen. That for butter, which carries a 360 percent tariff, is 78 billion yen.


Competitiveness crucial

Indeed, it is important to maintain high rates of self-sufficiency for the nation's main agricultural products. However, Japan will not be able to compete internationally if it remains closed by continuing to protect farm products that account for only a small share of the entire Japanese economy.

China is believed to have outpaced Japan in terms of gross domestic product last year, according to various data. Can nothing be done to stop the economy from falling further?

Actually, the government as well as private organizations have proposed various solutions.

The government's New Growth Strategy is an initiative designed to create more than 120 trillion yen of demand in environmental, health care and nursing care fields in the next decade.

To prevent a slowdown in growth in consumption and production due to the decline in the labor force, the growth strategy suggests such measures as a program to assist in child-rearing to promote employment of women and deregulation to boost demand by improving medical care and nursing care services. It lists a variety of measures.

However, many of the programs are facing deadlock as intragovernmental coordination is not going well. We must say politicians have failed to show the leadership needed to make the growth policies a reality.

It is not only weakened economic power that is making people feel anxious about their future. Shortcomings in the social security system and the nation's aggravated finances are already at a critical level. These are also major factors.


Social security costs rising

The nation's social security costs have been increasing by 1 trillion yen a year. The government is funding its contribution to the pension payment by raiding reserved funds in special accounts, dubbed "buried treasure." Such an unreasonable, irresponsible measure cannot be used anymore.

To secure stable revenue sources, it is clear that the consumption tax rate must be raised in the near future.

Kan should honestly explain to the Japanese people about the seriousness of the current situation and start drastic tax and fiscal reforms.

As a matter of course, people would not say yes to Kan's plea for a tax increase if the government continues its unpopular handouts such as child-rearing allowances and eliminating expressway tolls.

Above all, the government should withdraw its manifesto for the 2009 House of Representatives election as soon as possible and show us steady policies to promote the growth of the Japanese economy.

(From The Yomiuri Shimbun, Jan. 4, 2011)
(2011年1月4日01時06分 読売新聞)

by kiyoshimat | 2011-01-11 05:02 | 英字新聞

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