Monday, March 10, 2008

Russian Translation by Andre Fesyun

Mistaken economic policies

Tokyo seems to have difficulties in handling economic problems. For example, it has long had the problem of too many taxis. Since drivers' incomes are falling as a result, the authorities decided to increase the already high fares by 10 percent.

So now there are even less customers, and even more taxis are clogging the streets. And drivers' incomes have fallen further. Brilliant! The obvious answer used in Singapore and elsewhere is to auction off taxi licenses. But Japan finds that too complicated.

We see more of this shallow thinking in the current economic debate. Japan has suddenly come to realize that its economic growth prospects look bleak. What to do? The government is accused of not following up on the reforms of former Prime Minister Junichiro Koizumi. But can anyone seriously argue that breaking up the former post office or highways corporation monopolies could promote growth?

Fortunately, there is now some recognition that weak consumer demand is the main problem. But proposed solutions are of little help. We are told that cleaning up the pensions mess will help demand to grow since people will feel better about their future and spend more. But we are also told that to clean up the mess the consumption tax will have to be increased. So you encourage consumers to spend more by increasing taxes on consumption? Meanwhile the successful reverse mortgage system used in the United States and elsewhere to allow pensioners to spend more goes into the too-hard basket.

Incidentally, the minister in charge of pensions when the mess was created was Koizumi. As prime minister he said his reforms would cut the nation's public-debt obligations and restore confidence. The result? Continued deflation and public debt increased by ¥200 trillion. Today we are still told that the government needs to cut deficit spending to encourage consumers to spend more. So you increase the demand the economy needs so badly by continuing to cut government demand — more of the Koizumi solution?

The other favorite reform call is for something called increased productivity. But Japan's continuing trade surpluses are proof it already has productivity. It doesn't need more products. It needs more domestic demand for those products.

The Economist magazine has come out with a long wish list of needed reforms, including calls for an open and freer society and, of course, cuts in government spending. It has yet to explain how and why the much more closed and evilly unreformed Japan of the past managed to make the progress it used to admire. Nor does it tell us how the China it has long castigated for lack of openness and freedoms makes even greater progress.

Surely it is basic Economics 101 that the engine of progress in any economy is demand. If present China and former Japan were able to make such spectacular progress it was because demand was vibrant. Consumers wanted to buy essentials — TVs, refrigerators and so on. Firms were both able and willing to invest to produce those goods. They did not need much in the way of reforms and government spoon-feeding to do this. All they needed was the assurance that demand existed.

Japanese firms today lack that assurance. It is just possible that some reforms would unleash new demands — permissions for more coastal marinas for luxury yachts, easier building permissions for luxury houses and second homes, etc. But by far the main problem is that the Japanese, unlike most of the rest of us, are not very interested in owning luxury yachts or luxury houses. They already have most of the essentials they need. The rest of their money is saved, conservatively.

Finally and at last, attention is now moving to this question of excessive savings — more than ¥1,500 trillion in personal financial assets. Japan's main economic newspaper, Nihon Keizai Shimbun, has even run a special series on how this weakens demand. In the past it was contemptuous of Keynesian demand focused solutions (myself and others pushing such solutions were censored). It saw Thatcherite supply-side economic reforms as the answer. But Nikkei's recommendations today — smarter investment use of the ¥700 trillion lying around in cash and deposits — still do not answer the demand problem. Plaintively it says "policymakers ought to ask why consumption is not as strong as it should be after six years of economic expansion." Its own reply, one presumes, would be "not enough reforms."

One is reminded of the old-time communist ideologues disappointed by the lack of progress in communist societies. Their answer? More communism.

True, one can understand the conservative ideological bias in the West in favor of reform-oriented supply-side economics and against Keynesian demand-based economics since demand is often pressing at the limits of supply. But in Japan the problem is the reverse. Incidentally, the moment the U.S. seemed to face a consumer demand problem as a result of the subprime loan crisis, the policymakers changed horses and called for more government spending. Meanwhile Japan is told to cut government spending.

There are two simple answers to Japan's economic problems. One is for the government to say that it will do the spending needed to fill the demand gap caused by private individuals admirable reluctance not to spend heavily on luxury yachts, second houses and the other trinkets those in the West see as so important. It will mobilize some of those surplus savings and spend them on much more desirable things — improved environment, community health, education, rural investment, better pensions, etc.

A Japan that did that would be a model for profligate Westerners, especially Americans.

Some would argue that drawing on these surplus savings will increase the already unacceptable level of public debt. Here much depends on whether tax revenues rise proportionally. But if that is a problem, Japan should simply listen to the advice of some top U.S. economists. They say repeatedly and on the record that Japan's chronically deflationary situation gives the government the seigniorage right to create money, as the U.S. itself did in 1963. Failing that, it has the right to require the Bank of Japan to provide needed funds without recourse. Sadly none of this is likely to sink into the conservative heads of the policymakers, the Bank of Japan, or the conservative Japanese and Western media so assiduously telling Japan how to reform itself out of its troubles.

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 そこで、客はさらに減る。そして道路をふさぐ客待ちのタクシーはますます増える。そして運転手の収入はさらに減った。アタマイイ! ここで明らかに必要なことは、シンガポールその他で実施しているように、タクシー営業ライセンスを競売に出すことだ。だが日本ではそれは複雑すぎると思われた。


 幸い、内需の弱さが一番の問題だという認識が、多少は生まれてきた。けれども、示された解決策の提案はあまり役に立ちそうにない。年金をめぐる混乱を一掃すれば人々が将来に対する不安をなくし消費に向かうので、内需拡大の助けになるはず、という。だが、その混乱を一掃するためには消費税値上げの必要がある、ともいう。つまり、消費者がもっと多く消費することを促すために、消費に税をかけようということ? 片やアメリカほかの国では、年金生活者の消費を促すために効果があった逆モーゲッジ制度が、難しくて棚上げになってしまった。

200兆円の増大だ。そして今なお、消費者にもっと消費させるために、赤字支出を減らさなければならない、と聞かされる。公的需要をカットし続けることで、経済が今ひたすら求めている需要を拡大する、という― これも小泉流の解決策か。


 「エコノミスト」誌は、より開かれたより自由な社会の要求や、もちろん政府支出の削減を含め、 日本のあるべき改革の長々しいリストを掲載した。だが、いかにしてまた何故、今よりはるかに閉鎖的で改革不足の過去の日本が、同誌が盛んに賛美していた発展を遂げることができたのかについては、まだ説明がない。また、開放と自由が足りないと同誌が長いこと厳しく批判してきた中国が、なぜ日本をしのぐ発展を遂げたのか、説明がない。

 たしかに、どの経済でも発展のエンジンは需要だということは、経済学の基本だ。現在の中国、過去の日本が目を見張るほどの発展ができたとすれば、その原因は需要の活力にあった。消費者は生活必需品― テレビ、冷蔵庫、等々― を求めていた。企業はこうした製品の生産に投資する能力があり意欲があった。政府が改革せよと声高に唱えるまでもなく、政府が手取り足取り生産の面倒を見る必要もなかった。企業にとって、需要が確かにあるという保証だけで十分だった。

 いま日本の企業はこの保証がない。単に何らかの改革が新しい需要を解き放つ可能性はないといえないというだけ― 豪華なヨット向けの新しいマリーナの認可、贅沢な家や別荘建設の規制緩和、等々。しかし、何と言っても一番の問題は、日本人はわれわれ外国人の大半とちがって、豪華なヨットや大邸宅を持つことにあまり関心がないということだ。彼らはすでに基本的な生活必需品は持っている。あとは、守り堅く金は貯蓄に回す。

 今に至ってようやく、この過剰貯蓄に目ガ向けられるに至った― 1500兆円という個人金融資産である。主要経済紙である日本経済新聞はシリーズの特集さえ組んで、過剰貯蓄がいかに需要を弱めているかを取り上げている。これまで同紙は、ケインズ流の需要にフォーカスした解決策を蔑視してきた。(筆者を含めこの種の政策を提唱する人間は排除された。)サッチャー流のサプライ(供給)サイド経済改革こそが正解とされた。ところが、現金と預金として眠っている700兆円を活用した賢い投資という、今日の日本経済新聞の提案は、まだまだ需要の問題の解決にはならない。同紙は、“6年間の経済拡大が続いたあとでも消費がそれに見合って伸びないのはなぜか、政策当局者は考えてほしい”と訴えかける。彼らの答えを代弁するならば、“改革がまだ足りないから”というのだろう。

 昔の共産主義イデオローグが、共産主義社会における発展が足りないのを嘆いている情景を思い出させる。彼等の答えは? “もっと共産主義を”というものだった。