December 28, 2009
Economy chasing its tail

Begins: The Japanese have a saying –sandome no shojiki. Roughly translated it means that ‘after getting it wrong twice you finally get it right the third time.’ Two previous Japanese administrations – Hashimoto (1996-98) and Koizumi (2001-6) - have set out to revive the economy through promises to cut government borrowing and spending. Twice the result was disaster - an economy in tatters, ballooning official debt and an urgent need to increase government spending to stave off recession. Will the new Democratic Party of Japan administration finally get it right this time round?

Probably not. One admires its efforts to cut government waste. But in its efforts to restrict the government spending badly needed to revive the economy it seems determined to repeat the mistakes of the past.

The Japanese economy is like a dog chasing its tail. First someone notes size of the official debt – put at around 800 trillion yen. To reduce the debt they urge cuts in government spending. But these spending cuts weaken domestic demand, the economy falters, tax revenues collapse, budget deficits increase, and the government has to borrow more to balance budgets. So instead of decreasing the debt they end up increasing it – by all of 200 trillion yen in the allegedly reformist Koizumi years.

Clearly something drastic has to be done to break out of this vicious circle. They include:

1. Realise what some of us have been saying for years – that Japan’s chronic lack of domestic demand is not accidental. It is due at least in part to a cultural bias against the luxury or conspicuous spending taken for granted in most other advanced economies. One result is that accumulated personal financial assets total a staggering 1400 trillion yen, with about half held in miserly cash or deposits (another conservative cultural quirk, this one being undue concern for the future). Someone has to use those funds or else they remain dead money draining demand from the economy. Meanwhile the DPJ hopes to save things with a mere 7.1 trillion stimulus package (reluctantly increased to 7.2 trillion as a concession to New Peoples Party leader Shizuka Kamei who wanted an extra trillion to break the economy’s deflationary spiral). Even Kamei’s request was a mere drop in Japan’s ocean of demand deficiency – put at 35 trillion yen or 7 percent of GDP for the three months to September.

2. Realise also what others have been saying for years, namely that the debt problem is not as alarming as it seems. A good share of it is balanced by surplus funds in other areas of government. Much of the remainder comes from borrowing and using some of that dead money sitting in bank or post office deposits.

There is one simple proof Japan does not have a genuine debt problem. This is the failure of all the predictions over the years that excessive borrowing would cause inflation and force interest rates to go through the roof. Instead, rates have fallen through the floor and deflation stalks the land.

3. Go one step further and realize that most economic thinking in Japan for close to two decades has been wrong. We now have a disastrous situation where tax revenues have fallen to less that 40 trillion yen and the government needs a budget of well over 90 trillion simply to keep things turning over. Meanwhile the pundits, mainly to be found in Keidanren and Japan's leading economic newspaper, Nihon Keizai, still push the discredited US (and Koizumi) supply-sider, anti-Keynesian thinking that says all Japan’s problems can somehow be overcome simply by more deregulation, entrepreneurship and innovation. None of these things can be done quickly. Nor can they be effective without strong demand from the economy.

4. What to do? Shock treatment should be the first move, with tens of trillions of yen pushed into the economy in a gigantic stimulus package. Once the economy starts moving again tax revenues will grow and part of the debt problem will be solved. But if that is not enough simply create the funds needed, as any government has the right to do if it throws off central bank shackles. So far the world’s central banks have done little more than pour money into the private banks which then use the funds to buy government debt. They are part of yet another vicious circle - weak demand in the economy kills their desire to lend for productive purposes which further kills demand.

5. Next, do all that is needed to increase private demand. Even such seemingly trivial things as casinos and Disneyland should be welcome. An immediate immigration policy is also needed, to stop the corroding demand-reducing influence of declining population. As well, Japan should do much more to protect industries threatened by imports from countries like China with artificially depressed exchange rates.

6. Finally, if private demand is inadequate then it is up to government to step into the breach. But where possible concentrate the spending on areas that improve productivity and have strong employment and income multiplier effects, such as needed public works. A serious revamp of the tax system is also urgently needed, with much more emphasis on eliminating rampant tax avoidance, and on indirect taxes such as specific product and services taxes rather than the unpopular, cumbrous, demand-stifling consumption tax. Meanwhile, the DPJ is busily trying to cut both public works and some very reasonable indirect taxes such as gasoline surcharges and road tolls.

The gloom deepens.



 前の二つの政権 橋本(199698)と小泉(200106は、政府の借金と支出を減らすと約束することで経済を活性化させるといって発足した。二度とも結果は悲惨なものだった。 経済はメチャメチャ、公的債務は膨張し、不況を避けるために政府支出を緊急に拡大する必要に見舞われた。今回、新しい民主党政権はようやく正しくやれるのだろうか。


 日本の経済は自分の尻尾を追いかける犬のようなもの。まず誰かが公的債務の大きさに声を上げる 約800兆円程度とされる。彼らは債務を減らすために政府支出を削れと迫る。だがこうした支出削減が、内需を冷え込ませる。経済は腰くだけて、税収はガタ落ち、財政赤字が拡大、そして政府は財政バランスをとるために、さらに多くの借金をしなければならなくなる。そこで、負債を減らすどころか、増やす羽目になる。 小泉のいわゆる改革時代で200兆円もの巨額を増やした。この悪循環を断ち切るために、何か決定的な打開策が必要なことは目に見えている。その方策として:

1. われわれ数人が長年言い続けていることを認識する必要がある つまり日本の慢性的内需不足は偶然ではないということ。少なくともその一部は日本人の文化的性癖から来ており、多くの先進国経済では当然とされている贅沢や浪費に対する、日本人の抵抗感が原因になっている。その一つの結果として、個人資産の蓄積が1400兆円というとんでもない額になり、その半分ほどはタンス貯金や銀行預金されている(もう一つの文化的性癖、いざという時の備え症候群)。これらの金を誰かが使わなければならない。さもないと、経済から需要を吸い取っている死に金のままだ。

 一方民主党は、僅か7.1兆円の景気刺激パッケージ(国民新党党首で金融担当大臣亀井静香が経済のデフレスパイラルを止めることを主張したため、渋々妥協的に7.2兆円に辛うじて増額された)で、状況を救おうとしている。亀井の1兆円という要求でさえ、日本の需要不足という大海 9月までの3ヵ月間で35兆円、あるいはGDP7%といわれる の中の一滴に過ぎない。

2.また他の人々が長年言ってきたことを認めること つまり債務問題は、一見したほどには心配要らない。そのかなりの部分は政府の他の部門の余剰資金でもってバランスが取れている。その残りの大きな部分は銀行や郵貯に眠っている死に金の一部を借りて使えばいい。

 日本に純粋な債務問題はないことを示す簡単な証拠がある。ここ数年いわれている、過大な債務はインフレを生み金利を天井破りの高さまで上げるという予言は、当たっていない。代わりに、金利は 床をブチ抜いて落ち込み、デフレが闊歩している。

3.もう一歩進んで、ここ20年近く日本の経済の考え方はまちがっていたと認めることだ。現在はひどい状況だ 政府は、現状を順調に始動させるためだけでも、90兆円をはるかに超える予算が必要なのに、税収は40兆円以下にまで落ち込んでしまっている。ところが経団連や日本の指導的な経済紙「日本経済新聞」を中心とする賢人先生方は、日本の問題は規制緩和、企業家精神、イノベーションをさらに強めることで容易に解決できるとするアメリカ(そして小泉)のサプライサイド型、反ケインズ的考え方をプッシュしようとしているが、このどれ一つとしてすぐやれるものではないし、経済からの強い需要がなくしては有効に働き得ない。


 これまで世界中の中央銀行は、せいぜい民間銀行に金を注入するくらいのものだった。するとその民間銀行はその金で国の債券を買う。これがまた別な悪循環の一部だ: 経済に需要が弱いと、彼らが金を生産的に貸し出すという意欲を殺す、それがさらに需要を殺す。


6.民間需要が不十分な場合は、急場をしのぐために介入するのが政府の役目である。とはいえ、可能な限り、生産性を改善し雇用と所得を拡大する効果が大きい分野に集中 例えば必要な公共事業など すべきだ。横行している脱税への歯止めを強化し、不人気で煩雑で、需要の息の根を止めるような消費税よりは、特殊製品・サービスへの間接税を強化することを盛り込んだ、税制の抜本的見直しを早急に手がける必要がある。