November 26, 2005

AN ESPECIALLY LOVELY SUNSET STILL SIGNALS THE END OF THE DAY:

Mission accomplished: Junichiro Koizumi will leave Japan’s economy on the mend and its politics invigorated (Bill Emmott, The Economist: The World in 2006)

The prime minister, Junichiro Koizumi, was in September 2005 returned to power with a landslide election victory, so you might expect him to be carrying out a vigorous programme of reforms to stimulate the economy. If so, you would be wrong. Mr Koizumi’s main task in 2006 will be to stay out of the way of the economic recovery, resisting pressure from the Ministry of Finance or some colleagues in the Liberal Democratic Party to raise taxes or cut public spending, in order to reduce the budget deficit, now 6.4% of GDP. That will be necessary, as the gross public debt has reached 170% of GDP and even the net debt (ie, taking account of the public pension scheme’s holdings of government bonds) is over 80% of GDP, the fourth-highest in the OECD. But it will be best not to rush it as that too could risk choking consumer spending.

Rather, the reforms presented to the Diet (parliament) by Mr Koizumi and his economics minister, Heizo Takenaka, will be directed at the much longer term. Like the postal-savings privatisation that he used as his election-winning issue, the reforms of 2006 will be aimed at establishing a long-term squeeze on the state’s role in the economy. The postal privatisation will not take full effect until 2017. With the two-thirds majority in the lower house of the Diet that he enjoys with the LDP’s small coalition partner, New Komeito, Mr Koizumi will be able to implement other reforms a bit faster than that, but caution will remain the watchword. Next in line for the Takenaka treatment are eight state lending institutions.

The biggest challenge, though, lies in finding ways to cut the costs of the state health-care and pension schemes. Mr Koizumi’s election manifesto promised reforms, but was short on details. High principles governed his campaign for postal privatisation; hard graft will be needed for health and pensions, and he is not noted for that. This task will be left to his successor.


Back when folks like James Fallows and Michael Chrichton and the entire Democratic Party thought Japan had figured out a new way of doing things that would leave us in their dust, Mr. Emmott wrote a great book, The Sun Also Sets, that outlined the whole series of structural problems that not only made imminent superpower status impossible but long-term survival doubtful. Mr. Koizumi has only made the most meager beginning on the massive reform that Japan requires and he doesn't appear to have much of a constituency for those reforms nor natural successors in pursuing them.


Posted by Orrin Judd at November 26, 2005 9:35 PM
Comments

So what's the deal with including Japan in the Anglosphere, if they haven't learned to apply Western economic practices even as well as Canada, whom you've kicked out of the Anglosphere ?

You've also said that you expect Japan to avoid total breakdown, but only by allowing what they would consider "massive" immigration, which you speculate will save the nation of Japan, but which will destroy the Japanese culture.

That sounds very inflexible and maladaptive to me, which are not qualities that I associate with the Anglosphere.

Posted by: Michael Herdegen [TypeKey Profile Page] at November 27, 2005 3:53 AM

Michael:

If Douglas MacArthur designed your state you're at least partially Anglicized. That he didn't impose our religion causes problems.

Posted by: oj at November 27, 2005 7:58 AM

OJ - it seems like your amazon link to Emmott's book is broken. Try here instead.

Posted by: mike beversluis at November 27, 2005 8:15 PM
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