The Daily Yomiuri (DY) blasted the front page of their May 8th edition announcing their plan for the rescue of the Japanese economy.
There were five recommendations:
1) End manifesto-accelerated business slump
2) Both concrete and humans are important
3) Employment is source of reassurance
4) Seek domestic and external demand
5) Stay ahead of international competition by developing higher technologies
I couldn’t see the massive front page story on their web site. This editorial comes close [http://www.yomiuri.co.jp/dy/editorial/20100508TDY02T03.htm]
It seems that the DY is more a right-wing publication. They do not seem happy with the DPJ. They ought to be reminded that the Japanese economy has been mired for the past decade. It is nothing new. The right-wing LDP had been in power for fifty years. Certainly it is they who have left the Japanese economy in a shambles.
Here is my interpretation of Yomiuri’s “rescue” plan.
1) End manifesto-accelerated business slump
Comment: I have no idea what this means.
2) Both concrete and humans are important “public works are necessary to escape deflation”
Comment: I have no idea what this means, either.
3) Employment is source of reassurance
This makes no sense. An unemployment rate of 5% means that the employment rate is 95%
4) Seek domestic and external demand
Comment: This is not new or insightful.
5) Stay ahead of international competition by developing higher technologies
Comment: Not just high technologies but higher technologies. Nice. However, to do this you need education. It doesn’t just happen. Your education system educates for conformity not for creativity and innovation. “Let’s work harder” ain’t gonna cut it. The brightest minds are in America and they are not only American, they are from India, China, Korea and Russia. Later, they take that new knowledge and return to India, China, Korea and Russia and launch new businesses.
The DY’s fuzzy, ethereal rant is tantamount to entering a grocery store and declaring: “let’s eat lunch”. There is food there, but the declaration just leave everyone confused. It is amazing, their piercing prose and obviously professional writing skills of the editorial board of the Yomiyuri. I`m kidding. It stinks. I suggest the editors read and heed the advice of The Economist. I suggest the reader of the DY do the same, along with cancelling their subscription. And finally, the government of Japan ought to do the same as well as heed my advice, of course.
The powers that be do not know how to change the Japanese economy. Or, more likely, the powers that be do not want to change the Japanese economy. They obviously want to keep things exactly as they are. It serves their purpose to keep things as they are. If it didn`t they would change. After all, they are in power, right?
So, what would you do? How would you stimulate and grow the Japanese economy?
Here’s what I would do. First, identify the problem. Second, identify what stimulates and grows an economy. Third, make recommendations that suit the Japanese situation.
First, the problem.
Japan’s strength is now its weakness. According the CIA Factbook, “the two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu and the guarantee of lifetime employment for a substantial portion of the urban labour force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. “ The world has changed. Japan hasn’t. This, coupled with the all too well known economic bubble that burst at the end of the 1980s. They have been hiding / cleaning up from it ever since. Massive public and corporate debt, massive over production and massive over hiring and a protectionist climate all make for massive inefficiency, low productivity and an inability to compete. Add to this a rapidly aging population and a tiny birth rate.
Second, consider what stimulates an economy, any economy.
Well, there is: spending, consumer spending, having money to spend, confidence that you will have a job in the future, having a job now, confidence that the price of a new home will not be cheaper in the future, creating new jobs, and creating new businesses. These are not all but they are quite important stimulants.
Third, here are my recommendations:
1) Introduce and enforce a 40 hour work week. If you can’t get it done in 40 hours then that’s a failure of management. If they really can’t get it done, then hire more people.
2) Introduce and enforce mandatory 8 week annual vacations for all employees, requiring at least one 4-week vacation. People are unproductive already, give them time off to enjoy life, get to know their children and spend money.
3) Deregulate. It is the end of la-la land. Open the economy right up. The reason why there is no growth is because there is no incentive to grow. Fat, bloated, lethargic, and constipated corporations need to be whacked in the side of the head. Efficient and hungry foreign firms are at the gate and they are ready to eat your lunch.
4) Reform the labour laws and allow companies to layoff all the dead weight. Sure it will be tough at first, but it is like removing a band-aid – rip it right off all at once.
5) Institute a national daycare and national eldercare system
6) Introduce hard-hitting punitive damages on companies convicted to wrongful dismissal and gender bias. Time to start utilizing and promoting the smarter half of the population.
7) In a make-work program, send the unemployed to clean up the coastline. It is a disgrace.
8) Remove all highway tolls and implement a 60% tax on all religions and triple the tax on tobacco
9) Do whatever it takes to encourage entrepreneurship – they create jobs and create wealth. Salarymen don’t.
10) And finally... my final recommendation is not to take any advice from the DY.
#1, 2 and 3 sound tough, even impossible. But this country has been through much worse things in its history and it has endured. This ought to start to bring Japan into the 1980’s at least. I’ve got more (it is so easy when there are so many obvious problems with obvious solutions) but I will stop at 10, it’s a nice round number.
Of course none of this will happen. It’s all a dream. Like election reform and universal health care in the US. The reality is people get the government they deserve. In a democracy, if your economy and government stink, it’s your own fault. If you don’t like it then change it. This will never happen in Japan and the powers that be know it. The Japanese people are getting the government they deserve.
The future of the Japanese economy?
At this point, there is no future. I am not alone in this opinion. I encourage you to read any much more informed views of any foreign economist or analysts. The Japanese economy is a rusty ship with a slow leak sailing around in circles in the fog. But there is pachinko. So, re-arrange your deck chairs, there is a fresh copy of the Daily Yomiuri delivered to your table. Enjoy the ride.
