There has been no shortage of ideas to shore up Japan’s economy in the face of the global economic slowdown and the general collapse of exports, Japan’s main engine of growth over the past few years. Let’s look at some of them.
- Motoshige Ito, Tokyo University Professor: Temporarily waive gift taxes to encourage the elderly to hand their financial assets to their children and grandchildren. Then the money will be used for consumption and help spur domestic demand.
- Yuri Okina, Research Director, Chief Senior Economist at Japan Research Institute: Push domestic demand by creating jobs in child care, medicine, and elderly care. Specifically, improve day care services and digitize medical records.
- Ryutaro Kono, Chief Economist of BNP Pariba – 1.2 million yen in handouts to each unemployed person. Build health care, elderly care, and education into growth industries through deregulation.
- Akihiko Tanaka, Tokyo University Professor: Revamp scholarship systems to attract the best foreign students. Expand slots open to students with recommendations and speed up the application and selection process for foreign students.
- Iwao Nakatani, Director of Research at Mitsubishi UFJ Research & Consulting (“one of the leading opinion leaders of Japan”) - Raise the consumption tax to 20% and issue a refund of 200,000 yen per person. Eliminate the system of 47 prefectures and reorganize the country into 300 “han” domains, while shrinking central government functions.
- Mitsuhiro Fukao (PDF), President of Japan Center for Economic Research: Institute a negative interest rate policy, by which a 2% tax would be levied on government-guaranteed financial assets. Focus any fiscal efforts on employment policy. Encourage a shift in employment toward medical and elderly care sectors.
- Richard Khoo, Chief Economist of Nomura Research Institute: Continue fiscal support until “balance sheets are improved.” Encourage supply of sturdy, long-lasting housing to expand consumption and maintain household assets.
- Robert Feldman, managing director of economic research at Morgan Stanley Japan – Increase productivity and build up demand in agriculture, medical, and financial sectors. Aggressively promote preventive medicine. The national health insurance program should charge extra to smokers.
- PROJECT: Enhance earthquake protection of schools and other public institutions. BENEFIT: They’ll be the last buildings standing when the big one hits Tokyo.
- PROJECT: Examine and fix the nation’s 140,000 road bridges. BENEFIT: Many bridges are aging and need it, and we don’t want a Minneapolis on our hands.
- PROJECT: Bury power lines, giving priority to tourist areas. BENEFIT: Prettier streets, plus this would prevent accidents somehow.
- PROJECT: Complete the beltway around Tokyo, starting with the Nerima-Setagaya area that feeds into the Tomei. BENEFIT: This would “almost totally resolve” inner city congestion and increase the average speed of Tokyo roads by 30%.
- PROJECT: Expand both Haneda and Narita airports, and improve rail services to them. BENEFIT: 30% more landing/takeoff capacity, better access.
Whether this would actually raise the level of construction employment as opposed to merely keeping it steady, it is unclear.
But I do like the Nikkei approach to avoid building castles in the sky. They have also called for massive government support of solar and other “green” technologies.
Here’s what one analyst had to say:
Japan Economy May Have Bottomed Out in Feb.: Economist
Thursday, March 12, 2009 5:59 PM
(Source: Jiji Press English News Service)Tokyo, March 12 (Jiji Press)—The Japanese economy appears to have hit bottom in February as a result of inventory adjustments by automakers, Yuji Shimanaka of Mitsubishi UFJ Securities Co. said in an interview with Jiji Press.
Noting that a key point for production is when vehicle output cuts end, Shimanaka said production cuts will be smaller from now on. Production and the economy, therefore, are both likely to have hit bottom in February, he said.
The Japanese economy is expected to recover because the ruling Liberal Democratic Party and the major opposition Democratic Party of Japan are both expected to call for economic stimulus measures totaling some 10 trillion yen, he said.
He said he believes that the Bank of Japan will take further monetary easing measures and that the Chinese economy will show clear signs of recovery.
But Japan needs measures to boost its economy as the recovery is likely to be weak, he said, adding that the country needs a stimulus package worth 10 trillion yen on a fiscal spending basis.
Japan should use 4 trillion yen for public projects and 6 trillion yen for tax cuts and other measures, he said.
Japan should focus more on creating jobs in the construction industry, to which 10 pct of its workforce belongs, he said.
In the Nikkei’s New Year editorial series they noted that crises are times when the ideas that fuel future prosperity are often born. This might not happen by the decree of senior economists but from spontaneous invention by someone somewhere in the world.