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2009年7月25日 (土)

経済財政白書 物足りない回復への処方箋

The Yomiuri Shimbun(Jul. 25, 2009)
Economic white paper short on specifics
経済財政白書 物足りない回復への処方箋(7月25日付・読売社説)

The theme of the fiscal 2009 Annual Report on the Japanese Economy and Public Finance was "overcoming crisis and the outlook for sustainable recovery."

Although the country's economy has stopped deteriorating, it is still in a deep rut and there are lingering concerns that it could worsen further still.

The white paper on the economy and public finances was drawn up in the middle of a dire economic situation. As such, it was expected to present a clear remedy for the Japanese economy that would guide it through the crisis and help it regain its growth potential.

The white paper said that although the country's economy slumped at the fastest pace on record, and that the extent of the slowdown also was the deepest ever, it finally began picking up thanks to the government's pump-priming measures and the recovery of foreign economies.

But the report pointed to three continuing risks in the economic outlook--the deteriorating employment situation, the risk of backsliding into deflation and a downturn in foreign economies.

The employment situation made for particularly grim reading. The paper estimated the number of workers surplus to requirements at Japanese firms topped 6 million. Many companies are believed to have hired far more workers than they actually need for their production.

The report warned that unless production recovers soon, these firms will soon find it difficult to retain employees and will resort to slashing their workforces.


Govt must keep risks in mind

We think the white paper was on the mark to point out the need for the government to appropriately proceed with economic and fiscal management while paying close attention to such risks.

Regrettably, the report stopped short of making detailed proposals on specific policies.

The white paper called on the government to jump-start economic recovery by a two-track policy of domestic and foreign demand.

We do not object to the proposal. Yet, it should be remembered that domestic demand was weak even during the economic expansion that lasted nearly seven years from 2002. Given that, the paper should have spelled out how domestic demand could be promoted in the middle of an employment crisis.

The nation's shrinking population will gradually erode domestic demand. Under these circumstances, it is important to consider how the increasing needs of an aging society, such as medical and nursing services, can be linked with domestic demand.

The white paper also said shoring up the credibility of pension and other social security services will make people less likely to squirrel away excess savings, and this would flow on to support consumption. This is a good viewpoint, but to our regret, the argument is not overly convincing because it failed to explain where the fiscal resources to realize such proposals would come from.


History could repeat

Though Japan's economic growth is driven by exports, the nation will have to vie for export markets with emerging economies. The paper should have presented strategies for taking advantage of the growth of Asian countries and other nations.

The paper concluded that economic recovery would be the surest way to resolve social and economic disparities in this country. But this claim is too simplistic. Relying on the economic recovery to resolve the problem could doom the nation to repeating the terrible times of the so-called employment ice age, when many university graduates struggled to find jobs after the economic bubble burst. The income disparity among young people significantly widened during this period.

An overemphasis on profitability and efficiency in line with the structural reform drive is partly responsible for the widening social and economic disparities and exhaustion of the social security system.

The white paper had carried the same subtitle of "No growth without structural reforms" for five years in an apparent show of support for the government's structural reform drive. Perhaps it is time to reflect on the proposals it made during that period.

(From The Yomiuri Shimbun, July 25, 2009)
(2009年7月25日01時54分  読売新聞)


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