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2010年5月 8日 (土)

読売経済提言 政策を一新し停滞を打開せよ


srachai from khonkaen, thailand

The Yomiuri Shimbun (May. 8, 2010)
Govt must change economic tack
読売経済提言 政策を一新し停滞を打開せよ(5月7日付・読売社説)

The administration of Prime Minister Yukio Hatoyama has only aggravated this nation's fiscal condition through lavish government handouts that will do little to improve the economy. This has been exacerbated by the administration's failure to write proper prescriptions for recovering economic growth. The Hatoyama government's lack of sound economic management policies cannot be overlooked any longer.

This perception is the basis for the emergency proposal advanced by The Yomiuri Shimbun to press the government to fundamentally change its economic policies.

The greatest flaw in the Hatoyama administration's political approach lies with the priority it gives to ensuring the Democratic Party of Japan wins elections through policies and programs only aimed at pleasing the public, combined with its implementation at any cost of policies included in the DPJ's manifesto for last year's general election.

The prime minister should carry out responsible economic policies in line with the Yomiuri's latest proposal, to stabilize the nation's economy and society throughout the 21st century and achieve sustainable growth.

This country's economy is finally improving after months of being buffeted by the global recession. However, the nation cannot afford to feel at ease with this nascent economic recovery.

The nation's current macroeconomic condition is marked by a 30 trillion yen shortfall in demand. There has been downward pressure on prices, giving rise to chronic deflation.


Growth to slow

A package of pump-priming measures introduced by the preceding government led by the Liberal Democratic Party, including an eco-friendly car purchase incentive program, is losing steam. According to many observers, the current economic improvement likely will slow down in the latter part of the year.

However, the current government's pump-priming measures are amiss, despite the necessity of doing all it can to underpin the economy. Its "from concrete to humans" slogan is a perfect example of this in that the policy regards public works projects as evil.

The government budget for fiscal 2010 entails a hefty 20 percent cut in public works spending, a budget item highly conducive to stimulating the economy. The reduction is certain to deal a blow to regional economies, which rely heavily on public works projects.

Meanwhile, the current fiscal budget incorporates a massive amount of appropriations for dole-out programs, including child-rearing allowances. The Hatoyama government has given priority to honoring promises included in the DPJ manifesto despite being unsure how to secure a permanent source of revenue for the lavish handouts. Furthermore, direct allowances to households often end up being squirreled away, so it is difficult to expect the provision of such benefits will immediately improve the economy.

Increased spending for improving social infrastructure--including transport networks and school buildings and facilities that are earthquake-resistant--would spur economic growth and make people's lives safer. Given this, the government should improve the nation's social infrastructure, instead of regarding such public facilities in the same light as unnecessary buildings and equipment.


Govt bonds to the rescue

We propose no-interest bearing, tax-exempt government bonds be issued as a means of securing financial resources for achieving that goal. The issuance of such bonds does not entail new financial burdens in the form of interest payments, though purchasers are entitled to the reduction of and exemption from inheritance taxation. This means there is no threat of the state coffers being further depleted.

New financial means could be secured by encouraging people to buy such bonds with some of the estimated 30 trillion yen stashed at homes across the nation. Using such resources to carry out necessary projects would make it possible not only to ensure people use a portion of their money saved at home but also make headway in improving the nation's social infrastructure.

According to a Cabinet Office opinion survey, the greatest discontent felt by people about their current state of affairs is their lack of economic comfort and their uncertainty about their future. Nearly half of those polled gave this answer.

Giving lavish allowances alone will do nothing to dispel people's anxiety about the future. The first step to be taken in this respect will be to create jobs for people who want to work and enable them to support themselves economically. Employment stability would reinvigorate the economy, for example, in the form of expanded consumption.


Help care workers

Chances are high that more jobs will be created in the medical and nursing care fields, given the rising need for these services due to the aging of society. However, many people are quick to leave such jobs because of the strenuous working conditions and low wages. This has caused a chronic shortage of workers in these fields.

Wages and other labor conditions in these sectors need to be improved, thus making sure people find such jobs worthwhile. Public money should be used to help achieve this goal.

It is also necessary to hurriedly shore up the social security system to support people who cannot work because of illness or old age. Drawing a blueprint for a new system is pie in the sky if it is not supported by financial means.

The declining birthrate and aging population is forecast to push up the nation's social security costs by about 1 trillion yen each year. To accommodate this increase and transform the social security system into a sustainable scheme, it will be inescapable to raise the consumption tax rate--which stands at 5 percent--as a stable source of revenue.

Hatoyama should retract his earlier pledge to "freeze" the tax rate and start specific discussions on an increase in the rate as soon as possible. As a first step, it is necessary to try and increase the tax rate to 10 percent.

In the early 1990s, Japan was among the top-ranked nations in international competitiveness and per capita gross domestic product. However, it has fallen to somewhere near 20th place in both categories today.

There are concerns this nation's economic scale could shrink due to its aging population and falling birthrate. Halting a decline in Japan's international standing requires the nation, first and foremost, to earn money through external demand.

To attain this goal, Japan should target burgeoning middle-income groups in newly emerging nations while also undertaking projects to build and improve railway, electric power and other facilities in these areas.

At the end of last year, South Korean companies fully backed by their government won contracts to build nuclear power plants in the United Arab Emirates, beating a consortium of Japanese and U.S. corporations. Japan should devise a new strategy for international commerce and trade, with the aim of penetrating emerging markets through cooperation between its public and private sectors.

The striking rise of corporations in China and other emerging nations means it will not be easy for Japanese companies to survive the fierce global competition. In fact, the predominant share previously occupied by Japanese corporations in the flat-screen TV market has been surrendered to a South Korean maker.

Japan's effective rate of corporate taxation--the percentage of income that companies pay as national and local taxes--is about 40 percent. This rate is significantly higher than those overseas, and is an important factor behind this country's loss of corporate vitality. The figure should be brought down to somewhere between 25 percent and 30 percent, levels comparable to those in Europe, China and South Korea.

It also is important to revitalize such promising fields as energy saving and environmental protection, both areas of Japanese expertise. We hope the government will back corporate efforts through investment and research tax breaks and other support measures.

(From The Yomiuri Shimbun, May 7, 2010)
(2010年5月7日03時00分  読売新聞)


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