Thursday, Jan. 10, 2008
Mistaken economic policies
Another year, another budget. And yet another increase in public debt as tax revenues yet again fail to provide the funds needed even for the budget's highly restricted outlays.
And yet another prediction of miserable 1 to 2 percent growth rates, together with the usual poor excuses — U.S. subprime loan problems, rising oil prices, aging population, currency appreciation.
Somehow one of the world's strongest economies enjoying the world's lowest interest rates is supposed to be vulnerable to these pinpricks. Meanwhile, China just shrugs them off with its breakneck progress.
I have another idea. Why not simply admit there is something fundamentally wrong with Tokyo's economic policies?
Much is made of the accumulated official debt problem — now over ¥800 trillion and still rising. This is supposed to justify the restrictive fiscal policies that cause so much damage. But in a nation of chronic savers, inveterate tax avoiders, ¥560 trillion in government financial assets and over ¥700 trillion in personal cash and deposit assets, this debt is inevitable.
What's more it cannot be solved by unending budget stringency. All this does is slow economic growth, reduce tax revenues and cause more deficit financing, which increases the official debt, which causes more budget stringency, etc. In the year of the mouse, rats on a treadmill look sane by comparison.
Rats at least look for escape routes. Japan has long had at least three possible escape routes from its economic treadmill, all ignored.
1) Put forward by Seiji Ono, who heads the Association for Japanese Economic Recovery (AJER), this one says the government should be trying to spend more rather than less. In Japan's currently depressed economy, the multiplier effects from increased budget spending would increase tax revenues enough to reduce the official debt burden. The treadmill would slow down and eventually stop.
2) Also promoted by AJER, this says that Japan can solve its debt problem overnight simply by having the Bank of Japan purchase government debt directly, since interest payments on the increased debt would be going to its own entity.
3) Promoted by Kansai economist, Haruki Niwa, this route says that even if the BOJ refuses to cooperate, the government can create and spend its own money. There is a precedent, namely the move by former U.S. President John Kennedy in 1963 to have the U.S. government bypass the Fed with its own issue of $4.6 billion.
Each of these options makes serious economic sense in Japan's chronic noninflationary situation. What's more, the AJER proposals can claim the support of three top U.S. economists:
(1) Economics Nobel Prize winner, Lawrence Klein: "My proposal would be money expansion — Bank of Japan purchases of government debt."
(2) U.S. Federal Reserve chairman Ben Bernanke speaking in 2003: "Government concerns about its outstanding stock of debt (can be) mitigated if increases in its debt are purchased by the BOJ rather than sold to the private sector," and "with protracted deflation, excessive money creation is unlikely to be the problem."
(3) Paul Samuelson: "What counts is to rid the system of insufficient real spending."
Ono points to difficulty in changing Japanese opinion once it has been set in one direction. He has a point. The conservative peasant mentality that views debt as an evil that must be worked off, even if the children have to go without shoes, is one factor.
Mind control is another. The barrage of "structural reform" propaganda demanding fiscal restraint to cut government debt has been relentless. It reached a crescendo under former Prime Minister Junichiro Koizumi and his heavily U.S.-influenced academic adviser Heizo Takenaka. Throughout it was strongly supported by Japan's main financial media, the Nihon Keizai media stable in particular. The conservative British and U.S. financial media have also chimed in powerfully. The fact that the national debt has increased relentlessly as a result — by a whopping ¥200 trillion the Koizumi era alone — does little to cool the zeal.
Ideology too is a factor — a desire to drive out allegedly leftwing Keynesian demand-side thinking in the universities and elsewhere and replace it with rightwing U.S.-British supply-side policies from the Reagan-Thatcher eras in the United States and Britain. So a nation that suffers from a surplus of supply and inadequate demand has to move to policies designed for a surplus of demand and inadequate supply? How silly can you get.
Fortunately some of the politicians, influenced by recent election results, AJER activism, or simply common sense, are beginning to realize the need for fiscal policies that revive the economy and increase tax revenues. But they have to contend with yet another treadmill proposal — an increase in the consumption tax, which will cut consumption, worsen the economy, lower tax revenues.
And why is the much simpler BOJ direct purchase of government debt proposal ignored? Incestuous dealings between the main city banks and the BOJ to preserve their monopolies, and their profits, from the creation of money and credit perhaps?
Richard Werner, with his 2003 book "The Princes of Yen," also suggests that the BOJ and some other people in top places have wanted deliberately to slow down Japan's economic growth — to purge the economy of its sins through forced bankruptcies and an increase in the foreign business presence. Economic Armageddon.
Meanwhile, China relying on simple Keynesian economics forges ahead. It had the same bad loan problem as Japan and solved it easily through central government taking over the loans and writing them off (something that Werner and quite a few others proposed for Japan but was also largely ignored). It spends money when the economy is down, and cuts back when the economy is up.
There is a message here for Japan's anti-Keynesians and befuddled fiscal conservatives, but they are too busy on the treadmill to listen to it.
Discuss this Article
Mistaken economic policies
Another year, another budget. And yet another increase in public debt as tax revenues yet again fail to provide the funds needed even for the budget's highly restricted outlays.
And yet another prediction of miserable 1 to 2 percent growth rates, together with the usual poor excuses — U.S. subprime loan problems, rising oil prices, aging population, currency appreciation.
Somehow one of the world's strongest economies enjoying the world's lowest interest rates is supposed to be vulnerable to these pinpricks. Meanwhile, China just shrugs them off with its breakneck progress.
I have another idea. Why not simply admit there is something fundamentally wrong with Tokyo's economic policies?
Much is made of the accumulated official debt problem — now over ¥800 trillion and still rising. This is supposed to justify the restrictive fiscal policies that cause so much damage. But in a nation of chronic savers, inveterate tax avoiders, ¥560 trillion in government financial assets and over ¥700 trillion in personal cash and deposit assets, this debt is inevitable.
What's more it cannot be solved by unending budget stringency. All this does is slow economic growth, reduce tax revenues and cause more deficit financing, which increases the official debt, which causes more budget stringency, etc. In the year of the mouse, rats on a treadmill look sane by comparison.
Rats at least look for escape routes. Japan has long had at least three possible escape routes from its economic treadmill, all ignored.
1) Put forward by Seiji Ono, who heads the Association for Japanese Economic Recovery (AJER), this one says the government should be trying to spend more rather than less. In Japan's currently depressed economy, the multiplier effects from increased budget spending would increase tax revenues enough to reduce the official debt burden. The treadmill would slow down and eventually stop.
2) Also promoted by AJER, this says that Japan can solve its debt problem overnight simply by having the Bank of Japan purchase government debt directly, since interest payments on the increased debt would be going to its own entity.
3) Promoted by Kansai economist, Haruki Niwa, this route says that even if the BOJ refuses to cooperate, the government can create and spend its own money. There is a precedent, namely the move by former U.S. President John Kennedy in 1963 to have the U.S. government bypass the Fed with its own issue of $4.6 billion.
Each of these options makes serious economic sense in Japan's chronic noninflationary situation. What's more, the AJER proposals can claim the support of three top U.S. economists:
(1) Economics Nobel Prize winner, Lawrence Klein: "My proposal would be money expansion — Bank of Japan purchases of government debt."
(2) U.S. Federal Reserve chairman Ben Bernanke speaking in 2003: "Government concerns about its outstanding stock of debt (can be) mitigated if increases in its debt are purchased by the BOJ rather than sold to the private sector," and "with protracted deflation, excessive money creation is unlikely to be the problem."
(3) Paul Samuelson: "What counts is to rid the system of insufficient real spending."
Ono points to difficulty in changing Japanese opinion once it has been set in one direction. He has a point. The conservative peasant mentality that views debt as an evil that must be worked off, even if the children have to go without shoes, is one factor.
Mind control is another. The barrage of "structural reform" propaganda demanding fiscal restraint to cut government debt has been relentless. It reached a crescendo under former Prime Minister Junichiro Koizumi and his heavily U.S.-influenced academic adviser Heizo Takenaka. Throughout it was strongly supported by Japan's main financial media, the Nihon Keizai media stable in particular. The conservative British and U.S. financial media have also chimed in powerfully. The fact that the national debt has increased relentlessly as a result — by a whopping ¥200 trillion the Koizumi era alone — does little to cool the zeal.
Ideology too is a factor — a desire to drive out allegedly leftwing Keynesian demand-side thinking in the universities and elsewhere and replace it with rightwing U.S.-British supply-side policies from the Reagan-Thatcher eras in the United States and Britain. So a nation that suffers from a surplus of supply and inadequate demand has to move to policies designed for a surplus of demand and inadequate supply? How silly can you get.
Fortunately some of the politicians, influenced by recent election results, AJER activism, or simply common sense, are beginning to realize the need for fiscal policies that revive the economy and increase tax revenues. But they have to contend with yet another treadmill proposal — an increase in the consumption tax, which will cut consumption, worsen the economy, lower tax revenues.
And why is the much simpler BOJ direct purchase of government debt proposal ignored? Incestuous dealings between the main city banks and the BOJ to preserve their monopolies, and their profits, from the creation of money and credit perhaps?
Richard Werner, with his 2003 book "The Princes of Yen," also suggests that the BOJ and some other people in top places have wanted deliberately to slow down Japan's economic growth — to purge the economy of its sins through forced bankruptcies and an increase in the foreign business presence. Economic Armageddon.
Meanwhile, China relying on simple Keynesian economics forges ahead. It had the same bad loan problem as Japan and solved it easily through central government taking over the loans and writing them off (something that Werner and quite a few others proposed for Japan but was also largely ignored). It spends money when the economy is down, and cuts back when the economy is up.
There is a message here for Japan's anti-Keynesians and befuddled fiscal conservatives, but they are too busy on the treadmill to listen to it.
Discuss this Article
まちがった経済政策
年が改まると、予算も改まる。だが、またもや税収が、大幅に切り詰めた予算支出をまかなうにさえ足りないため、またまた公的債務が増大することになる。 そしてまたまた、例によってアメリカのサブプライムローン問題、原油の値上がり、人口高齢化、通貨高などという情けないいい訳つきで、１～２％という惨めな成長予測である。
世界最低の金利を謳歌し世界でも最強に属する経済が、なぜか小さいピンの傷にも敏感だといいたいらしい。片や中国は、そんなものを一蹴して、猛烈な発展を続ける。
私は別な考え方だ。日本政府の経済政策に根本的にまちがったところがある、と認めてしまえば簡単ではないか。
公的債務拡大問題― 現在８００兆円でいまなお増え続ける― に関心が集中している。このことが、大変なダメージの根源である緊縮財政政策を正当化する理由になっているようだ。だが慢性的貯蓄家で、常習的脱税家である国民を擁し、政府金融資産５６０兆円個人の現金と定期預金資産７００兆円という国であれば、これだけの債務は避けられまい。
そして何より、これはいくら予算を切り詰めたところで解決するものではない。結果は、経済成長の鈍化、税収の減少、更なる赤字財政拡大による公的債務拡大、その結果更なる予算縮小、等々となるしかない。ねずみ年の今年、踏み車の中のねずみの方がまだしもまともに見える。
ねずみは少なくとも、逃げ道を探している。日本はずっと前から、経済の踏み車から逃げるルートが、少なくとも３つはあったのに、全て無視してきた。
1) 日本経済復活の会（ＡＪＥＲ）会長の小野盛司が提出した、政府は支出削減ではなく、拡大に努力すべきだという提案だ。現在の日本の不況経済において、財政支出拡大の相乗効果が働いて、公的債務の重荷を減らすに十分なほど、税収が拡大するだろう、というもの。踏み車はスローダウンし、やがては止まるだろう。
2) 同様に、ＡＪＥＲによって出された提案で、日本銀行に直接に政府の債務を買い取らせることによって、日本は債務問題を一夜にして解決することができる、というもの。増大する債務の金利支払いが自分自身に行くことになるからだ。
3) 関西エコノミスト丹羽春樹が提唱するこのルートは、仮に日本銀行がこれを拒んでも、政府が自身で金を発行し、使うことができる。これには前例がある。前米大統領ジョン･ケネディが1963年に連邦準備銀行をバイパスして、米政府に４兆６０００億ドルの金を発行させた。
これらの選択肢はいずれも、日本の慢性的な非インフレ的状況において、重大な経済的意味を持つ。それに加えて、ＡＪＥＲの提案は、３人のアメリカのトップエコノミストの支持を得ている。
１）ノーベル経済学賞のローレンス･クライン: “私の提案はマネー供給の拡大― 日本銀行が政府の債務を買う方法だ。”
２）米連邦準備銀行総裁ベン･ベルナンケは2003年: “債務蓄積残高に対する日本政府の心配は、債務の増加分を民間セクターに売るのではなく、日本銀行にそれを買わせれるようにすれば、その心配は避けられる”そして、“長びくデフレーションがあるために、マネー過剰発行で問題が生じるとは考えられない。”
３）ポール･サミュエルソン： “大事なことは実質消費不足のシステムを断ち切ることだ。”
小野は、日本の世論は、一旦一定方向に向いてしまうと、それを変えるのが難しい点を指摘する。その通りだ。債務を悪、子供がはだしで歩かなくてはならないとしても清算すべきもの、と考える日本の保守的、農民的メンタリティが、一つの要因だ。
もう一つ、マインドコントロールがある。政府支出を削減するために財政抑制を求める“構造改革”プロパガンダの集中砲火は容赦ないものだった。それは元首相小泉純一郎と強くアメリカに影響された彼のアカデミック･アドバイザー竹中平蔵の下で最高潮に達した。それはとくに、一貫して日本の中心的金融メディア日本経済新聞メディアグループによって後押しされた。英米の保守的金融メディアもまた強力に同調した。その結果、国家債務が容赦なく拡大したこと― 小泉政権期だけで２００兆円という途方もない額― さえも、この熱狂を鎮めることはできなかった。
イデオロギーもまた一要因だ。大学その他から、いわゆる左派的ケインズ流の需要サイドの考え方を一掃し、代わりに米英のレーガン･サッチャー時代の右派的サプライサイド政策を据えようとする欲求だった。そこで、供給過剰で需要不足に悩んでいる国が、需要過剰で供給不足経済向けの政策に移行した。人はどこまで愚かになれるのか。
幸い、政治家の中には、最近の選挙結果、ＡＪＥＲの行動に影響されて、あるいは単に良識から、経済を再生させる税収を増やす財政政策の必要を理解し始めた人たちがいる。だが彼らは、またもう一つの踏み車的提案と戦わなければならない、つまり、それは消費税の引き上げ― 消費を減らし、経済を悪化させ税収を下げるもの― である。
ではなぜ、政府の債務を日本銀行が直接買うという、はるかにかんたんな提案が無視されるのか。もしかすると、金とクレジット創出から得られる独占と自分の利益を維持するために、主要都市銀行と日本銀行の間に近親相姦的取り決めでもあるのか。
リチャード･ヴェルナーは2003年の著書「円の支配者」でこうもいっている。：日本銀行と日本の上層部の一部は意図的に日本経済の成長を遅らせたかった― 強制的に破産させたり、外国企業を増やしたりして、経済に巣くう罪を一掃するために―。つまり経済のハルマゲドンである。
その間、中国はかんたんなケインズ経済学一本に頼って、前進してきた。中国も日本と同じように不良債権問題があったが、中央政府が債権を肩代わりして帳消しした。これはヴェルナー他かなりの人が日本に提案したが、おおむね無視されたことである。中国は経済が落ち込んだ時には金を使い、経済が元気な時には切り詰めてきた。
ここに日本の反ケインズ派と迷走する財政保守派に対する教訓があるが、彼らは踏み車を回すのに忙しくて聞く耳を持たない。