Tuesday, August 18, 2009

How the DPJ can get Japan growing again

Growth or aid, Yomiuri tells us, is the key point of difference between government and opposition manifestos. The LDP wants to promote economic growth, while the DPJ stresses protection for citizens. Sankei says the same regarding Monday's debate among party leaders.

All too often in recent months DPJ leaders have encouraged the idea that the LDP is concerned with growth, while the DPJ cares about livelihoods, as if economic growth has nothing to do with the wellbeing of the Japanese people. Of course, at times the LDP has been overly focused on economic growth: after all, Nakagawa Hidenao's "rising tide" school refers to the idea that a rising tide of economic growth will lift all boats in the economy. (In this blog post, Nakagawa demands that the DPJ state a growth target.) If Japan learned anything this decade, however, it is that growth is not enough. After all, despite Japan's having its longest sustained economic boom for the better part of this decade, all too many Japanese did not experience it as such. But at the same time, the DPJ cannot ignore policies that will promote sustainable economic growth. At the very least, without a growing economy it is difficult to see how the government will meet growing liabilities for social security without severe tax increases.

Accordingly, I have authored a white paper, "Opportunities for a DPJ-led government to achieve sustainable fiscal reform," with Naomi Fink. Naomi is a market practitioner with eleven years of experience in financial institutions. She is currently Bank of Tokyo Mitsubishi's Japan Strategist, based in Tokyo. All contributions herein represent her personal opinions and not those of her employer.

Our purpose is to suggest that the DPJ is actually quite well placed to move the Japanese economy in a different direction, but it needs a more focused economic strategy. Its growth strategy contains some good policies, but it is unfocused, barely deserving the label "strategy."

Here is the abstract: "There is significant probability that the upcoming Japanese general election on 30 August will bring a change in government for Japan. In the attached White Paper, Tobias Harris and Naomi Fink examine the political implications of a DPJ leadership, outlining its potential benefits and challenges. Harris and Fink argue that if elected, the DPJ will have significant opportunities to enact positive fiscal and political changes in Japan, then outline policy prescriptions for the DPJ's first year in office, focusing on fiscal reform."

You can read the paper here.

4 comments:

SmartBeyonceFan said...

I loved the document you and the BOJ staffer wrote together. I agree with concentrating a focus on domestic consumption for GDP growth as it is the largest component of GDP.

Noah said...

You know, it occurs to me that if the LDP was indeed the "party of growth," they would have actually done something to, you know, help Japan grow more during the last 20 years...

Noah said...

Oh, BTW, one big thing I didn't see in the white paper: Get women to work! All the evidence says that doing so would be huge.

PaxAmericana said...

Is GDP what matters? Couldn't Japan get "growing" by improving the quality of life? How about a goal of increasing the number of trees in cities by 25%? Or cutting the commuting time? Or doubling the number of students who study in China?

In a sense, it seems to me that the LDP has hit the wall with its model of GDP and pork, and it really can't come up with anything at all.