Posted by ampontan on Friday, June 29, 2012
JAPAN’S lower house passed the consumption tax increase by a margin large enough to override a defeat in the upper house, and now the commentary has started rolling in. With the exception of the Kasumigaseki bureaucracy, most of the National Political Establishment (NPE), the national dailies rewriting Finance Ministry briefings and handouts, the IMF, Keidanren, and The Economist (the inflight magazine for Davos Man), everyone is fed up.
One of them is the blogger known as Ryoko 174. She focused on the gap between the young and the old. Here’s much of what she said.
In the future, the structure of preferential treatment for the elderly and the exploitation of the young will grow stronger, rather than be eliminated. Politics is a type of business, so it provides services that target its preferential customers. That’s because it’s not possible to satisfy all of the customers.
According to the general theory of marketing, customers are classified into several segments, and the main target becomes the preferential customers in large numbers who have the propensity to pay for the services. Let’s look at the customer volume for Japan’s political business by age:
(The chart shows the voting population in 2008. The numbers at the right represent age groups.)
As you can see, a party could theoretically win two-thirds of the seats by capturing the votes of those aged 50 and older. (The group aged 50 and older, by the way, has more than 70% of Japan’s individual financial assets.) That’s because of the large numbers of elderly in Japan’s aged population, and the fact that the older the age group, the more likely they are to vote. Also, under the current system, an individual vote in an area with a higher aged population has a greater weight than an individual vote in the cities, so the presence of the elderly in politics is greater than the graph indicates.
In other words, the elderly are the blue-chip customers for Japan’s politicians, and those aged 40 and younger are a niche market. In a worst-case scenario, they can even be cut adrift. That’s why when some shout about the unfairness to the young, the politicians dismiss it as noise from the hecklers who aren’t part of their target customers.
The confiscation from today’s working generation in Japan is like eating the seed rice, and this structure is being strengthened…The aging of society will accelerate in the future, and this structure will become even stronger. There is unlikely to be any improvement.
Unfortunately, I think we have already passed the point of no return for ameliorating the age differential in Japan. Therefore, we should have no expectations for politics, which relies on other people, and should instead endeavor to protect ourselves.
It’s no surprise that the people at the Seetell website are just as fed up, and they mince no words either:
This tax hike was billed as a necessary measure to “help make social security sustainable” (Noda) and to show the world that Japan was serious about fixing its debt problems. Japan Finance Minister Azumi declared, “We took a major step forward toward our goal. Unlike in Europe, politicians in Japan are putting words into action.”
Someone has to dunk that boy’s head in a bucket of ice water. Right now. Several times.
And yet, the tax hike does nothing to solve social security or retire Japan’s debt or even stop the annual increase in debt. If anything, given politicians predilection to spend, it merely gives the government more money to waste. And people are already lining up for that money.
They quote the Nikkei:
While demand will likely surge before the tax is raised from the current 5%, consumers could hold off on big-ticket items as the levy is upped to 8% and then to 10%.
Some companies are pushing the government to take steps to tackle reduced spending.Takeo Higuchi, chairman of the Japan Federation of Housing Organizations, calls for measures to help homebuyers.
So, some of this money will go to prop up the construction and real estate industry, traditional political favorites. There are also concerns that low income Japanese will be unfairly hurt by the hike, so the proposal is to send cash payments directly to that certain segment of the economy.
Instead of employing the sensible solution of the Brits and making food, children’s clothing, and books tax exempt.
As indicated earlier, it is probable that consumer spending will tank after the tax hike hits. In many ways, it is no different than the government’s corporate welfare programs such as Eco-points, subsidies for “green” appliances, flat panel TVS, and autos….So, we will get a GDP surge of JPY 7.7 trillion followed by a total decline of JPY 10.3 trillion, a loss of JPY 2.6 trillion.
They see the same problems that Ryoko 174 sees:
And, of course, politicians will be loathe to cut welfare benefits to voters, especially retirees who vote in larger numbers than the younger generation. In fact, part of the deal between Noda’s DPJ and the LDP to pass the bill stopped any reform efforts that would decrease benefits to seniors, a particularly large voting base for the LDP. This is critical because passing this bill will probably cost the DPJ their majority status in the next general election, either this summer or next, opening the door for a return of the LDP.
This isn’t entirely true: The LDP wanted the DPJ to renounce the clause in their manifesto calling for the repeal of the LDP-implemented system that has the late stage elderly (75 or older) with sufficient financial resources to pay more for their healthcare. (The DPJ just shelved it.) It came into effect during the Fukuda administration, and the senior welfare kings and queens immediately started whining to the media that the government wanted them to “hurry up and die”. You’d have thought the LDP had instituted an Obama-style Death Panel or something like NICE in Britain, though that wasn’t the case.
But wait for it:
There is no rosy future for the Japanese people because of this downward spiral of more debt, higher costs, and higher taxes. A telling passage in a Nikkei article explains the logic behind this fatally flawed policy.
“The current generation of workers are reining in spending due to fears about the nation’s financial health and the sustainability of the social welfare system,” explains Ryutaro Kono, chief economist at BNP Paribas Securities (Japan) Ltd.
By this logic, consumption could grow if households’ anxiety about the future can be put to rest by the tax hike.
In plain language, the logic states that consumers will be more confident in their future and, thus, will spend more money if the government takes increasingly larger amounts of their wealth by artificially raising prices on both necessities and luxuries. Consumers will have less money to spend but will be willing to spend more of it. This is the basis for Japan’s economic revival through tax increases.
You’d be surprised at how many otherwise intelligent people are peddling the “consumers will have less money to spend but will be willing to spend more of it” lameness. (One is Ikeda Nobuo, whose views I frequently present here.)
Without massive cuts in spending, a total rethinking of the welfare system, and major reform of the bureaucracy, these tax hikes will only add to Japan’s woes and continue its inevitable decline.
It is most interesting that some Europeans are equally fed up for many of the same reasons, without knowing much of what is happening in Japan. Try this by George Handlery at The Brussels Journal site:
An era of pleasing self-deception is ending.
An economic collapse, to be followed by a political one, is threatening Europe. The global economy and your share of it might not remain immune. The problem is self-generated. Thereby, the entire, economically industrialized and politically democratic, world’s economic fundamentals are endangered….Its rot…is due to the interrelationships created by the “political class” and regardless of denials, a process that affects all. The crisis managers and the means of those in charge of repairs are (of) dubious quality.
Replace “Europe” with “Japan” in that sentence and the meaning isn’t altered a whit.
The Greeks created a coalition government. The purpose is not to rectify but to please the EU. The movers are unqualified to overcome the vicissitudes that they were elected to lay to rest. That is because earlier, they have subscribed to the approach that had caused the crisis. Governing continues to be associated with making presents. The error is not new: those elected to cure ailments are the ones that have created the mess that demands attention.
Another alteration of proper nouns wouldn’t change the meaning of that passage either:
The Japanese National Political Establishment created a de facto coalition government. The purpose is not to rectify but to please the Finance Ministry. The movers are unqualified to overcome the vicissitudes that they were elected to lay to rest. That is because earlier, they have subscribed to the approach that had caused the crisis. Governing continues to be associated with making presents. The error is not new: those elected to cure ailments are the ones that have created the mess that demands attention.
That last sentence should be printed on a placard and hung around the necks of every DPJ member of the Diet.
Mr. Handlery predicts “government by riot” in Europe. I do not think that happens in Japan. Before that, I think we’ll see a government by the regional rebels and their allies.
Earlier we had some silly juvenile gasconade from Azumi Jun, the Seamoon Finance Minister, about Japan’s courage compared to their European cousins for dealing with the financial problems they’ve all created and just made worse. If you think that referring to him as the Boy Finance Minister is just Wild West Internet pot shooting, try this Seetell translation of a Nikkei blurb:
Government bean counters do not usually need to be told not to drink on the job. But on Tuesday, when Finance Minister Jun Azumi issued that unusual directive, the lower house passed a bill to raise the consumption tax. “You could almost hear the sigh of relief” at the ministry, says one source.
Azumi’s “prohibition” did not stop with alcohol. He also asked everyone to refrain from smiling. At a news conference, he gave a sober assessment of the bill’s advance: “If this were mountain climbing, we’d be exactly halfway.” The message to staffers seemed to be “don’t get carried away.”
After more than 120 hours of debate in the lower house, Azumi must have felt some swelling of emotion. He would doubtless be smiling himself — if the tax issue had not torn his ruling Democratic Party of Japan asunder.
What the translation does not include is that the
ban request for self-restraint on smiling specifies “showing the teeth”.
What are Finance Ministry personnel doing that they need to be told by the likes of The Seamoon not to drink on the job? To what sort of person would it occur to even think of banning smiling? Does the ban also include him?
And to think some people are in hysterics because Hashimoto Toru banned tattoos for Osaka municipal employees.
I’ve got cash money that says the English language mass media will not even mention this, and if they do, the amount of stories will be fractionally fewer than those on the tattooed few suffering under the lash of Hashism.
Of course people are fed up. We’ve reached the reductio ad absurdum of social democracy and rule by Big Government/Big Bureaucracy/Big Business. The time has come to forget our expectations of politicians and defend ourselves.
Alizee is fed up too, or as she puts it, J’en Ai Marre, but then she’s be a lot more fun to watch than the average flybait pol, inside the bubble bath or out. What would she say if she heard about Azumi Jun’s smile ban? I feel like throwing up under the covers too.
Be sure to look for the little patch she has on her outfit that isn’t displayed until near the end (near her end). The French don’t miss a trick.
But getting there won’t be tricky at all.