The wolf is at the door

IT was almost the Aesop’s Fable in reverse: Officials have for so long been so little forthcoming with real information about the Fukushima nuclear disaster, some people wouldn’t believe them even if they were to tell the truth that the shepherd boy is warning about a fictitious wolf.

Other people, for reasons that are not clear, seem determined to create a situation which will manifest that wolf and bring him to the doorstep.

Most of the 30 (or 40, or 50, depending on the account) people who showed up for a good, old-time sit-in on Tuesday in the city of Kitakyushu were expressing honest concerns. They came to block six trucks hauling 80 tons of debris created by last year’s disaster from Ishinomaki, Miyagi, for a trial incineration at the Hiagari facility. The demonstrators plopped down in front of the gates to prevent the trucks from entering, which they successfully did for more than eight hours. One even crawled under a truck. The police finally dispersed them, arresting two in the process. That cleared the way for another 21 trucks to arrive later that evening.

Officials said the first burning of the debris over three days at two locations in the city went ahead as scheduled. It was packed in 140 plastic bags each measuring two meters in diameter. The announced radiation count was less than 100 becquerels of radioactive cesium per kilogram. The health ministry’s lowest acceptable limit for radioactive cesium is 200 becquerels per kilogram of drinking water and 500 for vegetables.

The debris was mixed in a one-to-nine ratio with ordinary municipal refuse and incinerated in a method the city claims will remove more than 99.9% of the toxic material, even that contaminated by radioactive cesium. The city will then measure the radioactivity of the trucks and the equipment after the work is completed, and decide by mid-June whether to allow full-scale incineration to continue. If they agree, they will be the first municipality in western Japan to do so.

The small number of demonstrators is significant for two reasons. First, Kitakyushu was once a heavily industrialized city with serious pollution problems, but has won international recognition for converting itself into an “environmental city”. As a result, most residents do indeed trust them in matters of this sort. One 34-year-old woman griped about the demonstrators: “These people have a narrow viewpoint and think only of their immediate surroundings.” The city admitted, however, that they were negligent in promptly explaining the procedure to citizens’ groups and focusing on agriculture and fishery groups instead.

The low number is also significant because the Japan Revolutionary Communist League, AKA Chukakuha, wasn’t able to round up any more than that for the demo. Chukakuha is a revolutionary/terrorist outfit that arose in the late 60s/early 70s, when that sort of thing was in vogue. More than a hundred of its members have been arrested for murder (sometimes of themselves), assault, and homemade bomb production. They’re still around, though less active and with less coverage than before. One member fired a mortar at the guest house for heads of state at the 1986 Tokyo summit, and others set fire to the homes of public sector employees in Chiba in 2002/3. Here’s the JRCL English-language website, which gives you an insight into their avocation. Japanese-language ability is required to read one member’s report boasting of how they held up the incineration, however.

It’s said to be an “open secret” that Chukakuha were behind last year’s Energy Shift Study Conference, attended by then-Prime Minister Kan Naoto. Mr. Kan is no dupe, by the way; he’s hung out with people of this sort since his own days as a student demonstrator, and has spoken more than once of his sympathy for Zenkyoto’s “cultural revolution”.  Another fellow traveler is one of Japan’s leading punitive leftists, the head of the Social Democratic Party of Japan, Fukushima Mizuho. She and her unofficial husband have given legal advice to Chukakuha members, spoken at conferences organized by their members, supported some of their activities, and were (jointly) named as one of the most 100 influential people of the world last year by Time magazine for their anti-nuclear energy crusade. What, you hadn’t heard?

The news readers in this clip don’t offer any more information than you already know, but it’s worth watching to see how things went down. Where else in the world do policemen dressed in freshly pressed white shirts and neckties drag off demonstrators to the pig box?

Whistling for the wolf

While a certain amount of public hysteria about a nuclear power plant accident is to be expected, professor/author/alphablogger Ikeda Nobuo charges that the mass media in general and the Asahi group in particular are deliberately provoking it and making it worse. The Asahi group operates both a newspaper and a television network, and their political/social views are roughly similar to those of the New York Times in the U.S. and The Guardian in Britain.

Prof. Ikeda is scathing in his criticism of the Asahi, not for their general philosophy, but for their readiness to reverse their positions to enflame public opinion and benefit in the form of higher circulation/ratings. Once a strong editorial supporter of nuclear energy in the 1970s, the newspaper has shifted its stance over time and became a nuclear-free advocate after the Fukushima accident. He asserts that the newspaper’s approach is typical of behavior stretching back decades, and is reminiscent of their editorials and articles written to whip up martial spirit during the war. He quotes from an Asahi editorial written on 14 August 1945.

“There is no question that the atomic bomb has considerable power. Nonetheless, while all new weapons have power in the beginning, historical fact bears out that their power suddenly wanes when measures are eventually established against them….the opportunity for revenge on the enemy’s atrocities will arrive when first, the belief of the people burning within their breasts becomes a ball of fire that quietly hardens and bursts at once into flame.”

Note that the editorial was published after the two atomic bombings and Japan had already agreed to surrender unconditionally, but the newspaper was still talking about “revenge on the enemy’s atrocities”.

After Japan’s surrender the following day, the Asahi wrote an editorial saying that the country must establish “a nation of peace”. Since then, they have trumpeted the necessity to “defend the Peace Constitution”.

Prof. Ikeda then presents for comparison an editorial written by the newspaper’s Ono Hirohito calling for a nuclear power-free society that reverses their pro-nuclear stance:

“Isn’t declaring that we should examine whether or not to give up nuclear energy the same as saying the accident of 11 March didn’t occur? We should first make up our minds whether or not we should give up nuclear energy, and then confront the subsequent challenge of whether or not we are able to give it up. The Fukushima accident compels us to change our thinking in that way.”

Says the professor:

“It is eerie how closely this resembles the editorial of 14 August 1945. What they have in common is the approach of proclaiming a hardline policy based on an ideal without considering whether or not it is possible. During the war, they pandered to Imperial Headquarters, and after the defeat they reversed themselves and pandered to the GHQ. During the period of rapid growth, they pandered to the power companies and supported nuclear energy, and after the accident they reversed themselves and support a nuclear-free Japan. For the Asahi Shimbun, the Fukushima accident was the second defeat in the war.”

He deals with the behavior of the television network in a separate blog post:

“It is a simple matter to cast off a sense of shame, pander to fools, and boost ratings, as Asahi TV has done. It is the same as the Asahi Shimbun boosting its circulation during the war by writing of the “explosion of the ball of fire that is the people” to enflame public opinion.

“This is the fateful dilemma of mass society. Democracy is based on the premise that the people are wise, but in fact the people are emotional and short-sighted. In a national referendum, they would likely vote to give up nuclear energy and reduce taxes to zero. The people who believe that is true democracy have the intellectual facilities of a junior high school student.

“A consensus can be created by emotion, but results cannot be changed by emotion. The losses incurred by stopping nuclear power generation have exceeded JPY six trillion, which is already more than the damage from the accident at Fukushima reactor #1. Any large power blackouts that occur will likely cause immense human damage far greater than that of Fukushima. When that happens, one wonders if Asahi TV will align itself with the victims and strike the anti-establishment pose.”

The Asahi isn’t the only Japanese newspaper responsible for spreading paranoia. The EXSKF site (which enjoys a bit of paranoia itself) demonstrates how the Yomiuri Shimbun’s mishandling of technical information — beyond the comprehension of the average journo — has created the false impression that the Fukushima nuclear contamination is four times worse than that at Chernobyl. It isn’t, and the poster at the site provides and explains the correct calculations:

Cesium-137 released from Fukushima: 400,000 terabecquerels

Cesium-137 released from Chernobyl: 3,400,000 terabecquerels

Kansai Electric’s Oi nuclear reactors

Media wolf whistling is bad enough, but downright despicable is the use of nuclear energy as an issue by politicians and their associates who already enjoy broad public support. It is difficult to see how they can benefit from pandering. Osaka Mayor Hashimoto Toru has galvanized attention as the symbol of serious, bottom-up government reform in Japan, and his rise has ignited a renaissance of dynamic criticism and debate, particularly among those under the age of 50. Yet he has chosen over the past few months to detour into a call for a nuclear-free Japan with emotional appeals characterized by the absence of proposals for replacing the lost energy source. In particular, he is speaking out against resuming operations at the Oi nuclear power plant in his neck of the woods. Here’s an example of his rhetoric:

“If you say you’re putting peoples’ lives first (the slogan of the ruling Democratic Party), putting the peoples’ lives in danger by restarting the nuclear plants would not be possible.”

Kansai Electric Power, facing the worst potential power shortfalls of the country’s utilities if the plants are not restarted, has warned that it will have to raise rates otherwise. Osaka Prefecture Gov. Matsui Ichiro, Mr. Hashimoto’s primary political ally, retorted by threatening wolf-like behavior to oppose a rate hike:

“Mayor Hashimoto Toru and I can only resort to holding a sit-in in front of their offices in opposition.”

Kansai Electric says their thermal power fuel costs (oil, coal) were JPY 500 billion higher than last year (to compensate for the shutdown of the nuclear plants), and will amount to another JPY 400 billion this year. Their total fuel costs are double those of 2010, and they are warning of insolvency.

The City of Osaka is the largest single stockholder of Kansai Electric. Thus, the man who represents that ownership stake is behaving as if he would bankrupt the company. Ah, but one of his advisors has a solution. That would be “energy scientist” Iida Tetsunari, a member of various institutes, recipient of various government appointments, founder of the Institute for Sustainable Energy Policies, and a promoter of the idea that Japan can go 100% renewable energy by 2050:

“At this rate, Kansai Electric will go bankrupt next year. The government should offset the fuel expenditures. That way they won’t have to raise rates.”

Save the facepalm — It gets worse. Former Ministry of Economy, Trade, and Industry high-flyer Koga Shigeaki, a University of Tokyo graduate, former principal administrator for OECD, radical reformer of the bureaucracy, and another key Hashimoto advisor has started dancing with the wolves.

Not so long ago, he knew better. Last year, he said that the biggest problem with nuclear energy was how to dispose of the fuel. Now he too wants to shut all the reactors down.

He attended a recent meeting of the Municipal Energy Strategy Council in Osaka and started an argument with a representative of the national Agency for Natural Resources, who was there to advocate restarting the nuclear plants.

Koga: “Just what is the reason you are thinking of restarting the reactors?

NRA rep: “At the minimum, we have confirmed their safety is such the reactor core would not be damaged to the extent of that which occurred during the Fukushima accident.”

Koga: “Don’t you understand any situations other than Fukushima?

And:

Koga: “METI’s ties with the power company are too close, so they are lenient. Your whole argument is based on the assumption that they will be restarted.”

NRA rep: “It’s harassment when you talk about close ties.”

Then they got emotional.

Still not time for a facepalm — That’s not the half of it. Here’s what Mr. Koga told the viewers of the Morning Bird TV program on the Asahi network on 17 May:

“I can only think that (Kansai Electric) will create a state of “power outage terrorism”. They’ll intentionally cause an accident at the thermal power plant, or stop operating it if an accident does occur, to create a panic due to a large power shortage. They’ll say their only choice is to restart the nuclear power plants.”

Over-the-top rhetoric in Osaka must be contagious. Another Hashimoto aide, former Finance Ministry official Takahashi Yoichi, also plays with fire in this excerpt from a column in Gendai Business Online:

“It has gotten difficult for the DPJ government after Mayor Hashimoto’s declaration that he and One Osaka will bring them down. The best chance for cutting him down to size, regional devolution, is already beyond their capability. In the end, the concern would be, though it is difficult to imagine, Kansai Electric suicide terrorism by creating an insufficient power supply during the peak period of summer use. What crosses the mind is the response of the Social Insurance Agency during the Abe administration when the subject of their privatization was broached. The agency released a stream of information that was fatal to the Abe administration (loss of pension records that occurred a decade before). The falsehoods of the “suicide bombing” of the Social Insurance Agency circulated at the time.

“Kansai Electric is a private sector company, and the company would collapse if they really did something like that. I don’t think it’s possible, but it is a fact they can control the supply of power, and there is a touch of uncertainty that rolling blackouts are not out of the question. That subject already has arisen. If the situation continues in which they have no measures for dealing with peak load (they probably can’t), then it is perhaps possible they might consider a little shock therapy, though I really don’t want to think about it.”

What some people really don’t want to think about is that these people are creating a wolf from a figment of their imaginations. Try this from Bloomberg:

“The highest reading reported on the health ministry’s website so far has come from a sample of spinach collected on March 18 from Hitachi city, 97 kilometers (60 miles) south of the plant. The spinach, which didn’t enter the food chain, contained 27 times the safe limit of radiation for I-131, according to the health ministry.

“The spinach contained 54,100 Bq/kg of I-131 and 1,931 Bq/kg of cesium. That means consuming 1 kilogram (2.2 pounds) of fresh spinach would yield a radiation exposure of 1.2 millisieverts, or half the average annual natural exposure from soil and cosmic rays, based on Bloomberg calculations using a formula posted on the website of Japan’s Food Safety Commission.”

Some of the wolf whistlers would probably accuse them of hiding something. Maybe a UN scientific committee is hiding something too. From Nature magazine:

“Few people will develop cancer as a consequence of being exposed to the radioactive material that spewed from Japan’s Fukushima Daiichi nuclear power plant last year — and those who do will never know for sure what caused their disease. These conclusions are based on two comprehensive, independent assessments of the radiation doses received by Japanese citizens, as well as by the thousands of workers who battled to bring the shattered nuclear reactors under control.

“The first report, seen exclusively by Nature, was produced by a subcommittee of the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR) in Vienna, and covers a wide swathe of issues related to all aspects of the accident. The second, a draft of which has been seen by Nature, comes from the World Health Organization (WHO) in Geneva, Switzerland, and estimates doses received by the general public in the first year after the accident. Both reports will be discussed at UNSCEAR’s annual meeting in Vienna this week.

“The UNSCEAR committee’s analyses show that 167 workers at the plant received radiation doses that slightly raise their risk of developing cancer. The general public was largely protected by being promptly evacuated, although the WHO report does find that some civilians’ exposure exceeded the government’s guidelines. “If there’s a health risk, it’s with the highly exposed workers,” says Wolfgang Weiss, the chair of UNSCEAR. Even for these workers, future cancers may never be directly tied to the accident, owing to the small number of people involved and the high background rates of cancer in developed countries such as Japan.”

Or even MIT:

“A new study from MIT scientists suggests that the guidelines governments use to determine when to evacuate people following a nuclear accident may be too conservative.

“The study, led by Bevin Engelward and Jacquelyn Yanch and published in the journal Environmental Health Perspectives, found that when mice were exposed to radiation doses about 400 times greater than background levels for five weeks, no DNA damage could be detected.

““Clearly these studies had to be done in animals rather than people, but many studies show that mice and humans share similar responses to radiation. This work therefore provides a framework for additional research and careful evaluation of our current guidelines,” Engelward says.

“It is interesting that, despite the evacuation of roughly 100,000 residents, the Japanese government was criticized for not imposing evacuations for even more people. From our studies, we would predict that the population that was left behind would not show excess DNA damage — this is something we can test using technologies recently developed in our laboratory,” she adds.”

Power shortages this summer would not only cause inconvenience and discomfort, they could also lead to the creation of an economic wasteland resembling the remains of the Fukushima nuclear power plants — all due to the popular delusion of crowds encouraged by the self-aggrandizing behavior of wolverine media outlets and politicians disguised in Granny’s clothes .

It will take six weeks to get the Oi nuclear power plants running again in the Kansai area, where the shortage will be the most critical. That means it’s very close to being too late. Rather than find a secret air-conditioned room to hole up in, the editorialists and the politicians will more likely put on a show of making a virtue out of hardship. They did that in 1945, too.

*****

Got to watch out for those wolves. They sure can be sneaky.

Thanks for nothing, Mr. Keynes

THE Wall Street Journal has a brief editorial with that title (sort of), emphasizing once again that the experience of Japan should put to rest forever the idea that it is worthwhile for a government to apply the theories of John Maynard Keynes:

But since the 1980s bubble burst, Japan has been closest to a sustainable upturn only when Prime Minister Junichiro Koizumi pursued genuine structural reforms. With his successors backtracking from that agenda, Tokyo is back to its old spend-and-spend ways and all it has to show for it is another debt downgrade.

The world’s formerly second-largest economy stands as a rebuke to those who argue Keynesian sprees help unleash private-sector-led growth down the road. Japan is a long way down that newly built, and rebuilt and rebuilt-again road and, as the latest quarter shows again, the country is still waiting for the private growth to materialize.

Finally, a recognition in the English-language media of the Koizumi contribution, albeit a fleeting one. If the stars align in a once-in-a-millennium phenomenon similar to that which resulted in the eclipse earlier this week, the upcoming meeting of the rehabilitated Ozawa Ichiro with Prime Minister Noda might also be of some assistance. Rumor has it that Mr. Ozawa will agree to accept the Noda tax increase plans on the condition of sharp cutbacks in government spending. There is no word, however, as to what constitutes “sharp”, whether Mr. Noda would be amenable, whether he could convince the rest of the party to go along if he were, or whether any cuts would be vitiated by the famed Japanese bureaucratic rhetoric. That’s why a once in a millennium alignment is required.

The highest hurdle among the potential obstacles might be the prime minister. Noda Yoshihiko has self-identified as a Third Wayer, and has actually said there are times that “equality” (as in equality of economic outcomes) has to be given priority to liberty.

Such is the fascisto-progressive mindset, though Mr. Noda’s is just a slightly more concentrated mix than the diluted variety practiced by the LDP over the years. (The arrogance masquerading as fairness required to even make that claim, and to assume that one is a member of the elite who knows the unknowable and is capable of exercising the authority to decide when, how, and to what extent that equality should be compelled, is stupefying, but not atypical.)

Speaking of the fascisto-progressive mindset brings us back to Keynes. Jeffrey Tucker on the Mises Economics Blog quotes the man himself:

As he wrote in the 1936 foreword to the German edition of The General Theory: “Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under conditions of free competition and a lance measure of laissez-faire.”

Mr. Tucker comments:

I can easily imagine his dispassionately narrating events in a Gulag, justifying every horror with a pseudo-scientific rationale made up on the spot.

Well of course.  Keynes was one of the directors of the British Eugenics Society from 1937 to 1944, a period that overlaps the rule of some other eugenicists on the European continent. He later said that eugenics was ”the most important, significant and, I would add, genuine branch of sociology which exists.”

The politics, sociology, and economics behind this are all of a piece. Don Boudreaux at Cafe Hayek quotes David Malpass explaining the governing idea behind Friederich Hayek’s The Road to Serfdom:

Contrary to much misunderstanding, Hayek never argued that the slightest deviation from laissez-faire capitalism launches a society on an unstoppable march toward tyranny.  Instead, he reasoned that tyranny is the inevitable result of government policies aimed at preventing market competition from ever threatening anyone’s economic prospects.  As long as voters demand that government protect them from all downsides of economic change, governments can oblige them only by shutting down, one after another, all avenues for economic change.  Competition; entrepreneurship; innovation; consumer sovereignty; workers’ freedom to change or to quit their jobs; even changes in demographics.  Government must obliterate these and all other sources of change if no one is to be exposed to the risk of losing a job or of having her wages or benefits cut.

There’s no excuse for prolonging the miserable charade any longer. A century, give or take a decade, is long enough. Japan is an example of the least worst that can happen.

N.B.: WSJ articles have a tendency to disappear quickly behind a paywall. Click quick!

The sky’s the limit

EARLIER this week, Japanese politicos filled their Twitter litter boxes with tweets of chirping delight about their VIP preview visit to the Tokyo Skytree, which opened to the public on Tuesday. Now the world’s largest tower, Skytree will be used for television and radio broadcasts. As with the tower it replaces — the Tokyo Tower — it is also expected to become a tourist destination and a symbol of the city.

The Christian Science Monitor and others, however, couple the news with the observation that building projects of this immensity might also be an indicator of impending economic decline. It’s based on a theory called the Skyscraper Index, and they explain it this way:

The skyscraper index works because developers tend to make ambitious gambles with huge new towers at the point of the business cycle when interest-rate and price signals can get distorted, wrote Mark Thornton, a senior fellow at the Mises Institute, in a 2005 research paper.

On the Mises Institute website, Mr. Thornton adds:

It is a broadcasting and observation tower and so it does not qualify as a skyscraper and therefore it does not signal a global economic crisis. However, with regional records being set in the Pacific Rim, China, India, and Europe, as well as a new world record skyscraper in development in Saudi Arabia, it reinforces the warning signals from the Skyscraper Index.

Here’s the Wikipedia explanation, which in this case is acceptable as something other than a collection of links. When Mr. Thornton refers to skyscraper development in China, he’s talking about the developments described in this article, which contains the following quote:

Investors should therefore pay particular attention to China – today’s biggest bubble builder with 53% of all the world’s skyscrapers under construction…

China will complete 53% of the 124 skyscrapers under construction over the next six years, expanding the number of skyscrapers in Chinese cities by a staggering 87%. China’s skyscrapers are not only increasing in number – it now has 75 completed skyscrapers above 240m in height – but the average height of the skyscrapers that it is building is also increasing as past liquidity fuels the construction boom.

For a more visually arresting and concentrated report on the Chinese high-rise boom, try this video report from Reuters. (I wanted to embed the video, but couldn’t figure out how to appease the cranky WordPress software.) This is not your average uptick in construction activity.

That would explain the data points on this chart of cement consumption from Goldman Sachs via ZeroHedge:

*****

George Gershwin composed the theme music for this manic erection of phallic cement and steel long ago — little more than a year into the Great Depression. His working title was Rhapsody in Rivets, suggesting his inspiration was the skyscrapers sprouting in the rocky soil of Manhattan during the Roaring 20s. The final title was the Second Rhapsody.

Last laugh

DURING the global financial crisis of 2008, then-Prime Minister Aso Taro was one of many leaders around the world who chose to further damage their economies by urging budget-busting stimulus expenditures.

Current Prime Minister Noda Yoshihiko was a relatively unknown backbencher in those days. Straining to be clever, he referred to Mr. Aso on his website in December that year as Baramaki Obaka, in reference to the government’s contributions to the IMF. Roughly translated, baramaki is pork-barrel spending, and obaka is big dummy. The similiarity in the pronunciation to the name of Barack Obama, who had been elected president the month before, was intentional, though it was not a reference to Mr. Obama personally.

In the Diet today, Mr. Noda said, “That was not an appropriate expression. I must apologize.”

The prime minister was answering a question put by LDP Secretary-General Ishihara Nobuteru. Mr. Ishihara noted the substantial contributions the Noda administration has made to the EU bailout, and asked, “How are you any different from the Aso administration?”

Ordinarily, that would have been the last laugh, but the amount of money of the mind Japan has firehosed other countries with during both administrations isn’t a laughing matter — particularly for Japanese taxpayers.

The Noda administration wants to raise the consumption tax AND the income tax AND the inheritance tax AND the gasoline tax AND the capital gains tax AND eliminate business tax breaks, while being extraordinarily generous with foreign aid of various kinds, from forgiving Myanmar debt to bailing out European banks.

Fiduciary responsibility? It is to laugh.

Further, Mr. Ishihara is threatening to introduce a no-confidence motion in the lower house unless the government submits its consumption tax increase legislation. That seems strange, until one remembers that Mr. Noda is talking about delaying the bill so he can patch up the differences with Ozawa Ichiro and the anti-tax faction within his own party AND the loud rumors of discussions between the DPJ and the LDP to create a grand coalition for a tax increase. That would give them enough time to screw the public before they both get neutered in the upper and lower house elections that must be held by next summer, resulting in their electile dysfunction.

No one will be laughing at that pratfall.

Straight talk

SOME straight talk from Steve Forbes in Forbes Magazine:

Japan has been strangling its economy since the early 1990s. FORBES columnist Nathan Lewis, a noted economist and money manager, recalled recently that when asked about Japan’s prospects seven years ago he blurted out: “They will tax themselves to death.” And that is precisely what Tokyo continues to do.

Japan’s political leaders are more obtuse and irresponsible than those found in Europe. They have completely forgotten the prescriptions of sound money and ever lower taxes that fueled their nation’s extraordinary postwar economic expansion. As if in the grips of a death wish, Japan has, since the late 1980s, repeatedly raised taxes, with new levies of all kinds imposed. In the early 1990s the capital gains tax on property was boosted to 90%—and this was before a slew of other property exactions were piled on. To stimulate the tax-strangled economy Japan has gone on spending binges that would make Paul Krugman, Barack Obama and other big-government believers drool with envy. Today Japan’s gross national debt—more than 200% of GDP—vastly exceeds even that of Greece. Nevertheless, Japan is in the process of enacting a new array of tax increases: The top income tax rate, the gasoline tax, the payroll tax, the inheritance tax and the capital gains tax are all slated to go up. The corporate tax rate was cut slightly, but this was more than mitigated by the elimination of numerous deductions. Notes Lewis ominously, “The government is plainly on the road to default.”

The title of the piece is Japan and Europe are Killing Themselves.

Not much else to say, is there?

There is one factor that mitigates his opinion, however. He thinks positive change is coming in the United States, which will then lead everyone to The Promised Land.

Delusions abound, and not just in Japan and Europe.

UPDATE:

ZeroHedge  is calling it a “truly historic move” in a post called The Canary in the Gold Mine:

“Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies.” Not our words: the FT‘s.”

When Japanese pension funds start avoiding government debt purchases, the sage old financial fossils will be able to unfurrow their brows and stop gumming over their plans to end deflation by targeting a 1% inflation rate. Inflation will kick down the door without an invitation.

¿What are these people thinking?

IT’S impossible to scan the news articles either on paper or in pixels without seeing several that make one wonder, “¿What are these people thinking?” “These people” can refer either the subjects or the authors of the reports, and often both. Here are three examples involving Japan from the past week alone.

Socialism in action

Japan on Tuesday warned French president-elect Francois Hollande to keep the nation’s fiscal discipline in place amid worries that the new leader will overspend in a bid to boost the economy.

Of course no one can expect the capital-S-socialist-and-proud-of-it M. Hollande to have the first idea of how an economy functions — even socialists know that’s not the point of socialism. But the last thing the French need is advice from a news reader-turned-politician serving as the Finance Ministry press secretary, who knows less about finance than a teachers’ union apparatchik selected at random from a May Day parade, and who represents a government that wouldn’t know fiscal discipline if it walked up to them wearing a name tag that read, “Hello! My name is Hayek”.  The Noda administration managed to avoid a third consecutive record-high budget this year only because they shifted some expenditures to “special accounts”. Government debt instruments still account for half their revenue.

He’s worried about the French overspending? That’s all the DPJ’s been doing since they took office in 2009.

In Tokyo Finance Minister Jun Azumi told a regular news conference…”We want (France) to do what has been decided so far, and I’d like to tell them about that if there is the opportunity,” he added, according to Dow Jones Newswires.

The Dow Jones Newswires did not report if there was any snickering among the reporters present.

“I don’t know whether Mr Hollande will immediately act on what he has said in heated debates during the election campaign…

Now Mr. Azumi is talking about a subject on which he has some expertise — the winning party in a national election reneging on the campaign promises that got them voted into office.

“…but realistically, I think it is impossible (for European nations) to give up on fiscal-rebuilding efforts,” the finance minister said, adding that he was “convinced (Hollande) will respect this movement.”

Realistically, it is very possible that several European nations will give up on “fiscal-rebuilding efforts”, whatever it is he means by that term.  Any conviction he has about what M. Hollande might or might not respect is derived entirely from the script his Finance Ministry aides wrote for him.

Hollande ousted conservative Nicolas Sarkozy from the Elysee Palace on a platform promising growth rather than further cuts, which has worried many European leaders who fear it will lead to another region-wide crisis.

Growth? ¿What are these people thinking? Economic growth would be an excellent way to solve France’s — or anybody’s — fiscal problems, if it were real growth created by the private sector.  The Europeans and the people reporting on them seem to have created a new political pidgin in which “austerity” means something other than what it really means — not spending so bloody much — because French government spending has risen every year from 2002 (€816 billion) to 2011 (€1.1 trillion). It has a budget deficit closer to that of Spain than to Germany.

What they are pretending is “growth” is the public-sector spending of borrowed money of the mind on infrastructure projects. The new French president also wants to hire 60,000 new teachers, 1,000 new police a year, and create (Abracadabra!) 150,000 state-funded “jobs” for youth.

In other words, he thinks Mr. Obama’s policies worked out very well for the United States and wants to try them in France.

Well, to be fair, those policies did work out, if hobbling private enterprise and the free market was the goal. Considering the backgrounds of the two men, that cannot be dismissed out of hand.

For example, what Mr. Hollande means by “raising revenue” in the new political pidgin is to place a tax on financial transactions and increasing the tax on dividends and rich people, thereby ensuring there will be fewer of all of them. He’s got to conjure up some kind of revenue to pay for this government spending, to which will be added the bill for rolling back a Sarkozy reform and reducing the retirement age to 60 from 62.

And he thinks this will result in an extra €29 billion? No wonder people are worried. Especially Japan:

But Japan and China — which hold huge amounts of European debt — raised concerns about the region’s future policies.

By huge, they mean:

Tokyo bought 13.0 percent of the eurozone rescue fund’s bond sale in December, worth about 260 million euros ($338.0 million), while purchasing 10.0 percent, or 300 million euros worth, in November. That was lower than the average 20.0 percent purchased in three other bond sales from the start of the year.

There’s been a lot speculation about why the Japanese and Chinese bought all that European debt issued to allow taxpayers the privilege of bailing out European banks. The people at Seetell wonder if Japan’s real objective was to prop up American banks, rather than European ones.  That explanation would work just as well for the Chinese too.

Meanwhile, what are all of these people thinking?

In communist China Monday the state-owned Global Times, which is known for its nationalistic tone, said the anti-incumbent results in France and Greece bore out the dangers of democracy running to “extremes”.

If you’ve read anything in the Global Times, you know that the newspaper’s tone is better described as jingoistic rather than nationalistic. Media consumers also know that a presumed connection between nationalism and a criticism of democracy is a non sequitur, but newspapers are full of those, starting with “All the news that’s fit to print”.

And what would anyone at the Global Times know about democracy, much less what constitutes an extreme form of it? But then the Chinese have a political pidgin of their own.

Still a colony after all these years:

Japan Post Insurance Co., one of the key arms of the government-backed Japan Post Holdings Co., will delay its entry into the cancer insurance field amid the U.S. industry’s misgivings about such a move, a Japan Post official said Wednesday.

Japan Post’s envisaged entry into the domestic cancer insurance market, which is dominated by U.S. insurers, “must not obstruct” Japan’s participation in U.S.-led multilateral talks on joining the Trans-Pacific Partnership free-trade pact, the official said. Participation in the TPP talks requires consent from all countries involved.

So: A Japanese enterprise, partially owned by the Japanese government, chooses not to sell a product in the Japanese market because the government of the companies now dominating that market won’t like it and might not let Japan participate in discussions that Japan hasn’t officially decided it will participate in?

¿What are these people thinking?

This time we have a good idea what they were thinking. The DPJ needed the votes to get bills passed in the upper house after they formed a government in 2009, so they created a coalition government with two small, incompatible parties. One of them was a reactionary splinter group that thinks only the government is capable of delivering mail, offering savings deposits, and selling life insurance, and that city dwellers should pay higher prices for mail delivery to offset the costs of delivering it to people who choose to live on out-of-the-way islands.

Well, that and using the money in those accounts to buy 20% of Japanese government debt so it isn’t sold overseas at higher interest rates and really screw up the calculations of Azumi Jun’s tutors.

Also, some people pretended to be concerned that foreigners would buy a controlling interest in the bank (even though government approval would be required), which would mean foreign countries would have an unacceptable presence in the Japanese financial and insurance sector.

You know, like if they dominated the cancer insurance market…

Given the situation, Japan Post Insurance will concentrate on improving its educational endowment and other existing policies for the time being, according to the insurer. The arm has extensive nationwide access to potential customers in the over-the-counter market.

And it will voluntarily relinquish that extensive nationwide access in one sector to prevent the Americans from raising their voices.

On April 27, the Diet enacted a law to rethink the full privatization of government-backed postal services. The revision to the 2005 privatization law stipulates that the banking and insurance entities can launch new services after the government sells half of its shareholdings.

Which they have no intention of selling. The politicos’ “rethink”, by the way, is of a policy that won its advocate, Koizumi Jun’ichiro, 70% approval ratings.

Neo-Luddism

Last weekend, the last operating nuclear plant in Japan shut down for regularly scheduled maintenance, meaning no nuclear plants were operating in the country.  It was easy to see what many in the media were thinking from their choice of language and focus on one aspect of the closure. This from the Independent in Britain:

Activists celebrate as Japan is nuclear-free for first time in 42 years

Will they celebrate after an extended period  of “nuclear-free” power generation results in several other –free conditions, namely “economic growth-free”, “prosperity-free”, and “employment-free”?

Those neo-luddites just got to be free!

Thousands marched through the streets of Tokyo yesterday to celebrate the closure of the last of Japan’s 50 nuclear reactors. The switch-off meant the country, for the first time since 1970, was being electrified without the use of atomic power.

Campaigners said it was fitting that the day Japan stopped using nuclear power coincided with the nation’s annual Children’s Day, because of their concerns about protecting children from radiation, which Fukushima Dai-ichi is still releasing into the air and water.

Yoko Kataoka, a retired baker and grandmother in a T-shirt with “No thank you, nukes,” handwritten on the back, said: “Let’s leave an Earth where our children and grandchildren can all play without worries.”

Since they’re only children, their play won’t be disturbed by having to worry about coming up with the average 10.28% increase in household electricity bills for those receiving power from Tokyo Electric, starting in July. Or that the replacement for nuclear energy at Japanese power plants is oil, which produces nitrogen oxides, sulfur dioxide, carbon dioxide, methane, mercury compounds, and other air enhancers that are not healthy for children and other living things. The tots also won’t be the ones who have to work nights or weekends at factories rescheduling their shifts to reduce large-scale demand at peak periods.

Before the crisis, Japan relied on nuclear power for a third of its electricity needs. The crowd at the rally, estimated at 5,500 by organisers, shrugged off government warnings about a power shortage. Activists said the shutdowns had proved the country could live without nuclear technology.

True, all but 30 countries live without nuclear technology, but most of them in the industrial world are small and/or functional economy-free, such as Portugal, Greece, and Italy. The singular exception is Australia, a continent with a widely dispersed population roughly that of metro Tokyo-Yokohama.

And even then, the organizers — if they are to be believed — thought it was a mighty big deal that 5,500 celebrants from the megalopolis showed up to rejoice and congratulate themselves for royally screwing up everyone else’s lives. They added:

Electricity shortage is expected only at peak periods, such as the middle of the day in hot weather, but critics of nuclear power say the proponents are exaggerating the consequences to win public approval to restart reactors.

We’ve already seen that noxious pollution, significantly higher electric bills, and social disruption are some of the consequences of a nuclear-free Japan. That last is unlikely to bother most of the demonstrators. If any of them are working nights, it’s at convenience stores rather than factories.

There’s more, however: Kyushu Electric Power just announced a loss of JPY 166.3 billion for the fiscal year ended March 2012, after recording a profit of JPY 28.72 billion the previous year. Kyushu Electric attributed the loss to the delay in restarting the idled nuclear reactors and the additional fuel costs for operating their thermal power plants. The costs associated with the idled nuclear reactors runs to several billion yen per day. As a result, the utility’s stock price is below JPY 1,000 for the first time since 1984.

Even then, summer temperatures at 2010 levels could cause power shortages of as much as 10%, the utility said last week. (The figures for the Kansai area are even worse.)

Combine that with a continued high yen, as economic craziness continues to masquerade as sanity in the United States and Europe, and even more Japanese companies will find it in the interests of their survival to shift production overseas.

Meanwhile, an article appeared on the same day in the Yomiuri Shimbun that suggested the youth of Japan will have more to worry about than the absence of fatalities from a once-in-a-millennium combination of circumstances:

More than 80 percent of people aged 15 to 29 are very concerned about whether they can earn enough money or receive public pensions after retirement, according to a draft of an annual government report.

The draft of the government’s white paper on children and young people for fiscal 2012 shows that younger generations are not optimistic about the future due to unstable employment conditions amid the nation’s aging population.

Also:

Although the overall unemployment rate was only 4.5 percent in 2011, it remained disproportionately higher among young people. The jobless rate was 9.6 percent for people aged 15 to 19, 7.9 percent for people aged 20 to 24 and 6.3 percent for people aged 25 to 29.

A few years ago, WHO compiled a report on the deaths attributable to the Chernobyl accident, which was much worse than the one at Fukushima. They found:

As of mid-2005, however, fewer than 50 deaths had been directly attributed to radiation from the disaster, almost all being highly exposed rescue workers, many who died within months of the accident but others who died as late as 2004.

There were also 4,000 cases of thyroid cancer found as a result of the accident, but the survival rate is 99%.

In contrast, the death toll from the Fukushima accident now stands at one: a worker cleaning up at the plant who collapsed from overexertion.

More important, the report also stated:

Persistent myths and misperceptions about the threat of radiation have resulted in “paralyzing fatalism” among residents of affected areas.

The problem with the 5,000 or so Tokyo celebrants is the opposite. They weren’t suffering from a paralyzing fatalism last Sunday. Their excitement stemming from a belief in the myth of nuclear danger rendered them oblivious to the potential paralysis of their country.

¡What are these people thinking!

*****

After all the lights go out, this will be about the only thing left.

Japan’s back pages

THE Japan that emerges in stories printed below the fold and in the back pages of newspapers, or on less frequently accessed news websites, is a different place than that presented in the industrial mass media. Here are some stories that demonstrate why.

Water business

The phrase “water business” in Japan is usually a euphemism for the enterprises conducted in entertainment districts at night, particularly drinking establishments.

But most people outside the region are unaware that Japan is a global leader in another sort of water business — that for the technology used in water supply and sewage systems. In fact, a paperback was published a few months ago with the premise that Japan is the global leader in water technology systems. Whether that claim is true or not, several entities in the country have established a reputation for expertise in the sector, and they are working to expand their operations.

For example, the Fukuoka City government recently signed a memorandum of understanding with Ho Chi Minh City, Vietnam, for joint research in water supply and treatment.

The Kyushu city developed the technology for reusing waste water from the necessity to deal with its own chronic water shortages. They became so successful that they now want to make a paying business of it. Fukuoka City was also the first municipality in Japan to process waste water for use as water in the toilet, and they also are known for building a network of tunnels that carry off the water from the heavy summer rains to prevent flooding.

Meanwhile, the growth of the economy and the population in Vietnam strained that nation’s water systems infrastructure, and they chose to look to Japan for help. In fact, the city of Haiphong is already working with the city of Kitakyushu, Fukuoka City’s neighbor, to prevent leakage from their water supply systems.

Kitakyushu has been active in this sector in Cambodia for some time. As of last December, they were serving as the technical consultants for water technology in nine Cambodian cities, and last month they began helping two other cities in that country to expand their water supply systems.

Fukuoka City is also involved in the water business in Burma. The Water Department dispatched a technician to Rangoon last month to conduct surveys and provide guidance, and they’ll send a full team later. The Burmese government also sent one of their technicians to Fukuoka City for training.

Apart from altruism, one objective is to increase the opportunities for local businesses to receive contracts from the Southeast Asian countries for infrastructure improvements. The Fukuoka City project in Burma is being conducted in tandem with the UN Habitat Fukuoka office. That organization is particularly interested in water purification and desalinization systems.

Rare Earth

The temporary Chinese suspension of rare earth metal exports during the standoff over the Senkakus in the fall of 2010 certainly got the attention of Japanese industry.  They wasted no time to start looking for new sources for the metals that couldn’t be used as a political weapon. For example, it was announced earlier this week that imports of rare earth metals would soon begin from India. Also, Mitsui Mining and Smelting Co. and Kurume-based Shibata Sangyo have teamed to launch the world’s first business for recovering and recycling the rare earth metal tantalum from discarded electronic products. Tantalum is used primarily as a material for condensers in PCs and Smartphones, but all of it is imported. The Ministry of Economy, Trade, and Industry estimates that recovering the tantalum from products discarded in Japan in a year would yield about 64 tons, accounting for 14% of the amount used here annually. Fukuoka Prefecture and Mitsui plan to commercialize the recycling technology and to create a structure that enables electronics parts manufacturers to procure the metal without concerns of interrupted supply.

More than a year ago, Japanese researchers announced they had produced the first artificial rare earth metal, an alloy similar to palladium. That metal is essential for making electronic parts, and is also used as a catalyzer to clean exhaust gas. While their method is not feasible for the commercial production of palladium, the researchers intend to apply it to create other alloys as rare earth substitutes. They say they’ve begun joint research projects with automobile manufacturers, but are keeping the details under the hood for now.

Power

A ryokan, or Japanese-style inn, in Yufuin, Oita, will generate electricity from the hot springs on the site using a 70 kW generator that Kobe Steel put on the market last fall. They plan to sell some of the power generated to Kyushu Electric Power through the system for the sale of renewable energy at a fixed cost that will begin in July. Kobe Steel says that if the power is sold at JPY 20 per kW, the spa could recover the costs by 2015.

Space

Japanese astronomers using a Hawaii-based telescope said last month they had discovered a “proto-cluster” of galaxies 12.72 billion light-years away from Earth. They claim that’s the most distant cluster ever discovered, which would also make it one of the first structures formed by the Big Bang.

“This shows a galaxy cluster already existed in the early stages of the universe when it was still less than one billion years into its history of 13.7 billion years,” the team of astronomers said in a press release.

But the discovery may already have been superseded.

Researchers using NASA’s Hubble Space Telescope have previously announced the discovery of a possible cluster of galaxies around 13.1 billion light-years from Earth, but that has not yet been confirmed, the Japanese researchers said.

Vanity

What Japanese women call with a smirk the “bar code” — the hair style created by follically deficient men, otherwise known as a combover in the English-speaking world — may, along with toupees and implants, be obsolete a decade from now:

Japanese researchers have successfully grown hair on hairless mice by implanting follicles created from stem cells, they announced Wednesday, sparking new hopes of a cure for baldness.

Led by Professor Takashi Tsuji from Tokyo University of Science, the team bioengineered hair follicles and transplanted them into the skin of hairless mice.

The creatures eventually grew hair, which continued regenerating in normal growth cycles after old hairs fell out.

The process has the potential for applications greater than flattering oneself in the mirror, however:

Tsuji and his researchers found hair follicles can be grown with adult stem cells, the study said.

“Our current study thus demonstrates the potential for not only hair regeneration therapy but also the realisation of bioengineered organ replacement using adult somatic stem cells,” it said.

Stop the snickering, ladies — before long another recent discovery in Japan might produce more satisfying answers when you interrogate the mirror about the fairest of them all.

Two different teams of university researchers have found the gene that causes freckling and skin blotches after exposure to the sun. One team was from Osaka University (working with cosmetics manufacturer Kanebo), and the other team, using different methods, combined researchers from Nagasaki and Kumamoto universities.

Both groups focused on ultraviolet hypersensitivity, a rare condition of which only five cases are known in the world. The condition was first identified in 1981 in Japan, but little effort was put into treatment because the only problem it causes is sunburn. The Osaka-Kanebo group inserted mouse chromosomes in the nuclei of cells from two patients with the condition to determine which would provide better protection to ultraviolet rays. Exposure to the rays would prevent multiplication of the cells, which would die after six weeks, but cells with the new chromosome were resistant to ultraviolet rays.

Crab computing

Here’s a story that made a lot more sense after spending the past week trying to make sense of the functions on my new PC:

A team of scientists from Japan and England have built a computer that uses crabs as information carriers, to implement basic circuits of collision-based computing.

The explanation:

Researchers at Japan’s Kobe University and the UK’s University of the West of England, Bristol, found that when two swarms of soldier crabs collide, they merge and continue in a direction that is the sum of their velocities. This behaviour means that swarms of crabs can implement logical gates when placed in a geometrically constrained environment.

And:

The swarms were placed at the entrances of the logic gates and persuaded to move by a shadow that fooled them into thinking a predatory bird was overhead. Results closely matched those of the simulation, suggesting that crab-powered computers are possible.

The experiment builds on a previous model of unconventional computing, based on colliding billiard balls.

That set the author of the article to wondering:

The paper’s authors did not say whether public money was used to fund their experiments.

Regardless, it doesn’t seem as if the experiment would be so expensive that a university couldn’t fund it on its own. The author might be suggesting that futzing around with crab-powered computers is a frivolous enterprise with no apparent application, but there might be some there there.  Explains Josh Rothman:

What’s the point? Increasingly, computer scientists are interested in the ways that natural systems solve computing problems. Often, they do so in surprising (and surprisingly effective) ways. Other researchers have investigated the ways in which honeybees compute the most efficient route through a field of flowers (see a well-reasoned take on that research here); one of the crab-computer researchers, Andrew Adamatzky, has been exploring the possibility of slime-mold computing. Future generations of computers, they argue, may well be inspired by nature.

Kampai!

The Moji Customs Office in Kyushu reports that the value of beer exported through the Port of Hakata in 2011 totaled JPY 1.225 billion, an increase of 6.3 times from the previous year. The volume of exports totaled 10,960 kiloliters, a year-on-year increase of 9.2 times. That set a record, and it was the first new record in 10 years. South Korea accounted for 57% of the exports, and there’s a story behind that. Premium Japanese beer has become popular in that country, which is closer to the Port of Hakata (also in Kyushu) than to Tokyo. Sapporo also established a sales company in South Korea last June. And don’t forget that the Japanese built the first breweries on the Korean Peninsula to begin with when the two countries were merged a century ago.

Does this mean tastes are changing in South Korea? The mass market beer in that country may be even weaker and thinner than the adult soft drink that pretends to be beer in the United States. That’s perhaps due to the robust and hearty nature of Korean food, with its industrial grade spices. It would make sense that people preferred something less intense to wash it all down with.

Hand grenade hotline

To conclude, here’s something I’ll bet nobody expected. The Fukuoka police became the first police department in the country to institute a hot line for tips on hand grenades. They’ll pay JPY 100,000 for each hand grenade found or confiscated as a result of a tip.

Concerns have been growing lately over the use of hand grenades to attack companies or in gang fights. Hand grenades were used in six incidents in the prefecture last year, the most in the country. Rewards will also be given for the discovery of homemade bombs. They’re serious — the police have printed 2,000 posters and 5,000 flyers.

They’d better be serious if gangs are bringing grenades to a gunfight.

Afterwords:

This clip of an English-language news report provides further info on the changing Joseon tastes for beer. They mention that 60 brewpubs have been established (by then) in South Korea since laws were relaxed in 2002. Pardon the goofiness with the Youtube link.

<p align=”left”></p>

Considering (a) that microbrewing had already taken off in Japan at that time, and (b) the substantial but largely unacknowledged influence that Japan still has on Korean culture, it is quite possible that the Korean laws were changed after the Koreans sampled some of the Japanese beverages.

Not that they’d ever admit it.

*****

Here’s another change: When I arrived in Japan in 1984, most funerals were still conducted in the home of the deceased. Now, however, they’re usually held in funeral parlors.

I attended a funeral in one of those establishments a week ago today for a pleasant man who passed away at the age of 86. I’ve been to enough of them by now to be familiar with the customs, but I was intrigued when I recognized the song the pianist was playing just before the service started: Hana (Flower), by Okinawan roots rocker Kina Shokichi. It is interesting to reflect on which things eventually become accepted as part of the common culture. No English translation can do the lyrics justice, so I won’t even try, but the song works in that context.

Here are three different versions spliced into one video.

 

Ichigen koji (99)

一言居士
- A person who has something to say about everything

One experience I’ll never forget. Soon after I became the Minister for Internal Affairs and Communications (October 1005), I tried to reform the way that local government bonds were issued (by municipalities and prefectures).

Though I call it a reform, it wasn’t anything special — I just wanted to do something that everyone else takes for granted. When companies float bonds to procure funds, the rate they pay will of course differ for Company A, which has strong revenue and earnings, and Company B, whose performance is weak. The risk of lending money to Company A is low, so the interest earned will be low. In contrast, the interest will be higher for Company B.

But when cities and prefectures issue bonds (in Japan), the solicitation is done through a financial institution selected by the national government, and the interest rate for procuring the funds is the same for every city and prefecture.

People who hear about this for the first time are probably surprised. This is the very definition of government-led collusion. It’s terrible, and it is probably enough for the Fair Trade Commission to issue an order prohibiting it.

As the Minister for Internal Affairs, I was responsible for fiscal matters related to local governments. I tried to stop it immediately. But not only were the bureaucrats opposed, many local governors and mayors were also upset. If the collusion fell apart, all of their problems would be exposed.

- Takenaka Heizo, Koizumi Jun’ichiro’s privatization guru

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Ichigen koji (98)

一言居士
- A person who has something to say about everything

Whether it is the result of confrontation or discussion between the DPJ and LDP, a Diet dissolution and general election in June is probably unavoidable. What will the issue in that election be? It will undoubtedly be Prime Minister Noda’s consumption tax increase, but what is LDP President Tanigaki doing? During the campaign for the 2010 upper house election, Mr. Tanigaki said, “As a responsible opposition party, we must resign ourselves to a consumption tax at the 10% level.” Yet now he is complaining about a consumption tax increase and demanding the Diet be dissolved. His opposition to a consumption tax increase is nothing more than a procedural argument: the DPJ said they would not raise the consumption tax during their (four year) term. The once-dominant party is now driven only by political crisis. How they have fallen.

The DPJ is calling for reform that integrates social welfare with the consumption tax, but they will introduce a bill only to raise the tax, divorced from a pension scheme. If the bill passes, no means have been created for accepting the increase in revenue. At first, it will most likely be used to offset the fiscal shortfall. If that happens, it would be just as the Finance Ministry planned it.

- Yayama Taro

Earlier this week, the LDP said that one part of their next election manifesto would be a call to raise the consumption tax to 10% “for now”.

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Sunrise in the land of the rising sun

NOTHING is stronger than an idea whose time has come. Sakaiya Taiichi, the senior advisor to Osaka Mayor Hashimoto Toru, spoke to the Your Party convention in February. The speaker and his audience share a common purpose, and both know that the time for their ideas has come. This is what he said in English.

*****
Your Party is different from the other parties. It was not born in the Diet, but was born from a citizens’ movement — the first one in the postwar era. There might have been some in the Meiji period, but it’s a rare thing. Most parties are created when several MPs get together in the Diet. Most of those parties fall apart.

Your Party began when Watanabe Yoshimi advanced his own policies and started a citizens’ movement by himself. Mr. Eda (Kenji, party secretary-general) was in synch with that. It is a party of democracy that you should be proud of.

It happened again at the end of last year. Diet members scrambled together to form groups and receive the public subsidies given to political parties. They have no political views, ideology, ideas, or concept of what the state should be. Both the Liberal Democrats and Democrats are parties for creating political crises, trifling with the people and causing them misfortune. They leave policy to the bureaucrats, and never think about Japan the nation.

Postwar Japan had many splendid conceptions. One concept was in foreign affairs, in which it would stand with the Western powers, and become a small country in military affairs and an economic giant. The option to become a military power did not exist during the American occupation, so that is what happened. The second concept was economic: The (political) system of (19)55 (when the LDP was formed), bureaucracy-directed policy, the cooperation of the business world, and large scale mass production.

They thought that even if no one had any political views, all they had to do was defend these concepts. That continued until the 80s. After that, however, the times changed: The Cold War ended, and large scale mass production reached its limits. Despite that, however, no one still had any political views or a concept of the state. All they did was create political crises.

Then Watanabe Yoshimi became a minister in the Abe Cabinet, and continued to serve in the Fukuda Cabinet. He lasted longer than usual (laughter). He began to talk about something different — civil service reform. That earned him the enmity of the bureaucracy, but the amendment to the National Civil Service Law passed. I created the draft of that amendment in the advisory council.

But even though that amendment was passed, nothing changed. The bureaucrats are unyielding. The president of the National Personnel Authority did not appear in the Diet. In the end, the (Civil Service System Reform) headquarters revolted, and Deputy Chairman Koga was fired. Even though the law was passed, nothing happens. The reality is horrendous.

Watanabe Yoshimi is a rare politician. He thinks about the concept of the state. Those politicians have been extinct for a long time. Even if there are some drawbacks, the policies are truly great. This year — This is It! This is the year of decision. The one I uncovered was Mr. Hashimoto (Toru). The circle of reform is growing. This year is the year of decision.

Why will this be the decisive year? It will be an extremely difficult year for both the Japanese economy and the global economy. Thus, there are four parts to the agenda. One is a state/province system with regional authority. There are three forms of government administration: the nation, the prefectures, and the basic self-governing bodies. The Osaka Metro District concept would convert that into two levels. We must not mistake the state/province system as a model for merging prefectures. We must change the nation.

(After creating that system) the regions must not say anything about the affairs the national government will handle — specifically, foreign affairs, defense, and the currency. Meanwhile, the national government will not say anything about the affairs the regional governments will handle. That is how it should be.

Second is civil servant reform. Civil service is not a job, it is a form of status. Until the 80s, the Ministry of Health, Labor, and Welfare was a small government office. Both the health ministry and the labor ministry accepted only seven people each with a humanities background for the elite job track. At the same time, the Ministry of Agriculture, Forestry, and Fisheries, and the Ministry of International Trade and Industry were large ministries and accepted 26 people each. But now the Ministry of Health, Labor, and Welfare is a large ministry with oversight for 25% of the national income. The agriculture ministry has jurisdiction of no more than 1.8% of GDP.

Anyone can be a bureau chief in the health ministry. The agriculture ministry has no work. If you ask, what about transferring the career agriculture ministry bureaucrats to the health ministry, that would be absurd. It would be like entrusting the old Kishu domain (present-day Wakayama and part of Mie) to the people of the Satsuma domain (present-day Kagoshima). It isn’t a job, it’s a form of status.

Organizations and personnel must be based on the principle of functionalism, and selection must be based on ability and incentive. The organization of any body that defends its status will inevitably crumble.

Third is a growth agenda. Japan today is facing its third defeat. Defeat is not losing a war. Even if it loses a war, a nation will not collapse. True defeat is the collapse of an ethical view and the system.

The first defeat was the Bakumatsu period (at the end of the Edo period). The values of the Edo government were stability and equality. They purposely did not build a bridge over the River Oi (in Shizuoka). They sought stability and equality by preventing people from crossing the flow, and making the movement of people difficult. That’s when progress became important with the arrival of the Black Ships (Commodore Perry).

It goes without saying that the second defeat was in the war. Now Japan is in third period of defeat. The sense of ethics is in turmoil.

Now it is seen as a good thing to receive social welfare benefits. In Osaka, even if the primary school teachers scold their students by saying, “If you don’t study, you’ll have a hard time later,” the students retort, “I’ll get welfare payments, so I’ll be all right.” They say 10% of the junior high school students can’t do multiplication.

Mr. Hashimoto’s proposal is to conduct a relative evaluation of the teachers. Five percent of the teachers will be given the lowest grade of a D. Teachers who get Ds two years running will have to be re-trained. If they do not improve after re-training, they will be asked to leave. How many teachers receive the lowest grade under the absolute evaluation system now? It’s only 0.15%. That’s one-and-a-half people in 1,000. There’s maybe one in a school.

In Osaka, where the teacher evaluations are strict, the teachers’ union says the teachers there have three times the neuroses of teachers anywhere else. It’s a scam. The same statistics cite the cause of the neuroses. The primary cause is trouble with other teachers in the teachers’ lounge.

The fourth is creating an open Japan. That’s true also of the TPP. What did we do during the Meiji Restoration? The policy known as “The return of the lands and the people from the feudal lords to the Emperor.” In short, civil servant reform, giving up the status of samurai. That was the second year of Meiji (1870). Next, they cheerfully opened the country. (N.B.: The term Mr. Sakaiya invented for this idea, which he frequently uses in speeches, is suki suki kaikoku.) The Tokugawas grudgingly opened the country. In the brocade pictures (nishiki-e) of the times, foreigners are depicted as devils or tengu (monster-spirits). That changed.

The next thing they did in the Meiji Restoration was economic reform. In the new currency law of the fourth year of Meiji, the monetary units were unified as yen and sen. They started using paper money, and it became possible to create credit. In the Bakumatsu period, according to the calculations of Oguri Kozukenosuke, annual tribute accounted for only 40% of expenditures. Now, of the (government’s) JPY 104 trillion in expenditures, including quarterly adjustments, tax revenues account for JPY 42 trillion. Exactly 40%.

Annual tribute was only 40% of expenditures. Oguri Kozukenosuke worried that annual tribute would have to be tripled. That vanished in an instant with the start of the Meiji period and the new paper money under the new currency law. A deflationary economy has to be converted to an inflationary economy. In a deflationary economy, the past governs the future. There has to be nominal growth of about 3%.

The next thing they did in the Meiji period was eliminate the domains and create the prefectures. In other words, the state system. After that followed education reform. In Japan at that time, 40% of the boys and 25% of the girls learned reading, writing, and arithmetic at the terakoya, the Buddhist temple schools. It was the leading country in the world for education. Even in Great Britain during the Industrial Revolution, only one in four boys went to school. There was only one educational institution in all of Europe that admitted girls.

They eliminated all the terakoya and created schools. That’s because the objectives of education changed, from stability to progress. Educating people suitable for large-scale mass production was required. That idea still remains today. That’s why they taught that individuality and originality was a bad thing. They called all individuality a “defect” and originality was chastised as garyu (not following conventional methods).

Of course basic education is important. Ten percent of first-year junior high school students can’t multiply. That is the responsibility of the teachers, and they should be fired. Attending Board of Education meetings is a part-time job for teachers once a month. A view of education as a whole is not possible. The people who think that’s fine are the education ministry bureaucrats supported by the status system.

Teaching is also a form of status. There are many English teachers incapable of English. On the other hand, they have teachers who’ve come back from living in the United States teaching social studies. That’s all they have a license for. Next to the teachers fluent in English are the English teachers who can’t speak English at all, and the teachers back from the United States teach about the Japanese Diet, of which they know nothing.

We must change this absurdity with systemic reform. The drawback of reformers is their tendency to splinter without limit. That’s causing a lot of trouble right now in Osaka (laughter). The conservatives are surprisingly united. This reform is good, that reform is bad, only about 20% can agree on each issue. As a result, the unfortunate situation will continue.

That’s why, even if there are problems to a certain extent, we must agree that it (reform) is better than what we have now. Persons of good character are not capable of reform. Have you ever heard anyone say that Oda Nobunaga was a person of good character? (laughter) The requirement for reform depends entirely on the ability to achieve breakthroughs. Watanabe Yoshimi has that ability.

This is it. This is the year of decision. Let’s put aside our small differences and unite behind the big things we agree on. This year, please work so that we can increase our number to 300 (in the lower house of the Diet).

(end translation)

*****
Meanwhile, here is one of the most astonishing newspaper articles I’ve ever read anywhere, and that it appeared in the Asahi Shimbun is more astonishing still. The Asahi is the newspaper of the left in Japan, and the DPJ is the major party to the left of center (with quite a few members quite left of center). Here’s the headline. Note the past tense:

DPJ’S GOVERNING FIASCO: Party never challenged Finance Ministry

It’s a condensed version of everything I’ve been reporting on for the last three years. They’re writing off the DPJ.

It’s difficult to find a passage to quote because every sentence is a dagger thrust. Let’s stick to this:

Successive DPJ administrations have failed to make meaningful spending cuts. Despite rounds of budget screening, the three budgets compiled by the party effectively ballooned to record levels on an initial basis.

You know what they say: Read the whole thing. Also note the background of former Finance Minister Fujii Hirohisa and his opinion about the respective role of bureaucrats and politicians.

That’s the same Fujii Hirohisa who was the secretary-general of Ozawa Ichiro’s Liberal Party before it merged with the DPJ, and who doesn’t know what happened to the party’s public subsidies that it was supposed to return to the Treasury when it folded. (Some in the print media suspect it wound up in Ozawa Ichiro’s safe before being spent to buy real estate for his political funds committee.) That’s the same Fujii Hirohisa who appeared on a Sunday political talk show one day before Hatoyama Yukio made his first speech to the Diet as prime minister in 2009 and admitted the party had no intention of keeping all the promises in the manifesto. They would just keep enough of them to keep the people so happy they would return them to office four years later. They didn’t, they didn’t, and they won’t.

Remember all those so-called journalists who wrote about the “fiscal hawks” of the DPJ?

ROTFLMAO.

*****
The lead story in the 12 April edition of the weekly Shukan Bunshun is titled, Farewell, DPJ. They report the results of their polling that asks voters the question, “If a lower house election were held today…” (It’s becoming a cottage industry.) While they have the LDP doing better than in other surveys, they think the DPJ would lose close to two-thirds of its seats. They also think all three DPJ prime ministers — Hatoyama, Kan, and Noda — stand a good chance of losing their seats. (Hatoyama’s been on thin ice in polling for a while.)

*****
Get ready, people — the train is coming.
Oh, yes it is.

Hashimoto Toru (5): Onishi Hiroshi speaks!

ONISHI Hiroshi is the head of a marketing and management consulting company who also blogs about politics and business. His thoughts in a recent post about One Osaka and contemporary Japanese political conditions were quite sensible. Here it is in English.

*****
The One Osaka political juku received applications from 3,326 people, and after examining the applicants’ essays in the first screening, they selected more than 2,204 candidates from 46 prefectures for the start of lectures. There will be five sessions until June, when they plan to reduce that number to 400-1,000. Immediately, one ran across criticisms and concerns expressed in the mass media and blogs.

It’s my sense that most of them are wide of the mark. Because expectations are high, the criticisms and concerns were hurled in the way that fans of the Hanshin Tigers (baseball team) hurl harsh language at the players. The people who assembled at the One Osaka juku, went the criticisms, were after all just a group of amateurs. These people can’t be expected to shoulder the burden of national government.

But if we are to learn from the business world, innovation comes from the frontier and not the center. It teaches the lesson that many of the people who break through the limits of the industry experts and the mature business mechanisms are those who come from the outlying areas of the industry.

Speaking of political experts, that describes the Liberal Democratic Party, with their many years of experience of heading governments. But LDP politics have come to a dead end. There is no question that the current problems of a declining population, fiscal deficits, pensions, and nuclear energy are the bill left by the LDP government. Just because people are experts does not mean they are capable of good politics. Experts have their limits too.

There is also the criticism that the people who have come to the juku are the shades of the Koizumi Children and the Ozawa Children (younger Diet members elected on the coattails/influence of those two politicians in 2005/2009). It is nothing more than a rerun of people climbing on board a temporary trend, they say.

But the Koizumi Children and the Ozawa Children were a temporary grouping of people resulting from elections based on whether one supported or opposed the Japan Post privatization, or whether the LDP/New Komeito coalition should remain in government or be replaced by the Democratic Party.

The decisive difference is whether or not One Osaka can generate an impact on national government now, and whether they can become a force that spurs the reorganization of the political parties. They are not at the stage where they can suddenly take control of government. Even with the lecture courses and the further screening of the 2,000 students in June, they can not be treated in the same way. At this point, criticisms and concerns of that sort are not fair.

Certainly, there are different ways to go about it. Possible methods include selecting people after repeated workshops, or discovering the talented among them during dialogues. Perhaps they could somehow use social media. But that’s something for political parties other than One Osaka to think about. It’s not possible to arbitrarily determine that something absolutely won’t work at a stage when no results are visible.

Another frequent criticism is that they are being led astray by a superficial fantasy of reform. This feeling of doubting reform is understandable with the sense of disappointment that the Koizumi reforms didn’t continue, or that the DPJ was unable to proceed with the reforms the people expected.

It’s my feeling that the subject of the criticism is incorrect. One thing that prevents innovation is found in the saying, “The road to failure is paved with good intentions.” It seems to be something close to that. The classic comeback to crush new ideas in the business world is, “We did that before. We’d just be doing the same thing again.” That seems to be a superficial rejoinder along the lines of not wanting to be fooled. But that’s a poor position which results in protecting the politics of today and eliciting a condition from which there is no exit.

It doesn’t need to be said that Japan is in need of many reforms. It is self-evident that we must break free from the developing country model of bureaucratic leadership and the systemic fatigue and detrimental effects of a national structure with centralized authority. We must create the foundation in which more diverse industries can be created. We must change the national mechanisms for thinking about such issues as the government’s efficiency in responding to the problems of an aging society, or rebuilding the regional communities.

Both the DPJ and the LDP proclaimed they would move from the center to the regions, and raised the issue of dealing with the bureaucracy at Kasumigaseki. But there are limits to how both parties put their own interests first, and their concrete efforts lagged or faltered. Rather than regional sovereignty, the state/province system as proposed by Kasumigaseki was a shabby thing that, from the center’s perspective, would place daimyo throughout the country to maintain authority and complete control over the regions.

In reality, the concrete measures and efforts toward regional sovereignty have originated in the regions, as symbolized by One Osaka. At present, the existing parties are looking for a way to join in that effort.

The reform of the phrase “from the center to the regions” is not at all the superficial issue of changing procedures or the legal system. Rather, it means shifting the center of gravity for authority. In other words, there will be tremendous discord created over the question of authority, both on the surface and behind the scenes, as authority is seized from the existing political parties and the bureaucracy and shifted to the regions. If this were a period in which democracy had not been established, that sort of problem would result in hostilities or warfare.

In light of history, it is unnatural to think problems of that magnitude could be resolved by the Koizumi reforms or the change of government to the DPJ. To brush that aside by saying reform is nothing more than a fantasy is the same as defending the status quo. It is only that the elements who will address the issues of reform have not yet appeared, or have not yet matured.

True reform will be cultivated with the active and continuous participation of the people. Achieving that will require the creation of momentum and growth into a larger movement. Rather than abruptly take control of the government, the thinking and political methodology of One Osaka is likely that of increasing their influence on national politics and growing into a force while joining hands with the existing political parties.

Also, one becomes aware that the criticism and concern arises because of the ill will toward the “one phrase politics” in which One Osaka, and Mayor Hashimoto in particular, creates an enemy and uses that as an opening for repeated attacks. It is perhaps a good idea for commentators to talk of many subjects, or for politicians having it out in Diet skirmishes to talk of many subjects, but (one phrase politics) is a method that should be recognized for delivering a message to the people of the city and the country, and creating a sense of sympathy.

How you approach someone depends on whom you’re approaching. If you’re approaching mass media commentators, it’s a good idea to have the long messages those people prefer. But approaching the people of the city or the country requires something easily understood. Had One Osaka stopped there, however, I think they would not have been able to achieve their current high level of support, nor would they have been able to influence the existing political parties. Indeed, American presidential elections use the political methods of former Prime Minister Koizumi and Mayor Hashimoto; perhaps they employ them even more. Further, the criticism of One Osaka as unrealistic, or full of desktop theories, or that they champion the difficult-to-understand Osaka Metro District concept, cannot be ignored.

Just what is it that the people with the criticism and concerns are afraid of? Why are they so concerned over the One Osaka whirlwind that is now spreading. Wouldn’t that rather serve to heighten interest?

My sense of the current competition for authority between the DPJ and the LDP is that the differences within each party are greater than the sense of values and policy differences between each party. Further, the points at dispute have increasingly narrowed, and their debate centers on competing proclamations of their ability. Situations are often seen in the business world in which companies expand their battle for market share over minor differences.

In most of those cases, they have gradually become detached from the main issue of offering the higher value the market demands. New market entrants arise by creating an opening between the two. This sort of competition for share that creates no innovation has little meaning now in this great age of transformation from industrialization to digitization, and to globalization.

It is the same with politics. They have become detached from the needs of the people, and their struggle for authority is based on their self-interest. Politics have come to a dead end. Further, even if the LDP were to win a large victory in the next election, it will have been nothing more than an own goal brought about by their enemy’s blunders. They have not gained the support of the people, so their second collapse is clearly visible.

The reason for the very parties’ existence will be threatened unless they begin to address the people more directly, and make greater efforts to gain the sympathy and support of the people. These circumstances do not call for criticizing other parties, and enhancing one’s presence by repeatedly criticizing other parties is too short-sighted.

Nor are these the circumstances for existing political parties to play the game of political warfare within the party or the Diet, detached from the people. Speaking realistically, the existing political parties still have the forces to assume control of the government in national politics. I have a strong sense that if they have the spare time to criticize One Osaka, then we should more strongly present our requests to the existing parties.

(end translation)
*****
Some minor points:

1. Mr. Onishi specifically mentioned the problem of the “declining population” as one item on the bill left by the LDP. No political measures anywhere exist to halt or reverse a declining population. In fact, they’re usually counterproductive.

European style child allowances were one of the major policy initiatives of the Democratic Party government when it took power in 2009. Prime Minister Hatoyama justified it by citing the example of France, where subsidies are attributed to boosting the birth rate from 1.8 to about 1.9 (the last I looked). The French, however, offer many more benefits than the DPJ’s now rescinded straight cash payments, have higher income tax rates than Japan, and a VAT north of 19%.

The French also do not break down census information by religious affiliation, but some estimate that Muslims account for 40% of the population aged 20 or younger. Prof. Julien Damon of Sciences Po in Paris reports that approximately 20% of French births are accounted for by migrant families or those with one foreign-born parent. Foreign-born Muslims are likely to have more children than the ethnic French. Government benefits are irrelevant (unless it is a factor for Muslims with large families overseas moving to France to receive them.)

Pavel Kohout writes, in an article now behind a paywall:

“In 1927, Italian duce Benito Mussolini launched a program called Battle for Births. Mussolini believed that Italy had fewer people than it needed in order to play the part of a major world power. By the beginning of the 1920s, Italy had 37 million citizens. Il Duce set the number of 60 million by the year 1950 as national target. To achieve this target, Mussolini introduced generous benefits, especially for families with multiple children. Fathers of six or more paid no taxes at all. Of course, tax penalties for the unmarried were introduced, too. Abortions were outlawed, and contraception was hard to obtain. Later, career obstacles for unmarried men were officially introduced, mainly in government administration.

“The fascist government in Italy lasted long enough in peacetime that we may know its results. Exactly as economic theory would predict, the birthrate fell from 1927 to 1934. So did the number of marriages. Not surprisingly, the average age of marrying couples increased.”

And because this was a DPJ initiative, they couldn’t help tripping over their own diapers. In the first two months of the program, they paid about JPY one billion in public funds to foreign residents for 7,746 children living outside Japan. (It is an interesting bit of trivia that when New Komeito first proposed such payments in the Tokyo Metro District, the harshest opponents were the DPJ.)

All of this money was spent to boost a birth rate that fell below the 2.1 replacement level in 1957.

Of course the real problem lies elsewhere. Said Lord Sachs, the chief rabbi of the British Commonwealth:

“Parenthood involves massive sacrifice of money, attention, time and emotional energy…where today in European culture with its consumerism and instant gratification – because you’re worth it – where will you find space for the concept of sacrifice for the sake of generations not yet born?”

Then there’s the attitude of Barack Obama, who used his daughters as an example of his reason for supporting abortion:

“If they make a mistake, I don’t want them punished with a baby.”

The more likely explanation is the extension of the concept of survival of the fittest. Natural selection is weeding out the offspring of those people incapable of dealing with the modern world, in which today’s predators are psychological rather than saber-toothed tigers. How else to explain the phenomenon of the anti-lifers who think children are a “luxury good”, or who want to levy a carbon tax on people who have children? It’s natural contraception without the pill.

But I digress.

2. The Japanese deficit is not attributable to all of the LDP, as Mr. Onishi suggests. It was slightly over JPY 20 trillion when Mr. Koizumi took office. It hovered around that level for two or three years while his government dealt with the post-bubble problem of banks saddled with non-performing debt. It started to drop three years into his term, and fell to JPY seven trillion three years after that in the year of Abe-Fukuda. The deficit began to climb again under the anti-reformers Fukuda and Aso, especially after the global economic crisis of 2008, when Mr. Aso and the mudboaters saw an excuse to dish out the pork labeled as economic stimulus. Since 2009, the DPJ governments have set three new records with a debt explosion that is positively Obamanian. The Koizumi policies slashed it to less than one-third in six years. The rejection of those policies has resulted in annual deficit about twice what it was during his first year in the Kantei, or more than JPY 40 trillion.

UPDATE: The budget for FY 2012 was passed a few hours after I wrote the foregoing. The lower house approved it, and the upper house (where the ruling DPJ does not have a majority) rejected it, so it was enacted anyway in accordance with the Constitution. It came in at just a skoche more than JPY 90 trillion, which is the first DPJ budget to be lower than that of the previous year. It is also the lowest budget they have ever submitted, IIRC. However, that is only for the general account. The special accounts for the Tohoku recovery and pensions, which are also the responsibility of the national government, bring the total above JPY 96 trillion, the highest ever. This fact has been noted in all the news reports, so the Noda Cabinet will not get credit for “budget reduction”.

3. Mr. Onishi seems to offer a slight internal contradiction. He says that in another age, the required solutions for today’s problems would have resulted in warfare. If that’s the case, it’s difficult to see how joining hands with the people who created the problems will solve them.

4. He also thinks the Osaka Metro District concept is difficult to understand, but that seems to be a minority view. Most thought the arguments during last November’s election, pro and con, were easy to understand.

*****
I haven’t read the article yet, but the latest issue of the weekly Shukan Gendai (14 April, out yesterday) reports the results of their voter preference survey in the Kinki region. They say Hashimoto Toru’s One Osaka would sweep all the single-seat districts in a lower house election. It would be a historical rout for both the DPJ and the LDP. They also say both DPJ bigwig Maehara Seiji and LDP President Tanigaki Sadakazu would lose their elections (both are from Kyoto). That would not necessarily throw the bums out, however; with the odious proportional representation system, their parties would probably put them at the top of their respective PR lists.

Meanwhile, Yayama Taro has an article in the April issue of Voice about the phenomenon. The headline reads: The Hashimoto Whirlwind Will Not End as a “Diverson” (asobi, literally, play or pastime).

Here’s the first paragraph:

“One Osaka, led by Mayor Hashimoto Toru, has engulfed the political world in a whirlwind. Looking at the Tokyo editions of the major newspapers, it seems they treat the Hashimoto whirlwind as a local Osaka phenomenon. Pure and simple, this must be viewed as a major development that will lead to the reorganization of the central government. Having sensed that, I subscribed to the Osaka edition of the Sankei Shimbun.”

There’s a whole lotta shaking goin’ on.

He won’t have to read the Osaka editions if any bad news emerges. The Asahi Shimbun will be sure to cover that.

In any event, Mr. Hashimoto is also getting plenty of television coverage.

*****
The next posts in the Hashimoto series will examine his largest controversies/battles as governor and mayor in Osaka.

*****
What we need is some local funky diversity, and that’s what Cicala Mvta (pronounced “muta” in Japanese) offers. Any ethnic/folk/pop style of music that calls for a clarinet, leader Okuma Wataru plays.

Hashimoto Toru (3): Other policies, other views

**This is the third of a multi-part series on Osaka Mayor Hashimoto Toru and the phenomenon he represents. The first is here, and the second is here.**

Japan is now in a crisis state, so we have to put it all on the line to make a real change in the form of the country.
- Hashimoto Toru, 24 March

WHILE the centerpiece of Hashimoto Toru’s proposals for Japan is the radical devolution of authority to local government and to cut big national government down to size, his policy menu would be a wonk banquet if he were the sort of mobile mannequin-pol that appeals to most policy wonks. He insists that most of his proposals are starting points for discussion, and that politicians should enter at the end of the process, rather than the beginning. Finally — unlike 99.44% of the world’s politicians — he serves his banquet straight up, with neither the meat nor the words minced.

Earlier this year, Mr. Hashimoto drafted a statement of general principles and guidelines for his One Osaka movement that he titled Ishin Hassaku, or eight policies of renewal. It was a deliberate modification of the title of a similar document called Senchu Hassaku written by Sakamoto Ryoma, a samurai/activist in the final days of the Edo period. His “eight shipboard policies” became the basis for the later Meiji-period reforms. All Japanese of secondary school age and older understand the reference immediately.

He explained the reason for the document:

“Our work is to determine the course of Japan. We will develop a concrete philosophy for policy, politics, and government administration. The ones who don’t have that are the current political parties. Both the DPJ and the LDP are in a stupor.”

That last sentence is also immediately understood by all Japanese of secondary school age and older.

The mayor sometimes refers to it as the Great Reset. Now here’s his explanation of the basic principle:

“The argument of the Isshin Hassaku is simple. One Osaka will achieve, as the image of the nation for which we strive, a nation of individuals who behave independently, regions that behave independently, and a nation that behaves independently. To achieve that, it is indispensable to establish a democracy and a government mechanism capable of making decisions and accepting responsibility, and to promote the vitalization of the generation active today.”

The mention of decisiveness and responsibility refers to everyone in the legislative and executive branches of the national government in general, and the Democratic Party administration in particular.

The document’s eight sections cover such topics as the restructuring of governing institutions and reforming education. They include the direct election of the prime minister, the institution of the state/province system, the abolition of regional tax distribution, the abolition of education committees (i.e., boards of education), and the integration of pension, welfare, and unemployment programs.

To explain further, the Constitution requires that the prime minister be a sitting member of the Diet elected by the Diet members. That requirement has been abused by decades of passing the washtub, in the Japanese phrase, of the prime minister’s position among the members of the ruling party without voter input. The LDP started it, but the DPJ liked it just fine after they got a taste of their own. Putting it to a popular vote would require a Constitutional amendment, and the public might be up for that. All Japanese of secondary school age and older understand that the status quo is untenable.

In fact, his One Osaka ally, Osaka Prefecture Gov. Matsuo Ichiro, said earlier this week he thought anyone should be able to run for prime minister as long as they had 20 sitting MPs back their candidacy. That immediately generated speculation the intended beneficiary would be Mayor Hashimoto himself (though the process to enable his candidacy would take some time), but the idea has enough merit on its own to warrant serious discussion. What they’ve got now isn’t good enough, and the DPJ has shown everyone that it isn’t going to get better.

The young lawyer makes a television appearance.

The abolition of the regional tax distribution from the national government would mean giving greater authority to the sub-national governments to raise their own revenue. (Where I live the prefectural government now sells advertising on the autos for public sector use.) The abolition of the education committees refers to his effort to make local government executives the final authority for education, rather than professional educators. That issue will be presented in more detail in a later installment of this series.

When Mr. Hashimoto unveiled the Ishin Hassaku, he explained that it contained “guidelines for political thought” for the next lower house election, but that it wasn’t an election manifesto/party platform. “If we submit something like the DPJ manifesto,” he asserted, “it would be a failure.” The document intentionally contains no numerical targets, because it is supposed to be a rough guide for changing the system.

Such is the political discourse in our age that the media and his political opponents immediately called it a manifesto and criticized it for not being more specific in the way manifestoes are supposed to be. Among the newspapers, the Sankei has since dialed back on their language and now call it a “de facto manifesto”.

Former Prime Minister Hatoyama Yukio observed that Mr. Hashimoto had learned a lesson from the failure of the DPJ’s 2009 manifesto. Of course, we’d be here all week if we were to mention all the lessons everyone learned from the failures of the DPJ since 2009. The first would be not to take anything Hatoyama Yukio says seriously.

Mr. Hatoyama forgets that he wasn’t so anxious to call a manifesto a manifesto either in 2009. Just before the election that year, as party president, he rolled out the DPJ manifesto to great fanfare, with banners over the stage heralding the arrival of The Manifesto, a word that was printed in big red letters on the front cover. Then the governor of Osaka prefecture, Hashimoto Toru objected the document was not specific enough about the devolution of authority. Mr. Hashimoto was massively popular even then, so the DPJ rewrote it and resubmitted it a few days later. When the media quite rightly questioned the process, Mr. Hatoyama insisted that the first one wasn’t really a manifesto but a “collection of government policies” instead. (The story is here. I’d congratulate myself for my prescience about what a DPJ government would be like if it hadn’t been so bloody obvious.)

Other policies

We’ve seen before that he’s proposed a two-year national discussion on Article 9 of the Constitution, the inaptly named Peace Clause, followed by a referendum. He thinks it’s time for Article 9 to be history, and recently restated his position:

“Ceaseless efforts are required if you would maintain a tranquil life. The people themselves must do the work. The text (of the Constitution) has caused us to forget that completely.”

Wealth redistribution

In one of his famous daily Tweet-a-thons, the governor wrote:

“There’s the idea of the negative income tax. This is one item for consideration as a way to further develop Basic Income.”

University professor and commentator Ikeda Nobuo, who tends to hold the governor at arm’s length, was impressed. He wrote, “It is unprecedented for this (idea) to emerge in Japanese policy discussions.” Look closer and you’ll see that he’s discussing two social welfare schemes, one from the Right in Milton Friedman’s negative income tax idea, and one from the Left with the Basic Income idea, which Prof. Ikeda attributes to Andre Gorz and others. It’s also important to note that the governor says it is “an item for consideration”, if only because his critics charge him with dictatorial tendencies. Dictators are not usually guys who willingly say, “Let’s talk about it.”

Prof. Ikeda then offers a simple comparison of the basics.

The concept of negative income tax involves the positive taxation of income that exceeds the minimum taxable amount, and negative taxation, or providing some of the funds obtained to people with incomes below the minimum taxable amount.

If the minimum taxable income is set at JPY four million, for example, and the tax rate is 20%, the amount of income exceeding that benchmark would taxed at 20%. People with incomes below that amount would receive 20% of the difference between their actual income and the minimum taxable income. A person whose income is JPY two million would receive a benefit of JPY 400,000 as 20% of the JPY two million difference, giving him a total income of JPY 2.4 million. Based on the same calculation, people who earned nothing would receive JPY 800,000.

Prof. Ikeda goes on to say there are different approaches to Basic Income, and uses one of those approaches as an example. Assuming JPY 800,000 would be distributed to those with no income as the basic income, a person who earned JPY 2 million would have that amount taxed at 20%, resulting in JPY 1.6 million. To that amount would be added the Basic Income of JPY 800,000 to get JPY 2.4 million, or the same amount that person would receive under the negative income concept.

Regardless, he says, the idea is to eliminate conventional social welfare, which is one of Mr. Hashimoto’s key proposals. Prof. Ikeda holds that the current system is unfair because it distributes funds from young people of relatively modest means to older people who are financially better off. Since the issue is income rather than age, the idea is to eliminate public pensions, welfare payments, unemployment insurance, and long-term care insurance (nursing for the old and infirm) and integrate those schemes into either a Basic Income or negative income tax system. He also notes that it would eliminate the vast expenditures for the Ministry of Health, Labor, and Welfare.

Prof. Ikeda admits it would be difficult politically to eliminate the existing substantial benefits under the current system. He also says it would generate concerns of an infringement of property rights, because Japanese pensions are two-tiered and include both corporate payments and personal payments.

Maintaining the status quo, however, means that the current pension system will go bankrupt in 20 years, and enormous taxation would be required to offset a JPY 800 trillion yen shortfall.

That’s the reason the proposed increase of the consumption tax is such a contentious issue in Japan. The Finance Ministry estimates that expenditures for pension, healthcare, long-term care, and “demographic problems” will exceed JPY 40 trillion in 2015. The current 5% consumption tax produces about JPY 13 trillion in revenue, or about or 30% of the amount required for those expenditures. Raising it to 10% would result in JPY 27 trillion of revenue — says the Finance Ministry. Some people are even calling for an increase in the tax to 30% to make up the difference.

That explanation is what makes opponents so livid. The Finance Ministry ignores that a tax increase of that size will depress consumption, which will depress the economy, resulting in lower-than-projected revenues. That’s exactly what happened when the tax was raised from 3% to 5% during the Hashimoto Ryutaro administration. (To be accurate, the tax revenues that fell were those from the income tax and corporate taxes. Consumption tax revenue rose.) Current deflationary conditions would make the impact worse today.

The assumption that the status quo of the system should be maintained regardless of the impact on the finances of both the nation and the individual households also angers people. (This is what people mean when they say we’re witnessing the collapse of social democracy.)

So — Mr. Hashimoto jumps on the third rail of politics everywhere and insists that changes have to be made because the current system is untenable and the government/bureaucracy’s solution is unworkable. He then offers in a public forum possible solutions for the problem, one from the left and one from the right, neither of which is well known in Japan, and suggests that everyone mull them over.

Combine that with his communication skills and ability to win big in elections, and now you know why he scares the vested interests of the national political and bureaucratic class, as well everyone on the Left.

North Korea

Mr. Hashimoto spoke to a group of family members of North Korean abductees in early February. He told them:

“The national government must express its thinking more clearly. I have no idea what they want to do….Osaka Prefecture and the city of Osaka will not permit the abduction problem (to continue). I want to clearly express the view that we will have no relations whatsoever with the outlaw state of North Korea until they become a normal country.”

He also said he would tighten the government’s requirements on providing public (financial) assistance to schools in Japan operated by Chongryeon, the North Korean citizens’ association:

“All the local governments throughout the country can do that if they want. Why is it that the national government cannot issue this sort of directive?”

Energy

He serves the chair of a Kansai area federation of local government heads. At their last meeting, he suggested that the mayors of Osaka, Kyoto, and Kobe should use their cities’ stock holdings in Kansai Electric Power to create a new, non-nuclear energy strategy, though he didn’t offer specifics. The governor of Nara is generally opposed to Mr. Hashimoto’s schemes, so he does not participate in the group. That might explain why the group decided to back a proposed route through Kyoto instead of one through Nara for a maglev train line.

Governmental systems

One Osaka wants to create a system that allows the prime minister to leave when required to attend to business overseas. This week, the debate over the budget started in the Diet just as the leaders of the U.S., China, and South Korea were meeting to discuss ways to handle North Korea. Asks Mr. Hashimoto:

“What about Japan? As usual, the prime minister is chained to the Diet.”

While recognizing that Diet debate is one means of democracy, he suggests it is not an absolute that requires the prime minister’s constant presence. Just as a company president doesn’t have to do everything himself, he wrote, there are questions the prime minister doesn’t need to answer in person, and these should be delegated to his representatives. He tips his hat to Ozawa Ichiro by repeating the latter’s charge that out-of-control bureaucrats in the past appeared in the Diet and gave whatever answers they liked, but says it is the job of the leading “politicians’ group” (he didn’t call it a party) to control the bureaucrats’ answers.

As for what being chained in the Diet meant in practical terms on this occasion, here’s a report from Kyodo:

“With Pyongyang’s planned rocket launch looming over East Asia, Prime Minister Yoshihiko Noda had the perfect opportunity at this week’s global nuclear summit in Seoul to raise Japan’s presence in dealing with North Korea.

“But Noda missed out on the chance as he arrived in Seoul only on Monday evening, skipping a working dinner that officially kicked off the two-day Nuclear Security Summit, and barely engaged in substantive bilateral talks….

“The prime minister was instead preoccupied with his key domestic task — pushing the consumption tax hike on which he has said he is “staking my political career.”

“Prior to his trip to South Korea, Noda had been tied up with Diet deliberations on the tax hike, with his Cabinet aiming to approve the key bill Friday.”

Kyodo doesn’t tell us that Mr. Noda is preoccupied about a lot more than the tax increase. There is also the possibility that the issue will splinter his party and force either an immediate election or an alliance of the tax hikers in the DPJ with those in the opposition LDP.

Outside observers, in brief

The 5 February edition of the weekly Sunday Mainichi offered some observations of Hashimoto the politician from others in the same business who’ve seen him in action. Here’s one from a member of the Osaka City Council, who chose to remain anonymous.

“One thing he’s got going for him is that he didn’t make the blunder of dashing into national politics right away as soon as he achieved a little popularity. He’ll probably select candidates (for the lower house election) based on the circumstances of each election district and after probing the response of those around him. He’s a very solid strategist.”

A man identified only as a veteran LDP politician said he had exceptional skill at enhancing his presence:

“From the voters’ viewpoint he looks hot-blooded or emotional, but in fact he’s the opposite. He’s cool, settled, very objective, and makes shrewd calculations. He’s very shrewd at sizing up a situation and advancing or withdrawing accordingly…with all the attention on him now, he’s showing interest in national politics, and observing the course of events. Because he always views circumstances with a certain detachment, he can maintain his popularity and increase the level of opinion in his favor. He’s a politician that’s very much his own man, and that can’t be imitated.

“(Former Prime Minister) Koizumi had Iijima Isao to orchestrate his appearances and make sure he wasn’t overexposed, but Mr. Hashimoto seems to have been born with that knack. He might even be better at it than Koizumi.”

The author of the Sunday Mainichi article suggested that his strategy is to hold off on running himself in the next lower house election — he’s 42, so he has plenty of time — but instead place some of his people in the Diet to establish a foothold and form alliances with like-minded people, such as those in Your Party or any other new regional party members that might get elected.

When asked about the possibility of an alliance between One Osaka and the opposition Liberal Democratic Party, LDP Secretary-General Ishihara Nobuteru quite logically observed:

“Mr. Hashimoto is winning acclaim because he’s anti-existing political parties. It would be a difficult decision for them to ally with the LDP, an existing political party.”

Incidentally, Mr. Ishihara supported the creation of an Osaka Metro District during the November election in Osaka.

To every action there is always an equal and opposite reaction

That someone as outspoken, specific, and fearless as Mr. Hashimoto will attract critics and enemies is as immutable a principle as Newton’s Third Law. Here’s a brief look at a few:

Sengoku Yoshito, former Chief Cabinet Secretary in Kan Naoto’s first Cabinet, speaking of the Osaka Metro concept:

“The core body of self-government is the basic government of municipalities. The prefecture should leave things up to the city. I wonder how well (his idea) would work.”

Works in Tokyo, doesn’t it? Mr. Sengoku is presenting the DPJ’s vision of decentralization — doing away with prefectures and organizing everything around 300 fiefdom/cities. It makes more sense when you know that Mr. Sengoku (like Kan Naoto) doesn’t believe in nation-states, but rather a worldwide network of communities in a New World Order guided by such bureaucratic globutrons as the UN and the EU.

Anyone could have guessed that Social Democratic Party head Fukushima Mizuho, the vile body of Japanese politics who’s always up to some black mischief, wouldn’t like Mr. Hashimoto:

“A policy of bringing the principle of competition into education and discarding (teachers) is very dangerous…As for the Osaka Metro concept, I have no idea what they’re talking about with many of the points. I’m going to watch this carefully.”

She knows exactly what he’s talking about. She has to monitor Mr. Hashimoto because he’s orbiting on the other side of the galaxy from social democrats.

Ms. Fukushima used the same I-don’t-know-what-he’s-talking-about line for Abe Shinzo’s vision of a Beautiful Japan, even though he wrote a book about it. She knew what that was all about too. She just finds distasteful the idea that her native country in particular, or any nation-state in general, is beautiful.

Indeed, most commentators pro and con agreed that during the Osaka election, the arguments made for the Osaka Metro plan and those of its opponents were clearly stated and easy to understand.

But here’s my favorite — you can almost see the spit fly. It’s from Ichida Tadayoshi of the Communist Party. A reporter pointed out to Mr. Ichida that some of the One Osaka policies, such as those for nuclear energy, the tax system (i.e., consumption tax) and social welfare were similar to those of Japan’s Reds. He didn’t like that:

“There is absolutely no match at all. Even though in some places it looks like some of the letters in the words are the same, there is no value in critiquing the policies of a person who would trample on the freedom of thought and conscience guaranteed in the Constitution.”

Isn’t it entertaining to watch a Marxian fulminate over freedom of thought?

Meanwhile, over in Japan’s English-language press, the boys and girls who play newspaper at the Japan Times made a bad Kyodo article worse by trying to convince readers that Kansai political leaders don’t like the Hashimoto plan to reorganize the prefecture/city. Here’s the first paragraph.

“Osaka Mayor-elect Toru Hashimoto’s administrative reform plan has only limited support so far among prominent local leaders, with just six openly backing his proposed bureaucratic shakeup, a survey has found.”

That story falls apart as soon as they fill in the details.

“The survey polled the mayors of Japan’s 18 officially designated major cities, and the governors of the 13 prefectures that host them, excluding Osaka Prefecture and the city of Osaka.”

Here are the results:

In favor: Four governors (Niigata, Aichi, Kyoto, and Hyogo) and two mayors (Niigata and Nagoya). There’s a similar reorganization proposal being discussed in Niigata, by the way.

Opposed: One governor and three mayors, all unidentified, perhaps to protect them from constituents.

Neutral: 21

So the total is 6-4 in favor and 21 sitting on the fence with their fingers in the wind. Now here’s the headline the Japan Times ran:

Few leaders back Hashimoto’s plan

And you just know the kids are congratulating themselves on their cleverness.

Finally, try the Japanese Wikipedia page on Mr. Hashimoto for the portrait photo. Thousands of photographs have been taken of Mr. Hashimoto since he was elected governor of Osaka five years ago, but this is the one someone thought was representative. Now we know that Wikipediatric immaturity is an international phenomenon.

Coming next: There isn’t room here to describe the policy positions that most upset his enemies, so that will come later in the series. The next installment will present his use of Twitter as a weapon. In the process, the reason he generates such strong opinions will get a lot clearer.

Afterwords:

I make it a matter of principle to forget about links to the Japan Times in the same way it’s a matter of principle not to pay to see an Oliver Stone movie (much less watch one). I made an exception for the Kyodo article about Prime Minister Noda because it is so delicious when the denizens of La Tour D’Ivoire unwittingly reveal their overeducated vacuity. Here’s the end of the article:

“As things stand, political observers already see Japan as having little influence over North Korea, unlike China and the United States.

“Japan is a peripheral player with no significant leverage over Pyongyang” despite its strong interests in changing North Korea’s hostile policy, said Denny Roy, senior fellow of the East-West Center in Honolulu.

“According to Roy, who focuses on Asia-Pacific security issues, “Japan is trapped into a noninfluential role unless it gives up its tough position on the abductee issue.”

“Yoshihide Soeya, director of the Institute of East Asian Studies at Keio University, said Japan’s North Korean policies are being held “hostage” by domestic sentiment over the abductions, which has compelled the government to take a hardline stance.”

It isn’t often we see such a short, concentrated burst of willful ignorance from oblivious, self-important people. And then there’s the stupid — there is no other word — attempt of Mr. Soeya to be clever by describing Japanese policy as held hostage because the Japanese public is outraged their citizens were (and might still be) held hostage by an outlaw state.

North Korean agents conducted black ops in Japan by kidnapping innocent civilians — including a mother and her young adult daughter, two young lovers on a moonlit stroll, and a 13-year-old girl on her way home from school — removing them to the Prison Nation, and forcing them to teach the Japanese language and culture to their agents whose assignment was destabilizing Japan.

How unfortunate for Japan that “domestic sentiment” (i.e., they’re so angry they could spit) is tying the hands of the Japanese politicos, when they could be do-goodering for the international community, such as sending food to feed the North Korean army, or money to feed the lifestyles of Pyeongyang’s rich and nefarious.

Denny Roy might ask some of the people on the street outside his Honolulu office what they would think had Cubans done the same to Americans, and never fully ‘fessed up — and even offered fraudulent birth certificates for premature deaths.

Has he read this article, or would he care if he did?

“His first memory is an execution. He walked with his mother to a wheat field, where guards had rounded up several thousand prisoners. The boy crawled between legs to the front row, where he saw guards tying a man to a wooden pole.

“Shin In Geun was four years old, too young to understand the speech that came before that killing. At dozens of executions in years to come, he would listen to a guard telling the crowd that the prisoner about to die had been offered “redemption” through hard labour, but had rejected the generosity of the North Korean government.

“Guards stuffed pebbles into the prisoner’s mouth, covered his head with a hood and shot him. In Camp 14, a prison for the political enemies of North Korea, assemblies of more than two inmates were forbidden, except for executions. Everyone had to attend them.

“The South Korean government estimates there are about 154,000 prisoners in North Korea’s labour camps, while the US state department puts the number as high as 200,000. The biggest is 31 miles long and 25 miles wide, an area larger than the city of Los Angeles.

People are meeting in South Korea because everyone is concerned of an imminent North Korean missile launch. But just last month:

“A U.S. delegation has just returned from Beijing following a third exploratory round of U.S.-DPRK bilateral talks. To improve the atmosphere for dialogue and demonstrate its commitment to denuclearization, the DPRK has agreed to implement a moratorium on long-range missile launches.”

Denny Roy says Japan is “a peripheral player with no significant leverage”.

So, as a missile is being gassed up a month after a deal not to launch one, might we ask just who does have significant leverage? (The Chinese probably do, but they’d rather be part of the problem than be part of the solution.)

And why be a player in a pointless game?

Hashimoto Toru (2): The company he keeps

**This is the second of a multi-part series on Osaka Mayor Hashimoto Toru and the phenomenon he represents. The first is here.**

SOME people in Japan were suspicious: Was Osaka Mayor Hashimoto Toru just blustering with his declaration of intent to capture the Bastille of Japanese politics at Nagata-cho and implement his revolution from the inside out? That concern is now a very unlikely scenario — to prepare potential candidates for a lower house election, which rumor has it could come as early as June, he opened and begun operating on Sunday a political juku to prep potential candidates running either under the banner of One Osaka, his local party, or as allied forces. Backing down now would seriously wipe out the credibility of a man who’s riding The Big Wave.

Nagata-cho, here we come. Hashimoto Toru announces that One Osaka intends to field candidates in the next lower house election.

The word juku is often mistranslated as “cram school” in English, inspired by those exemplary Western educators who think Japanese children study too much. (Kumon is one of those jukus, and its system was adopted some years ago in a few of the lower southern states in the U.S. as a way to help laggard students.) This, however, is a juku in the original sense of the term — a private facility for the instruction of one’s “disciples”.

Mr. Hashimoto announced his intention to eventually accept 400 students for intensive training, of which 300 will become candidates, and of which he hopes 200 will win election. That’s a bit short of a lower house majority, but with even half that number, nothing happens in the Diet without him. That’s also before the totals of Your Party and other regional parties are factored in.

An article in the 10 February weekly Shukan Asahi (Hashimoto opponents) presented the argument that it won’t be possible for One Osaka to field 300 candidates. They quote one veteran pol as saying that it costs about JPY six million for a campaign, either for a single-district seat or a proportional representation seat, and the party doesn’t have the national organization, money, or bed of existing votes to pull it off. He thinks that even 200 is a pipe dream.

Someone the magazine claims is close to One Osaka is quoted as saying that even Mr. Hashimoto knows its an impossibility to run that many candidates, but he’s using that as a ploy to get the national government to approve his Osaka Metro District plan.

An anonymous source affiliated with New Komeito in the Osaka area suggests that many of his local supporters are ready to back him in local elections, but because they are affiliated with other parties, they will revert to their former allegiances in a national election.

Elsewhere, LDP Secretary-General Ishihara Nobuteru declared, “They can’t take 100 seats. 30-40 is the reality.”

The magazine appeared on newsstands at beginning of February. Since then, he received 3,326 applications for admission to his school, and after a review of their essays, 2,262 students were accepted. The 400 selected for more intensive study will come from that group.

Some of the applicants were said to be sitting Diet members of the ruling Democratic Party of Japan. Now who can blame them? They didn’t learn anything about politics, the popular will, and keeping promises where they are now.

The funding for elections might be a problem because One Osaka is not a national political party with a minimum of five Diet seats. Therefore, it receives no public subsidies, and candidates will have to pay their own way. They’re already paying JPY 120,000 for the tuition to meet five times between now and June, when the winnowing takes place.

If you can tell a person by the company he keeps, Mr. Hashimoto is clearly a respectable but radical reformer. Several of the teachers already work with Your Party and have often been mentioned on this site. (In fact, there are tags for most.) Here’s a list:

Sakaiya Taiichi: Former head of Economic Planning Agency, non-fiction/fiction writer, chief Hashimoto advisor, professor emeritus at the juku

Nakata Hiroshi: Former lower house member and Yokohama mayor, member of the Spirit of Japan Party

Okamoto Yukio: Former diplomat, now foreign affairs commentator and independent businessman, former aide to Prime Minister Koizumi, has served on board of several companies, including Asahi Beer, and served as Mitsubishi auditor

Koga Shigeaki: Former Ministry of Economy, Trade, and Industry official, author of three books, and the man who became the symbol of the national victimhood when the DPJ betrayed its promises to get the bureaucracy under control.

Hara Eiji: Another METI vet and bureaucracy-bashing author

Takahashi Yoichi: Former Finance Ministry official, devised the original plan for Japan Post privatization under Takenaka Heizo’s supervision, now a commentator, advisor to Your Party, and university professor.

Yamanaka Toshiyuki: Former diplomat, now works in human resource training

Suzuki Wataru: Economics professor

Kitaoku Nobuichi: Professor specializing in foreign affairs and diplomatic history, former personal advisor to Prime Minister Koizumi.

The belle of the ball

Winning big is the best way for a politician to win friends, influence people, and become a supersized enchilada himself, and that’s just what Mr. Hashimoto does. Since his initial success as Osaka governor, many politicians flocked to the political alpha male in the hope some of his shine would reflect off them. Three years ago Masuzoe Yoichi, then the Health Minister in the terminal LDP governments and viewed by some as the last great hope for the LDP reformers, tried to coax the governor into an alliance. Some viewed him as an ineffective political organizer/operator, which subsequent events have borne out. Mr. Hashimoto seems to have understood that right away, and deflected his interest.

He’s also attracted the attention and approval of Tokyo Metro Gov. Ishihara Shintaro, who’s defended him against charges of dictator tendencies:

“People call him a dictator, so perhaps everyone’s a little daunted by him. But that’s just arbitrary. Unless a person with the power of ideas directs affairs from the top down, nothing gets done. It’s the same way here (in Tokyo).”

Mr. Ishihara’s only beef seems to be that the Osaka Metro District plan calls for the creation of an “Osaka-to” in Japanese. That’s a throwback to the Tokyo governor’s emergence into the public eye more than 50 years ago as a literary sensation writing best-selling fiction and non-fiction. (He was also a Vietnam war correspondent on special assignment.) He objects to the use of “to” (都), which he insists should be applied only to national capitals. (He has a point; one meaning of the Japanese reading of the word is “seat of government”. Then again, Osakans have always had a big idea of themselves.)

While Mr. Hashimoto welcomes the attention and is respectful of his elders, he’s also done a good job of deflecting the talk of an alliance with the Tokyo governor. Mr. Ishihara is discussing the formation of a new political party with Kamei Shizuka, an anti-Japan Post privatization non-reformer and paleo-conservative in the Japanese sense, whose party is still officially a junior coalition partner with the DPJ government. Mr. Hashimoto politely gave them the stiff-arm:

“There has to be a certain agreement on policies, such as opposition to tax increases and devolution from central authority.”

Mr. Kamei is not interested in the second of those policies mentioned. He’s part of the problem, not part of the solution.

The Osaka mayor has also developed a close professional relationship with Nakata Hiroshi and Yamada Hiroshi of the Spirit of Japan Party (more here). Both were appointed special advisors to the city after Mr. Hashimoto’s election, and Mr. Nakata is teaching at the juku. Asada Hitoshi, the chairman of the Osaka Prefectural Assembly and the policy chairman for One Osaka, attended a banquet for the Spirit of Japan Party in Osaka. Mr. Asada thanked them for their help in creating the Ishin Hassaku, or One Osaka’s policy framework, and added, “We share a sense of values.” Replied Mr. Yamada:

“We have great hopes for what’s happening in Osaka…We hope to be able to create a third political center by gathering people who share their view of the state and history.”

Former LDP Secretary-General Nakagawa Hidenao, the most prominent of the Koizumians left standing in the party, invited Mr. Hashimoto to Tokyo to participate in a study group and offer his opinions on devolution. Said the mayor:

“The people think that nothing will happen unless the Kasumigaseki social system is changed.”

But he was preaching to the converted. Several younger and mid-tier LDP members are attracted to the mayor’s movement, and there are also rumors of more private contacts with LDP member Kono Taro. The son of a former prominent LDP pol himself, Mr. Kono claims to be an advocate of small government, but sometimes skates onto very thin ice. (He thinks international financial transactions should be taxed and the funds given to multinational public sector do-gooders. He still hasn’t figured out that the global warming bologna was a scam.)

Another LDP member in the Hashimoto corner is former Prime Minister Abe Shinzo. Mr. Abe recently spoke at an Osaka symposium for a private sector group called the Organization for Reviving Japanese Education. Attending was new Osaka Gov. Matsui Ichiro, Mr. Hashimoto’s partner in One Osaka. Their common objective is to reshape the current educational system, and at a post-conference meeting with reporters, the governor said they were on the same page. Mr. Matsui also said that the schools’ opposition to the amendments of the Basic Education Law passed during the Abe administration means that the popular will is not reflected in the school curriculum.

The most important of Hashimoto’s allies, however, is the reform Your Party. (Reports of their activities often grace these pages.) Party head Watanabe Yoshimi was interested in joining forces when Mr. Hashimoto arose as a political figure (a year or two before Your Party was formed), but was said to have been restrained by his party co-founder and Secretary-General, Eda Kenji, due to concerns that the Osaka mayor was a loose cannon. If that was true, the leash is now off. Said Mr. Watanabe:

“We must work to ensure as a party that this movement (One Osaka) spreads nationwide.”

He says the policies of One Osaka and Your Party are nearly the same, and adds that they have plans to form a joint policy study group and a political alliance nationwide. Those policies include the reorganization of local governments into a state/province system, the creation of an Osaka Metro District, and the idea that the new sub-national units receive all the consumption tax revenue. Mr. Watanabe has created a catchphrase to crystallize the ideas of his party’s policies, which is “giving the ‘three gen’” to local governments. Gen is the final syllable of the words kengen (authority), zaigen (revenue sources) and ningen (people).

L-R: Gov. Matsui, Mayor Hashimoto, Mr. Watanabe, Gov. Omura. The shape of things to come?

Further, Your Party executives as well as others in the party responsible for the candidacies in single-seat districts will study at the One Osaka political juku with the party leadership’s blessing. That includes about 20-30 people from Osaka, Kyoto, and Hyogo. Your Party plans to run 100 candidates in the next lower house election, and they’ve settled on about 70 so far.

The Shukan Asahi also quoted a Your Party source as saying that Mr. Watanabe and Mr. Hashimoto have reached a private understanding that the former would be “the first prime minister”. They suggest that Mr. Watanabe thinks control of the Diet is in their aggregate grasp.

The Osaka mayor is also an official international phenomenon — he’s attracted the attention of South Koreans. That’s only natural: national elections will be held in that country in April and December this year. KBS-TV sent a crew to hop over to Osaka for interviews. Commenting on the Korean interest, the mayor said:

“I look forward to the emergence in South Korea of new politicians who aren’t beholden to vested interests.”

Asked by a Korean reporter about his political juku, he answered:

“We must create politicians who aren’t under the thumb of vested interests. If South Korea can get excited about the same thing, I’d like to see Japan and South Korea move in same direction.”

The Japanese media spoke to one of the KBS reporters after the interview, and he told them:

“There’s quite a lot of reporting on Hashimoto in South Korea. After actually meeting him, I sensed his strong intent for reform.”

Critical to the success of any politician is his capacity to appeal to people who don’t agree with all his positions, but are on board for the most important of them — in this case, governmental reform. For example, Mr. Hashimoto supports amending the Constitution to permit the Japanese to maintain military forces for self-defense. Chiba Mayor Kumagai Toshihito also supports amending the Constitution, but for the opposite reason — he wants to prevent Japan from becoming involved in any conflict. Nevertheless, he said:

“The structure of the local governments where we live is an important issue, but one that has not attracted much interest. That it became the primary issue contested in the Osaka election is epochal…We of the “government ordinance cities” (cities with authority similar to that of prefectures) strongly seek the transfer of authority from the prefectures. I don’t agree with all of the opinions in Mr. Hashimoto’s Osaka Metro District concept, but our intent to change Japan from the regions is the same.”

Local party time!

Hashimoto Toru is the most visible manifestation of the ferment of regional politics in Japan, but he is by no means alone. This time last year, all eyes were on the newly elected mayor of Nagoya, Kawamura Takashi, and the governor of Aichi Prefecture, Omura Hideaki. Their victory in a February 2011 triple election might have been more impressive than the Osaka result because the Kawamura — Omura alliance is between men originally of different parties. Also, their tax-cutting, small-government message was accepted by people in a region that has been a stronghold for the tax-raising, big government DPJ. (This is the national headquarters of Toyota, and there are plenty of labor unions.)

Mr. Hashimoto actively lent his support to the two men and their respective regional parties last year, and members of One Osaka came to help campaign. (It should not be overlooked that this revolution is occurring in Osaka and Nagoya, Japan’s second- and third-largest cities.) It’s expected that the three men will form an alliance for a national election, and while that will probably happen, there are some differences in viewpoints between them.

For example, Kawamura Takashi’s party is called Genzei Nippon, or Tax Reduction Japan. He favors sharp cuts in taxes (which he has partially achieved in his first year in office). Though Mr. Hashimoto has criticized the Noda Cabinet’s plan to raise the consumption tax, and he is allied with the anti-tax increase Your Party, he has also criticized the Kawamura approach. That criticism provides a fascinating glimpse of his philosophy:

“The awareness I would like to see is not transferring work or duties from city hall to the ward offices, but transferring decision-making authority from the mayor to the heads of the ward offices. The ultimate objective is, ‘We don’t need a mayor’.”

He’s also said that he would be cool to a formal alliance with them unless Mr. Kawamura makes some adjustments, including his campaign for tax cuts:

“At the current stage, let’s stop talking about tax increases, or reducing taxes, or opposing tax increases. It is nonsense in our present state for politicians to be expressing an opinion about either tax increases or cuts. If society as a whole is going to create a system of mutual support, it’s natural for the members of society to assume the liability for an appropriate share. First, we should identify what sort of social system we want to create. Whether or not the residential tax should be cut is a minor matter that should be discussed at the end of the process.”

Mr. Hashimoto has presented this view on several occasions. If he’s serious, that would represent a drastic departure from the political status quo anywhere, much less Japan. He’s talking about bottom up government with the political class last.

The Aichi governor and Nagoya mayor have a plan for the administrative reorganization of their own area, which they call Chukyo-to. (Ishihara Shintaro won’t like that to either.) While they’re working on common ground, Mr. Hashimoto believes they need to do some more thinking about the concept, and he has the sense that they aren’t clear on exactly what they want to accomplish. Representatives from Aichi and Nagoya have had meetings on the Chukyo concept, but they have yet to present a plan for changing the current form of the administrative bodies, such as breaking up Nagoya (The Osaka plan calls for eliminating the administrative entity that is the city of Osaka and creating self-governing wards in the region.)

Mr. Kawamura says, however, that he spoke to Mr. Hashimoto by phone and explained that their plan calls for the merger of Aichi and Nagoya, but that the framework will take into account regional considerations. That will include maintaining the form of a city of Nagoya. Nevertheless, he wants to maintain their alliance.

Complicating this somewhat is that Your Party’s Watanabe Yoshimi has his own plan for the region, which would eliminate Nagoya and its current 16 wards and create seven new regional districts. Each of these special districts would have a chief municipal officer and a legislature. As with the Osaka Metro District concept, the idea behind the Watanabe plan is to eliminate redundant government systems. It would reduce the number of city workers by 20% and save JPY 50 billion. Mr. Kawamura thinks the people of Nagoya would not support it, and Mr. Omura thinks the Watanabe plan lacks specifics.

Meanwhile, both men have decided to establish a political juku of their own. The first was Mr. Omura, who announced his at the end of January:

“I want the three major metropolitan areas of Tokyo, Aichi, and Osaka to form an alliance and change Japan.”

His idea is to present candidates for the four Tokai prefectures of Shizuoka, Aichi, Gifu and Mie. Mr. Omura announced yesterday that he had received 751 applications, and after reviewing their documents, 678 have been accepted. About 80% are from Aichi, and include company employees, national and local civil servants, and local government council members. One of the speakers will be Takenaka Heizo, the Koizumi privatization guru, and another will be one of the elder statesmen of Japanese journalists, Tahara Soichiro.

Oddly, Mayor Kawamura didn’t like the idea at first. He told reporters, “I cannot agree with how they’re going about it.” That didn’t change his relationship with the Aichi governor, however. He still supports the Chukyo-to concept, and said, “There is no change in our friendship.”

But Mr. Kawamura suddenly changed his mind — you know what they say about imitation and flattery — and plans to set up his own political science class to start next month. His reasons:

“I want to communicate my thinking to the next generation. It is also for the next lower house election.”

The curriculum at his school will focus on taxes and national defense issues, and he will ask Hashimoto Toru and Omura Hideaki to send over some teachers. He expects to run Genzei Nippon candidates in the next lower house election in the five lower house districts in Nagoya.

He’s sticking to his tax cutting pledge, too. Despite Mr. Hashimoto’s criticism, it’s easy to like his approach.

“To improve the people’s lives, we must not raise taxes. Rather than tax revenue, we must raise (the people’s) income…the revenue source for tax reduction is governmental reform.”

It’s not often mentioned in the media, but Mr. Kawamura would have special committees established in each district of the city to have the residents determine how they would spend the tax revenue in their area. While taxes would be cut, it would give — you got it — power to the people to decide how they want to spend the money.

Now this is the kind of debate I can get behind. One man is opposed to immediate tax increases absent reform and says let the people decide what they want first, while the other man says the issue is raising income rather than taxes and tax reduction should be achieved by cutting government.

That’s my idea of win-win.

Coming next: An overview of other Hashimoto policies and a first look at his critics. Here’s a taste — He’s backing an idea proposed by the man being interviewed.

White collar hit men

ONE reason people overseas fail to see the reasons for the dysfunction of Japan’s political system at the national level is the difficulty in comprehending the strength and influence of the bureaucracy, which considers itself to be permanent ruling class. Here are two views on one aspect of that problem. The first is by journalist Suda Shin’ichiro, which appeared in the 18 January edition of the biweekly Sapio.

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It’s well known that the Finance Ministry officials responsible for dealing with the mass media are sent to deliver individual briefings (“lectures”) to opinion leaders with a certain amount of influence in forming public opinion, such as television commentators. The objective of these briefings is to convince them of the necessity for raising the consumption tax.

This has become more evident of late. As a producer with an important Tokyo-based network says:

They haven’t tired of developing a pro-tax increase group, and they’ve begun to pressure television producers to prevent them from using commentators who are critical of tax increases.

To be specific, the name at the head of the list they’re told not to use is Koga Shigeaki, former Ministry of Economy, Trade, and Industry official. The producer continues:

Mr. Koga is their sworn enemy. Politicians with the support of the Finance Ministry are making it a condition for their television appearances that Mr. Koga not be invited.

The Finance Ministry seems to be in something of a rush. To pacify the Democratic Party Diet members, they’ve fastened on the idea of vote differentials. Explains one mid-level DPJ MP:

Prime Minister Noda said he will take the issue of the tax increase to the public after the legislation passes, but before it goes into effect. Some party members who favor tax increases have begun to argue it’s not possible to dissolve the Diet and hold a general election unless the unconstitutional condition (differences in voter weight in election districts across the country), frequently cited by the Supreme Court, is resolved.

They’re calculating that public opinion will simmer down and they won’t be at such a disadvantage if they can use this situation to put off the election as long as possible. The Finance Ministry is likely encouraging them in this belief.

It doesn’t seem possible that buying time will get the electorate to swallow the tax increase and settle down. But even if the DPJ, which has fallen for the con, loses the next election, it would present no problem at all for the ministry. The Liberal Democratic Party is also calling for a 10% tax increase.

(End translation)

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Furthering the discussion on his blog is Your Party Secretary-General, Eda Kenji:

I’ve raised in the Diet the question of what Katayama Yoshihiro, former Minister of Internal Affairs and Communications, calls the Finance Ministry’s “mind control”. Their assault in waves is something out of the ordinary. I got a real sense for the terror of it when I was involved with Finance Ministry reform during the Hashimoto administration.

Even then there was talk about Finance Ministry efforts to prevent television appearances by people such as Koga Shigeaki. But operations on that level are not so surprising. That’s child’s play for the Finance Ministry bureaucrats.

It’s often remarked that the trio of Finance Minister Azumi, Vice-Minister Katsu, and Deputy Vice-Minister Kagawa are on a “tax increase pilgrimage”. They’re making their explanatory pilgrimages to opinion leaders in many circles, including key people in the financial industry, academia, and mass media, in addition to politicians in the ruling and opposition parties. They pay particular attention to people asked to give commentary on television or in newspapers.

In a sense, it’s natural for the Finance Ministry to promote tax increases. One would have to question the insight of the so-called analysts who would fall for that sort of persuasion. They haven’t approached me, a dyed-in-the-wool member of the anti-tax increase faction, at all.

The problem is that their efforts go beyond that level. In my case, the Finance Ministry sent people out on pilgrimages to attack and slander me. Those bureaucrats even had a manual. Their stories of course filtered into the mass media, which thrives on such rumors.

If a person is going to assertively promote reform against the wishes of the Finance Ministry, they must be prepared for those attacks and stay clean.

(End translation)

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After all that, it’s time for a palate cleanser and a burst of sunshine on a winter’s day from the original Nenez.

What goes around

Bullets are flying from all directions. Recently they’ve been coming from behind, from my allies.
- Prime Minister Noda Yoshihiko

THE Japanese prime minister announces that he wants Japan to participate in the Trans-Pacific Partnership free trade agreement to “open the country”. A large group in his party immediately declares their opposition. The prime minister also insists on a consumption tax increase as part of a “fiscal reform” program to tie consumption tax receipts to social welfare expenses. A larger segment of his party declares their opposition, remembering how the mere mention of discussing a consumption tax increase turned a potential upper house election victory to defeat in 2010. The legit opposition parties refuse to discuss the bills for the upcoming fiscal year budget if they are premised on a consumption tax increase. The poll numbers for the unpopular prime minister are dropping, and the opposition sees a chance to force an election.

The prime minister has half a mind to do just that, and hints he’ll dissolve the Diet. He knows an election will inflict one of the largest electoral slaughters in Japanese history on his party, but a commanding officer has to ignore his emotions to send his troops into battle. His strategy is based on the belief that the Liberal Democratic Party, the primary opposition, won’t win enough seats to form a government without his party’s help. Even if his party loses and he is ousted as prime minister, he will die a happy man because history will remember him as the man who did what had to be done.

No, that’s not a rehash of the news from the past two weeks, but the summary of the lead article that appeared in the 10 February 2011 edition of the weekly Shukan Bunshun. The prime minister was not Noda Yoshihiko, but Kan Naoto.

Yet today circumstances are much the same; only the date is different. Last year, New Komeito head Yamaguchi Natsuo’s opposition to budget negotiations was the factor pushing Mr. Kan into thoughts of an election. He had hoped to convert New Komeito into an ally, if not coalition partner. Mr. Yamaguchi is said to be sympathetic to the DPJ, but the women’s group in the party, a critical element of their election campaigns, actively disliked Kan Naoto.

Prime Minister Kan was also obsessed with his place in history. (He wanted a large bust of himself placed in the prime ministerial pantheon, but all anyone has to do to see one of the largest busts in Japanese history is to look at his photograph. Funny how it works out that way.) Mr. Noda, in contrast, does not seem to share that obsession. Other than that, everyone’s back where they were last winter, just before the Tohoku earthquake.

If our political leaders were accountable the way business leaders are for keeping the books straight, they would all be in jail.
- Phillip K. Howard

When last we saw Noda Yoshihiko, he was promoting Japanese participation in the TPP talks and the doubling — at a minimum — of the consumption tax rate. A large group in his party immediately declared their opposition to both ideas, many of them reprising last winter’s discontent. Former party president and secretary-general Ozawa Ichiro is the most closely watched of those opponents. Though Mr. Ozawa has lost some of his political heft, shown by his failure to unseat Kan Naoto in a party election and in a no-confidence motion in the lower house, he retains the loyalty of many party members.

Late last month, Mr. Ozawa said he opposed the tax increase. The party, he maintained, should first emphasize the reduction of unnecessary expenses and government reform.

Former Chief Cabinet Secretary Sengoku Yoshito, and now one of the party leaders, said, Bah, Humbug! on national TV:

No matter how many reforms we carry out now, we’d still get only about two or three trillion yen.

That’s one of the leaders of a party that two years ago claimed during their successful election campaign they could conjure up JPY 16.8 trillion through reform and budget revisions alone. Mr. Sengoku used on Mr. Ozawa the charge that others used on the DPJ: all that hooey was just political pie in the sky fed to the voters:

It’s (his) experience that simplification and sloganeering wins elections.

During the same broadcast, he also suggested the country would fall apart in five years unless the consumption tax was raised to 15%. Such are the threats of those for whom a reduction in the size of government would be a denial of their life’s work.

For now, the Noda government chose the moderate, prudent, let’s-not-scare-anybody approach by adopting a plan to increase the consumption tax to 10% in 2014, while promising to attach a clause to the tax bills stating that the government is preparing for “the next reform”. Translation: We’re planning to raise the tax still further to 15% or 20%. For some reason, the media falls for the Newspeak that higher taxes = “reforms”.

They’re not likely to stop there, either. Takenaka Heizo, former Prime Minister Koizumi’s privatization guru and man of many Cabinet portfolios, thinks they’ll have to up the bidding to 25% or higher.

And not a bit of this will do any good. From university professor/author/blogger Ikeda Nobuo:

The government has finally settled on a draft of legislation to combine the tax systems and social security, and increase the consumption tax to 10% by October 2015. There was strong opposition within the party, and the plan was finally approved after a lot of slapstick, including a kerfuffle about members bolting the party. Can this result in the reconstruction of the nation’s finances?

The answer is no. The reform to unify taxes and social security is expected to increase income by 13.5 trillion yen, while simultaneously increasing social security expenditures by 15 trillion yen. Thus the budget deficit will only increase. Taking so much trouble to create this reform that isn’t a reform means it is just a matter of time before the financial debacle occurs.

Speaking of slapstick, the Finance Ministry floated a plan on the 26th last month to return a portion of the consumption tax increase on food to those who make JPY 5.5 million or less a year. They project a revenue increase of JPY 13.5 trillion from the tax increase, less JPY one trillion for the refunds.

Now for the punch lines: The ministry made no distinctions for a person’s marital status or number of children, which means 60% of the nation’s households qualify for rebates. After realizing they resembled the kid in the joke who smacks the ice cream cone into his forehead, they announced they were rethinking the problem to lower the income level of those eligible and insert family size into the equation.

They still refused to consider exemptions in the tax increase for food items of the type applied in other countries. Nope, that just won’t do. The people have to understand they’re entitled to receiving payments of other people’s money from the government. How else can they make the country safe for social democracy?

Government spending does not ‘spur growth’. If it did, Japan would have been the world’s growth engine for the past two decades.
- Peter Tenebrarum

Mr. Noda’s Cabinet has also finalized a budget for 2012 that increases the national debt, though it supposedly reduced outlays by JPY two trillion from the previous year. This was achieved by the magical political technique of book cooking and the idea that saying it makes it so. For the third straight year, the government will issue more debt than it will recoup in tax revenues. The upcoming year’s spending for rebuilding the Tohoku region (JPY 3.7 trillion) is tucked away in a different account over there somewhere. In other words, they’re saying it doesn’t really count because they put it in a different pile.

The government will also make another pretend pile and offset half of next year’s pension benefit expenditures by issuing JPY 2.6 trillion in so-called special bonds that aren’t going to be counted as expenditures. They’re going to wait until the consumption tax increase brings in more money before they start pretending to count it. This invisible shell game to bring in a budget lower than the previous year will fool those who limit their intake of information on current events to reading the Headline News. Kiuchi Takahide, chief economist at Nomura Securities, can see the pea under the shell:

The government is trying to maintain surface appearances by playing with the numbers…This budget clearly shows Japan’s fiscal situation is worsening.

More comical than the attempt to hide fiscal baldness with a comb-over was this comment from The Japan Times:

This wasn’t how it was supposed to be. Prime Minister Yoshihiko Noda, a fiscal hawk and former finance minister, said earlier this month that it was imperative to get the country’s public finances back on track.

That’s some more of what Prof. Ikeda termed slapstick. Most Japanese “finance ministers” know nothing about financial affairs; their job is to be the media spokesmen for the Finance Ministry. In addition to Mr. Noda in the DPJ governments, that includes ex-political agitator Kan Naoto and ex-newscaster Azumi Jun.

Whenever any media source uncritcally parrots the the ministry line that these people are “fiscal hawks”, it is a signal for the reader to find new information sources.

That phrase was never part of the public discourse until it became necessary to convince the gullible that a left-of-center party really and Honest to God truly was serious about reducing government expenditures. The truly serious, however, did the math. The average annual government expenditures from 2001 to 2008 under the Koizumi, Abe, and Fukuda (LDP) administrations were JPY 83.6 trillion. The budget deficits fell. So did the bond issues, for all but the Fukuda administration. The similar figures from 2010 to 2012 for the Hatoyama, Kan, and Noda (DPJ) administrations was/will be JPY 94.3 trillion. The budget deficits rose. So did the bond issues.

(That omits the outlier, Aso Taro (LDP) for the FY 2009 budget, whose government boosted government outlays in the name of stimulus when the United States and other countries were doing the same.)

This tax and social security “reform” misses the point, as securities analyst Kondo Shunsuke points out:

The government plan positions the social security system as “the shared asset of the people”. They say that a consumption tax increase will be necessary to offset the continuing rise in expenditures. They say they have hammered out a policy to secure a stable revenue source for the social security system and achieve fiscal soundness at the same time. The plan also responds to changes in society, such as the globalization of the economy and the widening income gaps.

The view that the social security system is “the shared asset of society” is only one aspect of the thing. The problem with the social security system begins with the aspect that it is a liability of the state. This perspective is essential. As long as the public is brainwashed that the problem of the social security system is a problem of “the shared asset of society”, the problem that it is a liability of the state will continue to be hidden, and there should be no hope a real discussion will be conducted for the benefit of the nation and the people.

The sooner we recognize the 20th century entitlement state is over, the sooner we can ring in something new. The longer we delay ringing out the old, the worse it will be.
- Mark Steyn

In addition to the consumption tax, which is inherently flat and therefore considered “regressive” in some quarters, the DPJ plans on doing what governments of it type always do. They will take proportionally more money from the people who have proportionally more of it. Starting next fiscal year, they will reduce income tax deductions for those making more than JPY 15 million in salary, raising the income tax on those making JPY 50 million from 40% to 45%, and boosting the maximum inheritance tax rate from 50% to 55%. How effective that last measure will be after they get done cutting the gift tax to children and grandchildren — another DPJ plan — is not apparent.

Yet another bright idea is raising the tax on the new ersatz beers to the same level as regular beer. This will be successful — in killing off the market, because the only reason those beers were created was to beat the higher tax rates on real beer.

What can be said about a government that thinks the solution to the governmental failure to fulfill its fiduciary responsibilities is to confiscate 45% of anyone’s income, 55% (or even 50%) of anyone’s assets on death, and eliminating profitable business sectors? Here’s one thing that can be said: Those are not ideas from a government interested in the well-being of its citizens or the economic growth of the nation as a whole.

The real opposition?

Some people realize there are better ways to address the problem. As usual in the post-Koizumi era, the ideas are coming from sub-national governments, where voters have better luck installing politicians willing to walk the walk. Osaka Mayor Hashimoto Toru, elected at the end of November, is showing signs that he might be a real fiscal raptor rather than a media throwaway line. He’s already announced that he will scrutinize municipal subsidies with the intent of eliminating as many of them as he can. These outlays total JPY 32.124 billion, and it’s not entirely clear yet who gets what. What is known is that JPY 110 million goes to the Osaka Philharmonic Association, which operates the local symphony, and JPY 139 million is handed out to the group that operates the Kids Plaza Osaka museum, which seems to be a glorified playground. Says Mr. Hashimoto:

I don’t understand the meaning of a lot of these subsidies.

Oh, it’s not that hard to understand. What politicians can resist playing Sugar Daddy Warbucks, or the temptation to spend public funds as a way to justify their jobs?

Japan’s second- and third-largest cities (Osaka and Nagoya) are now being run by mayors with an approach diametrically opposite to that of the national parties. They claim to be interested in reducing the size of government. (Nagoya’s Mayor Kawamura Takashi just announced plans to introduce a bill to cut municipal taxes by 10%.) Both trounced their opponents last year, indicating where popular sentiment lies.

A few at the national level are finally seeing the light. Ten DPJ Diet members recently quit the party, and nine of them cited the Noda government’s tax increases as their reason. They’ve formed a new party called Kizuna. The name means “ties”, as in ties of friendship or blood, and it became the buzzword for 2010 in the aftermath of the Tohoku disaster. (Some politicians criticized the name selection as a cheap ploy, but what would politics be without cheap ploys?)

Their slogan is “autonomy and self-reliance”, a capital idea if they’re interested in seeing it through to the end. In addition to opposing the tax increases, they’re also part of the anti-TPP crowd.

How interested they are in real autonomy and self-reliance remains to be seen. Some view them merely as a receptacle for Ozawa-Hatoyama allies. They’re also positioning themselves to stay viable for a lower house election widely expected this year.

Snap goes the Diet

Prime Minister Noda said that if his tax increase and budget-related bills don’t pass the Diet, he will dissolve the lower house and call for an election.

He has therefore guaranteed that the bills won’t pass the Diet, forcing his hand on an election. It might be difficult to get them through the lower house, where the Ozawa-Hatoyama allies could try to derail the train, but it will be even more difficult to get them through the opposition-controlled upper house.

Thus, into the Valley of Death marches the DPJ. The current issue of the weekly Shukan Post features a simulation of the election results. The authors are the first to admit their projections could vary widely depending on a number of factors, but every projection assumes there will be bucketfuls of DPJ blood in the water. As a mid-line forecast, the Shukan Post calls for the DPJ strength to plummet from its current total of 301 seats to roughly 160. In contrast, the magazine looks for the LDP to climb from 118 to 195 and their New Komeito allies to move from 21 to 31. That will not be enough to form a government on their own, however. Recall that last year, Kan Naoto planned on both a DPJ defeat and an opposition whose lack of seats required DPJ cooperation to rule. Then again, this time last year Mr. Kan was unconcerned about Mr. Ozawa starting a new party. A report this weekend says he’ll do just that by March or April and take 70 people with him.

Another factor has changed since then. The magazine also projects the seats for the reform Your Party to climb from five to 38. They also expect the local parties of Osaka Mayor Hashimoto and Nagoya Mayor Kawamura Takashi to run candidates, and think the former might win as many as 18 seats and the latter as many as 12. That would an aggregate of 68 seats for the three reformers, which could enable them to exert real influence on the direction of national affairs.

That would suit the public just fine. Public opinion polls show that from 60% to 70% of the voters prefer a complete political realignment rather than a government centered either on the DPJ or the LDP. In many ways, the Japanese public has been years ahead of their counterparts in the West in consistently choosing to cast their votes for real change.

Meanwhile, Mr. Noda chose to demonstrate his determination by quoting Winston Churchill in English in his first speech of the New Year. He said he would “never, never, never give up”. (There might have been more nevers, but I lost count.)

That would usually be an admirable approach for a political leader guiding his nation in difficult circumstances, albeit self-imposed, but one wonders just whom Mr. Noda thought he would impress with a backbone fashioned from hot air. He wants to rally the nation by demonstrating his resolve to gun the engine of government and drive the nation off the cliff?

For years, people both in Japan and the West have criticized Japan’s politicians as being inferior to those paragons of wisdom and practicality in the United States and Europe. I most strongly disagree, however. I maintain that Japanese politicians are truly world-class.

They are just as myopic, stupid, and absorbed by self–interest as any group of the bunkum peddlers anywhere.

Consider: It’s been 11 months since the political situation was as described in the first paragraph. After all the sound, fury, earth quaking, big wave crashing, and the subsequent aftermath, they’re finally back where they were in February 2011.

Afterwords:

The tenth DPJ refugee said he left the party for personal reasons, but he wound up in a new vanity party of ex-LDP mini-baron and jailbird Suzuki Muneo with a few other DPJ bolters close to Ozawa. That allowed them to reach the minimum number of members for political parties to receive public funds for their operations.

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Will Mr. Noda and his government be successful in getting what they want? Maybe not at all.