Japan from the inside out

An interview with Yosano Kaoru (2)

Posted by ampontan on Friday, August 8, 2008

SINCE RETURNING to active politics after receiving treatment for cancer of the larynx, Yosano Kaoru has assumed a major role in the post-Koizumi/Abe Liberal Democratic Party. He was tapped to serve in the critical role of chief cabinet secretary in Abe Shinzo’s last Cabinet, and is said to have handled affairs at the prime minister’s office when Mr. Abe entered the hospital. He returned to the Cabinet last week when he was assigned the Economic and Fiscal Policy portfolio.

Mr. Yosano has also been appearing regularly on television and giving interviews in newspapers and the monthly current events magazines. He sat for a round of interviews with reporters earlier this week, one of which ran in the Sankei Shimbun. But this interview comes from the Nishinippon Shimbun, a regional daily, and I translated it here because the content was more revealing.

Are any economic factors causing you concern?

Wages have not risen for about 10 years, so consumer purchasing power did not improve through higher wages. Corporate profits have been quite good, but the companies have been allocating them to internal reserves and dividends. Labor’s relative share has not always risen. I think the time has come for those in the financial sector and for politicians to think about this.

What sort of economic measures will you put together in the near future?

We will not use fiscal means to increase effective demand. We’ll have to think about what we can do without priming the pump and maintain fiscal discipline at the same time. Tax cuts are used as an economic policy measure in the United States, but no one in Japan is making that argument yet.

Are new fiscal measures necessary?

Budgets must be formulated by taking funding sources into consideration. Even if we have left the previous path of reform, there is a limit. We will have to make adjustments during difficult circumstances.

How will you conduct the Council on Economic and Fiscal Policy, which has been a source of friction between you and the DPJ?

The members of the Diet represent the people. The CEFP is a body consisting of individuals with experience, knowledge, and wisdom. I think their decisions in general are correct, but the participation of MPs is important for developing a national consensus. I think the proper sequence is to make decisions after taking the ruling party’s opinion into account.

It is important that the CEFP conduct heated debate. That will attract public attention, which will have a certain impact on policy formation. I don’t think a quiet CEFP is necessarily a good one. They should be bolder.

You are known to favor fiscal reconstruction. Tell us your views about raising the consumption tax.

We cannot talk about the Japan’s fiscal future without the consumption tax. But we must consider all the elements, such as economic conditions, the national mood, and the funding of social welfare programs. I think the first step is to hold repeated discussions and further the understanding of the people. We also must be aware that decisions will not be quickly made with the current Diet gridlock.


Of interest in this interview is Mr. Yosano’s admission that reform is no longer a priority for the Fukuda Cabinet. The ruling party might pay for that at the polls.

He also says that no one in Japan is seriously suggesting a tax cut. But it wouldn’t be surprising if some people, particularly Takenaka Heizo, thought it was a great idea in private. One factor mitigating against tax relief is the intrusion into policy and budget formulation of the Japanese bureaucracy, a government-within-a-government on a scale unimaginable in, for example, the United States. The bureaucracy will have to be caged before anyone can seriously consider tax reform.

The idea that the politicians have to educate the public on the need for higher taxes is not the ideal philosophy for the operation of government. The starting point should be citizens educating the politicians that tax revenues are not their money to begin with, and then having the politicians act accordingly. Mr. Yosano’s statement is reminiscent of those EU elitists who refuse to accept the popular will and continue to hold referendums on the EU Constitution until the public “gets it right” and votes to approve.

Iijima Isao, the former principal aide to Prime Minister Koizumi Jun’ichiro, has been been causing a few eyebrows to rise by complimenting Mr. Yosano in public recently. Earlier this week I saw him insist on television that Mr. Yosano would do good things for the country, to the mild astonishment of another panel member.

Here is the first interview with Yosano Kaoru

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