Japan from the inside out

Working together

Posted by ampontan on Thursday, December 30, 2010

THE WESTERN MEDIA has chosen to describe the DPJ administration that assumed power in Japan last year as a “center-left government”. From a limp-wristed foreign policy to spendthrift social welfare schemes designed to bribe the public with its own money, however, we’ve seen a lot more of the left so far than we have of the center. Writing on the Agora blog, Fujisawa Kazuki presents further evidence that their relationship with the center is little more than a passing acquaintance in a post titled Labor Unions will Destroy Japan. Here it is in English.

Since the Democratic Party of Japan formed a government, the political power of labor unions has grown, starting with the Japanese Trade Union Federation (Rengo), the DPJ’s largest support organization. It is possible to glimpse their enormous influence in the outline of the 2011 revision of the tax code.

This revision is said to focus on those with higher incomes. The revision will strengthen the “progressivity” of the code and result in a de facto tax increase on those with annual incomes of at least JPY 15 million (about $US 182,000) by reevaluating (i.e., eliminating) deductions from earnings. Corporate officers are expected to be subject to a more stringent elimination of income tax deductions.

First, I will examine the signs that the government has taken great pains to please the labor unions. The leading executive officers of labor unions generally have annual incomes of JPY 10 to 15 million. They were likely the ones who decided that the floor for tax increases would be an annual salary of JPY 15 million. This is not the only example of beneficial treatment they received, however.

A close examination of the outline of the 2011 tax code revision shows that in addition to the elimination of tax deductions, there will also be a revision of the “specified expenditure deductions”. For example, the expenses required to obtain certification as a lawyer or accountant will become deductable. Also, the following is written on page 44 describing the categories that will now be subject to specified expenditure deductions.

“Expenditures for the purchase of books or other documents related to work assignments, expenses for clothing worn at the workplace, entertainment expenses ordinarily required for work assignments, and the operating expenditures of groups related to one’s occupation.
N.B.: If the total amount of the operating expenditures required for work exceeds JPY 650,000 in a year, the limit of the deduction will be JPY 650,000.”

I didn’t understand what they meant by “groups related to one’s occupation” until I read an entry on the blog of Liberal Democratic Party upper house member Katayama Satsuki. The groups the passage refers to are only labor unions, and it means the union members will be able to deduct expenditures for union activities from their income tax. It gave me a gloomy feeling to realize the extent to which the current government had to curry union favor.

There are likely to be continued tax increases in the future, but labor unions, with their political muscle, will be able to escape those taxes, including their relatively high-paid executive officers. These people are indeed the “labor aristocracy”.

Ikeda Nobuo, the proprietor of the Agora website, often claims that the bottleneck in the Japanese economy is the rigidity of the labor market, and I agree. Under the current government, however, the politically powerful labor unions are pushing policies that will increase labor market rigidity. The burden is being forced on those without entrenched interests, such as newly graduated job seekers and irregular employees. I am concerned that at this rate, labor unions will destroy Japan.
(End translation)

Mr. Fujisawa ensures a boffo finish by quoting Milton Friedman. I couldn’t find the exact English equivalent, but paraphrased it was this: Labor unions aren’t necessary, because the sacrifice of other workers is required to ensure that certain union members receive benefits.

Let’s get it while the gettin’ is good.

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11 Responses to “Working together”

  1. Marellus said


    Now how about an article that cheers is up ?
    M: Take a look at the Christmas card! There’ll be another for New Year’s.

    – A.

  2. toadold said

    I for one am proud that the American political elite/union thug alliance is ahead of the Japanese in bankrupting cities, counties, industries, and entire states ahead of their Japanese equivalents. Of course in the US the citizenry can vote with their feet to some extent and leave the rent seekers with the problem of trying tax each other so they can have the life they’ve become accustomed to, but with our accomedating executive government by fiat, I feel sure that the working populace of all the states will soon feel the bite to support the useless.

  3. Tony said

    Loose writing again. You’e assuming connections without proof and then make generalizations based on those assumptions. Saying the executive officers of the unions ” WERE LIKELY the ones who decided” that the taxable income level would start at JPY 15,000,000 (because their salaries are just below that line) and then contending “THIS IS NOT THE ONLY EXAMPLE…” is clearly wrong since you haven’t provided an example yet, just an assumption.

    I’m not saying you are wrong, you may be right but just expect to be called out when presenting opinions and assumptions as hard facts. After all, that is one of the reasons you started this blog, to correct the wrongs you saw in western media publishing their inaccurate opinions and assumptions of Japan as if they were facts.

    One other thing, if all we have to worry about is the few labour union executives avoiding TAX INCREASES then there is very little to worry about since there are far more people who make over JPY 15,000,000 and do avoid some taxes both legally and illegally than this “labour aristocracy” you fear.

    Loose writing again. You’e assuming connections without proof and then make generalizations based on those assumptions.

    T: Loose reading again. This is clearly labeled a translation, so the only assumption I’ve made is that the author has a good idea of what he’s talking about. He is employed at a foreign-capitalized investment bank in Japan, so I wouldn’t dismiss it out of hand because you don’t care for the conclusions.

    – A.

  4. Tony said

    Point taken I did miss the translation label but then the original criticism stands. He’s making an assumption and then declaring a fact based upon it. Loose writing is still loose writing and it doesn’t matter if he were employed by Kreskin or by a foreign-capialized investment bank in Japan.

    JFYI, a little loose reading on your part though too as I didn’t dismiss it, in fact even said it may be right. As for the conclusion, could care less either way, just don’t like loose writing.
    T: Fair enough. If you could care less either way about the conclusion, however, you might consider the state of finances in California, where so much of their revenue must go to pay public sector benefits, entitlements, and pensions, and the reason GM had to be bailed out–the level of their pension and entitlement payments meant that they were unable to sell a car at a competitive price and still make a profit.

    They have labor unions to thank for that.

    – A.

  5. Tony said

    First, forgot to say Happy New Year. And yes, its true about GM but they did dig their own grave on that issue because in the late 60’s they avoided paying higher wages by first introducing and offering those very same retirement and health care benefits. Ironic that they turn around 35 years later complaining about them and blaming the unions. Stupid is as stupid does.

    Still, equating the assumption that the Japanese unions are responsible for avoiding tax increases for salaries over JPY 15,000,000 to the woes of California and GM defies logic.
    Happy New Year to you, too. Saying that the first steps on the road to the destination where California, many other states (and several European countries) and GM have arrived is not equation, it is simple extrapolation. Everyone knows that is where the behavior of labor unions will lead. It’s less of an issue with trade unions in the private sector, as long as the companies are allowed to fail without bailouts, but public sector unions are a different matter altogether.

    – A.

  6. Tony said

    What you refer to as an extrapolation is the logical fallacy known as circumstantial ad hominem.

  7. Marellus said

    @ Tony

    But I like reading Ampontan !!!! Why in blazes should I worry about all those ads (on) horny men ????

  8. Tony said

    @ Marellus
    Me too but what I don’t like are ads (on) horny men. Can’t stand them.

  9. Marellus said

    @ Tony

    But you’ve gotta admit that Ampontan’s ads are good, no matter how circumspect they are … 🙂

  10. Tony said

    Did you say ads or abs? The former are OK, the latter, I don’t know.

  11. Marellus said

    @ Tony

    … eish … eish … eish … eish !!! my revenge will be sweet ….

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