Japan from the inside out

Small beer for small government in Japan

Posted by ampontan on Thursday, November 10, 2011

THIS summer, the Diet passed legislation that included special measures for power companies to purchase renewable energy. Here are some comments from Ikeda Nobuo.

(The passage) was very welcome if only because the prime minister (Kan) will now resign, but I was concerned with the self-congratulation from Kono Taro, Seko Hiroshige (both LDP), and others who declared this to be an epochal event. I’m in basic agreement with their (classical) liberal policies, but this bill is in contradiction to that philosophy.

The government’s feed-in tariff regulating the purchase price of power is a measure beloved by the European social democratic parties. Even Bill Gates has pointed out that it will cause the energy industry to degenerate into a heavily subsidized sector.

That’s fine if all you’re thinking about is getting your hands on plenty of subsidy money. It’s even clever. A lot of subsidies are being distributed, even though it isn’t economically rational. In fact, 90% of the subsidies are allocated to building facilities. The same is true for Europe and the United States. Very little is allocated to R&D.

The renewable energy bill anticipates setting the purchase price below JPY 20/kWh. For solar power, this is incompatible with profitability. In a different context, the price of JPY 40 for 20 years that Son Masayoshi dreams of isn’t possible. He’s very bright, so he’s already begun shifting his interest to natural gas. Selling the inferior electric power generated by inexpensive solar cells will also be regulated, so making a killing will be out of the question. In the end, nothing will result from the renewable energy bill.

Also, Matsuda Kota (Your Party) introduced his bill for a national referendum on nuclear power. The reason these Diet members, seen by the public at large as reformers, are so enthusiastic about the ill-defined idea of reducing reliance on nuclear energy is that it is a buzzword accepted by the public. They lack a strong electoral base, so policy is their only road to popularity. “Eco” is the perfect image strategy.

Of course, gaining popularity through policy is preferable to the LDP political style of winning elections by spreading benefits to local supporters, but in the end, these MPs have become mass media zokugiin. (N.B.: That term is usually applied to MPs who represent the vested interests of individual ministries.) Their objective is to win the acclaim of mass media, particularly television. Yamamoto Ichita (LDP), a key member of the ruling/opposition party council that worked out the legislation, is also one of the principal members of the Diet members’ group supporting special designation for newspapers — from which he receives political contributions.

The ones beyond redemption are the members of the generation following the current baby boomers. There seems to be a consensus for small government among that generation, but many of them make an exception for regulating the economy for energy and environmental policies. That will exacerbate the structurally high costs of the Japanese economy and pass the bill on to future generations. When will they realize that this is just as bad as the Democratic Party’s pork barrel social welfare schemes?

(end translation)


Ikeda Nobuo didn’t like the bill, but the Japanese branch of the World Wildlife Federation was thrilled about it.

Matsuda Kota was the man who brought Starbucks to Japan, got rich, sold his stake in the business, and got elected to the upper house last year as a Your Party PR candidate. I sometimes follow his Twitter account. He’s intelligent and energetic, but he also really needs someone to tell him to put a lid on it every once in a while.

Prof. Ikeda identifies Kono Taro as a classical liberal, and Mr. Kono identifies himself as an advocate for small government. I wonder. Among his other dicey ideas, Mr. Kono supports ending foreign aid and replacing it with an international tax on financial transactions. The revenue would be given to some undefined international organization to dispense for development purposes.

Regardless of the merits or demerits of that idea, if Mr. Kono thinks that’s classical liberalism or small government, his compass is broken. Either he’s trying to fool us, or he’s already fooled himself.

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