The neoliberal Bloomberg blog is weeping because Japanese Prime Minister Shinzo Abe has announced a plan for “comprehensive and bold” fiscal spending this fall.
If Mr. Abe is serious, this would be a reversal for him, since he has always pushed for more austerity (i.e. less spending for special programs that help average people, and more spending for the military, for bank bailouts, and for whatever else widens the gap between the rich and the rest).
On 10 July 2016 Mr. Abe (pronounced “AH-bay”) was reappointed as Japan’s Prime Minister for the third time in a row, and started talking about doing an about-face on austerity. This is worrying the rich, who depend on austerity to widen the gap between themselves and the peasants.
Abe’s announcement isn’t getting a warm reception among economists who say that while a stimulus package may temporarily bolster the economy, they’d prefer he focus on long-term structural reforms.
“Long term structural reforms” means permanent austerity.
Since Bloomberg is a neoliberal blog, it is full of lies…
One worry among analysts is that a significant spending boost would further add to Japan’s public debt burden, without necessarily shifting the economy’s slow-growth path — which some see as Japan’s natural state at the moment.
Japan has no “public debt burden,” since the Japanese government creates its spending money out of thin air. If you could create limitless money out of thin air, would you have a “debt burden”? Of course not.
Economists (with very few exceptions) are paid to lie, in ways that enhance inequality. They know they will be dismissed from their well-paid jobs at universities if they tell the truth.
“If ever there’s a country that doesn’t have fiscal space, it’s got to be Japan,” said Desmond Lachman, a resident fellow at the American Enterprise Institute in Washington, a research institute neoliberal propaganda mill that advocates free-market policies austerity and inequality. Japan has “a high public debt, they’ve got a large budget deficit, their savings rate is going down because their population is getting older, so to me this makes absolutely no sense to increase the budget deficit further through deficit spending.”
The government is discussing supplementary spending of about 3 trillion yen ($28.3 billion) for the current fiscal year. Chief Cabinet Secretary Yoshihide Suga in a recent interview ruled out issuing deficit bonds to fund a stimulus package, hinting at using construction bonds for longer-term investments.
Translation: The Japanese government will create the stimulus money out of thin air.
Economists and analysts say they aren’t convinced of the need for fiscal stimulus now, or whether it would do much to reinvigorate Japan’s economy. Several said they’d rather see Abe focus on his own third ”arrow” of Abenomics — making structural reforms to the economy (i.e. they want an increase in the austerity that has boosted Japan’s financial economy, and wrecked Japan’s real economy).
Because of austerity, Japan is experiencing an explosion of homelessness, unemployment, and underemployment (i.e. temporary work with low pay, and no benefits). “Economists and analysts” want this explosion to increase.
Koya Miyamae, an economist at SMBC Nikko Securities Inc., worries that fiscal stimulus policies could distort the economy by providing a big temporary boost that could later lead to a sharp contraction, creating appetite for yet more stimulus. “The economy is crawling sideways. It isn’t improving, but it isn’t getting worse. If you introduce these policies now it’ll create distortions,” he said.
Translation: If the Japanese government creates an increased amount of money out of thin air, it will create millions of new jobs. If that money is spent on infrastructure improvements, it will create still more jobs. Average Japanese people will enjoy a boost in their living standards, without going further unto personal debt. The gap between the rich and the rest will be narrowed. Such a nightmare will create “distortions.” Therefore it must be defeated/
With some analysts seeing Japan’s potential growth rate at somewhere between zero and 0.5 percent, there is a case for arguing that it’s not worth pursuing a fiscal stimulus package.
Why not? The money will be created out of thin air. The only time the Japanese government should ever reduce spending is when the Japanese economy has 100% full employment, and inflation becomes a possibility.
Japan is nowhere near that point.
Incidentally we are tired of bullshit phrases like these…
“An official who spoke on condition of anonymity said…”
“A key insider who is not authorized to speak publicly says…”
“According to officials familiar with the talks…”
“Considering Japan’s fiscal position and the balance of supply and demand in the economy, I don’t really think that stimulus is necessary,” said Junko Nishioka, chief economist at Sumitomo Mitsui Banking Corp.
Even the Wall Street Journal admits that the Japanese economy continues to dip into and out of recession. The Journal’s “solution” for this is to change the labor laws so that workers can be fired more easily.
Japan’s labor laws allow even clearly incompetent employees to file wrongful dismissal cases that drag on for years. The Nikkei newspaper cites an estimate that six million full-time workers have nothing to do.
Even if that was true (which I seriously doubt), the solution is not to fire millions of workers so that wages fall, but to increase stimulus spending. Consider the ever-worsening problem of homelessness in Japan. In some cases these people have mental health issues. In other cases they have criminal records, and are unable to get jobs. Some actually like being homeless. But in 90% of cases, these people are homeless because they have no money, and no income.
To reduce homeless, the Japanese government needs to put a lot more money into circulation, so that everyone can find work. If workers are attacked, it will increase the number of homeless Japanese.
Shinichi Ichikawa, chief market strategist at Credit Suisse Securities Ltd., said he’d rather see the government work on economic reforms (i.e. more austerity) “rather than pursue policies focused on near-term conditions.” He emphasized making greater use of foreign labor and overhauling Japan’s work and education systems.
Got it. If unemployment is high, and wages are low, the solution is to bring in more foreign workers, who will drive wages even lower.
Here’s the Wall Street Journal …
Japan’s lifetime-employment system worked well during the high-growth postwar years. But as the economy slowed and the population aged, companies shifted their hiring to part-time employees who can be laid off easily.
The result has been falling wages, rising homelessness, and increasing personal debt. Just what the economy needs, aye?
The rise of part-time contracts explains why Japan’s low 3.2% unemployment rate hasn’t led to wage increases. Instead of laying off workers, companies reduce the number of hours they employ part-timers. Japan suffers from massive underemployment rather than unemployment.