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Archives : No.19

February-March 2014

No.19
No.19 ,Politics ,Discussions  Mar 25, 2014

A direct proposition to the “long-term” Abe administration
Crisis leadership: Nankai Trough, sub-Tokyo earthquake…
Voicing the limits to the Self-Defense Forces out loud

ORIKI Ryoichi Former Chief of Staff, Joint Staff

  They cannot do what they did after the Great East Japan Earthquake for all earthquakes. State risks require preparations on the part of autonomies and citizens. ORIKI Ryoichi Former Chief of Staff, Joint Staff Funabashi Yoichi has interviewed a number of people for this magazine (Bungeishunju) on the topic of the Fukushima Nuclear Power Plant accident and crisis leadership – writer Hando Kazutoshi (June 2013), former Chief of Fukushima No.2 Nuclear Power Plant Masuda Takahiro (August 2013), and Charles Casto of the U.S. Nuclear Regulatory Commission (October 2013). On this occasion, he meets former Joint Staff’s Chief of Staff Oriki Ryoichi, who was head of the army, naval and air forces at the time as the leader of the Self-Defense Forces’ uniformed personnel, to discuss the role of the Self-Defense Forces (SDF) in this incident and leadership as its former commander. FUNABASHI Yoichi ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

FUKAO Kyoji, Director General, Institute of Economic Research, Hitotsubashi University

The rise in non-regular employment not only increases the number of individuals with wages fixed at a low level and widens income disparity, but it also stand in the way of economic growth. This is some empirical research that I participated in. When we compared contributions to production (degree of contribution) among regular employees and non-regular employees in the manufacturing industry, we found that productivity among non-regular employees was lower than the wage gap would suggest. In short, even though it is claimed that non-regular employees are generally hired and exploited for low wages, in fact, it is possible that corporations are paying non-regular employees wages above their productivity in order to hire workers that make it easy to shuffle personnel around.... [Read more]

No.19 ,Economy
Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

OHASHI Hiroshi, Professor, University of Tokyo

Q: What are the criteria for the government to rescue a corporation? A: When market failure is greater than failure by the governmentThere are pros and cons to the government rescue of TEPCO and JAL. It is time to explain the economics behind the permissible scope for public rescue of private corporations. There is mounting concern in Japan and abroad about the rights and wrongs of governments contributing to corporate turnarounds. Overseas, the turnaround of General Motors (GM), the U.S. corporation that was temporarily nationalized in the wake of the collapse of Lehman Brothers, has attracted attention. Recently, we have also seen rising concern about state-owned corporations in China and other emerging countries buying and selling Western corporations, or dumping exports. In Japan, opinion is divided about the measures taken to support the process of turning around JAL, which relisted on the stock market ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

Q: How poor will Japan become? A: It’s already sufficiently wealthy; it won’t become poor even at zero growth.Japan faces a declining population and a rapidly aging society. A look at the future of Japan that Abenomics cannot forecast. The reason why the Japanese public is worried that the nation could start to decline without growth is because past administrations have historically indicated that a recovery in the growth rate would reverse Japan’s economic depression and solve the problem of its aging society. But as the Japanese people already earn an average per capita gross domestic product (GDP) of close to 40,000 U.S. dollars despite still being worried about further growth to avoid becoming poor, from a historical and global perspective they are really quite unusual. To avoid any misunderstanding, I must add that I am by no means saying that in the long ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

Economics for winning: Be skeptical about commonly accepted views
Viewing something that is commonly accepted from a different angle will lead to discovery

Q: Will Japan end up a loser if the trade gap widens? A: There are no winners or losers in trade, but attention is needed on an increase in the current account deficit.Japan’s widening trade deficit: the presence of Japan, an exporting country, continues to fade, but the current account balance, rather than the trade balance, is what requires attention. The problem surrounding the country’s imbalance, such as the trade balance or the current account balance, is old and yet a new theme. After a period of rapid economic growth, the ensuing era for Japan that persisted for a long time was one in which its massive trade surplus was deemed problematic in the course of international negotiations, resulting in numerous types of trade friction with the United States, be it in textiles, automobiles or semiconductors. At the Plaza Accord of 1985, major countries ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

The First Year of Abenomics – Part 3
The impact of monetary easing has been limited
— The actual role of monetary easing has been to assist in fiscal policies.
— The economy has expanded on the back of public investment.

< Key Points > – Despite the correction of the strong yen, export volumes have not increased. – With monetary easing, long-term interest rates have declined, facilitating smooth sales of government bonds. – The profitability of bank lending has deteriorated due to falling long-term interest rates. It’s been a year since the inauguration of the administration of Prime Minister Abe Shinzo. During this period, the economy has been staging a very steady recovery. However, this latest economic recovery is believed to be slightly different due to the fact that it has mainly been led by domestic demand, whereas most of the previous economic recoveries in recent years were driven by external demand. That is to say, despite the approximate 20% correction in the strong yen since the start of the Abe administration, there have been almost no increases in export volumes. The instruments that ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

The First Year of Abenomics – Part 2
An Overreliance on Short-Term Economic Stimulus Packages
— Public contributions have been put off to the future.
— Its real value will be tested after fiscal 2014.

< Key Points > – Abenomics has clearly achieved significant results in terms of an economic recovery. – A noticeable slowdown in the growth rate will definitely be seen in fiscal 2014. – The growth strategy features state control measures. A year has passed since the administration of Prime Minister Abe Shinzo advocated its economic policies called Abenomics. With the improvement in the economy, the business community is also enjoying a more encouraging business environment. However, many difficult challenges lie ahead. Abenomics is generally considered to consist of three arrows: aggressive monetary easing, timely fiscal stimulation, and growth strategies (the narrow view of Abenomics). However, there seem to be certain characteristic developments in the management of the economic policy besides these three arrows. In that regard, this report will call the overall economic policies that the Abe administration has been carrying out the “broad view ... ... [Read more]

No.19 ,Economy
Mar 24, 2014

Financial and Fiscal Policies Successfully Adopted
— The government needs to continue to strive to achieve inflation through growth strategies without fearing the costs.

< Key Points > – The adoption of bold financial policies has resulted in a steady rise in the inflation rate. – The short-term fiscal stimulus and the medium-term fiscal reconstruction have been progressing. – The implementation of growth strategies clearly appears to be slow. Abenomics, the economic policies advocated by the administration of Prime Minister Abe Shinzo, began on November 14, 2012, when then Prime Minster Noda Yoshihiko stated that the House of Representatives would soon be dissolved. During the campaign for the election of new members of the House of Representatives, Mr. Abe positioned ending the deflationary economy as the key to the reconstruction of the Japanese economy, and strongly requested that the Bank of Japan change its policies by setting an inflation target and launching unprecedented aggressive monetary easing (the “first arrow”). The introduction of monetary easing and a rise in ... ... [Read more]

No.19 ,Economy
Mar 14, 2014

Japan’s Medical and Long-Term Care (LTC) Insurance System One percentage point of the sales tax should be used directly to help sustain elderly medical and LTC service systems

The pace of government efforts to reform the medical and LTC insurance systems appears to be slow when compared with that of the nation’s pension program. The government should scale back benefit expenditure while ensuring a further stable revenue source for social security at the same time.... [Read more]

No.19 ,Economy
Mar 13, 2014

Consumption Tax Rate Hike and Social Security
Can Pension, Medical Care and Nursing Care Insurance Be Sustained?

Now that it has been determined that the consumption tax rate will be raised from April 2014, discussions on the reform of the social security system have been underway. This report will reexamine whether pension, medical care and nursing care insurance systems can be sustained.... [Read more]

No.19 ,Economy
Mar 13, 2014

Consumption Tax Rate Hike and Social Security
Pension: Reform has slightly progressed, but cutting of benefits is unavoidable in the future

The consumption tax rate hike has set a course for securing of steady financial resources for the basic pension, but it is also necessary to take measures to cut benefits for achieving a sustainable pension system.... [Read more]

No.19 ,Economy
Mar 10, 2014

A Year after the Launch of Abenomics: High Expectations for Sustainable Growth from Structural Reforms

The Japanese economy has begun to show signs of breaking away from the sustained deflation that has lasted more than fifteen years, unprecedented in modern world history. Japanese stock prices are maintaining their inherent upward momentum, and in its revised January 2014 World Economic Outlook, the International Monetary Fund (IMF) revised its forecast for Japan’s real GDP growth in 2014 (the real economic growth rate) up by 0.4 point from its forecast in October 2013, to 1.7%. The Japanese government, led by Abe Shinzo, is extremely confident, as its policy for economic revitalization, commonly called Abenomics, which was launched at the beginning of the new government in December 2013, is clearly producing an effect. With the widespread public expectations of economic revitalization, the Abe administration’s approval rate has... [Read more]

No.19 ,Culture
Mar 10, 2014

Japan Is Entering a Period of 10 Million Visitors: The Growing Competition to Attract Tourists — A company that has seized the business opportunity of increasing inbound visitors

The number of foreign visitors to Japan is expected to reach 10 million this year. And this number will likely grow further with the 2020 Olympics in Tokyo. What do businesses need to do in order to succeed in this growing market? What are the issues? We undertake a multilateral analysis. As a nation for tourists, the government needs to develop rules The number of inbound visitors to Japan rapidly increased during the period from January to September, and is expected to reach 10 million by the end of the year. While this trend is riding the tailwind of a weaker yen and visa deregulation, could Japan continue to increase its inbound visitors to double or triple the current number? The Ginza store of Don Quijote (“Donki”), a discount store that is open twenty-four hours a day, is known to be teeming with tourists from Asia and other foreign countries late at night. After taking in the country during the day, visiting tourist attractions and theme parks, there was nowhere for people to safely enjoy their late-night hours. Noticing this, Donki went creative and started attracting these inbound visitors. The number of foreign tourists visiting Donki’s current network of 257 stores totals 4 million a year. This figure has grown ten-fold from the 400,000 visitors of five years ago. Nakamura Yoshiaki, the president of Japan Inbound Solutions, which has led inbound visitor initiatives since 2008 and was spun off from Don Quijote, explains, “While some retailers tried to fill the gap in their domestic sales with sales from inbound visitors, Donki went and found the ‘blue ocean’ (a market without any competitors) of inbound visitors when its main business was on a roll.” ... [Read more]

No.19 ,Diplomacy
Mar 10, 2014

Japan’s Responsibility Sharing for the U.S. Extended Deterrence

Japan is now poised to increase its own efforts to enhance the credibility of U.S. extended deterrence, casting aside a long-held ambivalent stance of distancing itself from U.S. nuclear strategy, while relying on it to deter the threat of nuclear weapons. The National Security Strategyadopted on December 17 last year by the Liberal Democratic Party (LDP)-led coalition government of Prime Minister Abe Shinzo recognized that “the extended deterrence of the United States with nuclear deterrence at its core is indispensable” for Japan’s security against the threat of nuclear weapons. It also stressed the country’s preparedness to “work closely” with the United States in order to enhance the credibility of its extended deterrence, including Japan’s own efforts for ballistic missile defense (BMD).... [Read more]

No.19 ,Politics
Mar 10, 2014

On the New National Defense Program Guidelines

On December 17, 2014, the Government of Japan (GOJ) released two key documents for its national security policy: the National Security Strategy (NSS) and the new National Defense Program Guidelines (NDPG). The NDPG proposes Japan’s defense strategy and policies to implement the strategy including the structure and posture of the Self-Defense Forces (SDF) with a time span of at least ten years. The first NDPG was issued in 1976 and the GOJ has revised it in 1995, 2004 and 2010. The new NDPG has several remarkable characteristics: it is the first NDPG developed under a new document, the “National Security Strategy”; it contains several key phrases such as “proactive contribution to peace,” “Dynamic Joint Defense Force,” and “Seamless response to various situations including so-called ‘gray-zone’ situations”; and it gives serious consideration to the two most important factors in the strategic environment in the Asia-Pacific region, China’s rise and the United States’ rebalancing towards the region. ... [Read more]

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