Yoshikawa Hiroshi, President, Rissho University   Key points Postwar social security developments have contributed to longer life expectancy Disparities are a mix of transient phenomena and long-term trends It will be difficult to sustain social security with the current national burden rate (Discuss Japan Note: This article was written before the sixth wave of the COVID-19 pandemic hit Japan)   The COVID-19 pandemic has subsided in Japan, but the situation remains unpredictable as the emergence of new variants and global re-spread may still occur. Over the past two years, the world’s economy and society have been at the mercy of the COVID-19 pandemic. In 2020, the global economy fell into a severe recession that exceeded the post-Lehman shock fall in 2008. When the first state of emergency was declared in the spring of 2020, Japan saw the biggest fall in GDP in the postwar ... ... [Read more]

Miyagawa Tsutomu, Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI)   Under the Kishida administration, debate has been ignited on the topic of “new capitalism.” Grasping the current situation of “capital” in Japan as the starting point for the debate is the minimum work that is necessary. Capital stocks in the Japanese private sector have barely increased since the beginning of the 21st century. The amount of capital stocks in 2000, which was 692 trillion yen, grew to 736 trillion yen in 2019, representing an increase of only around 40 trillion yen. The stagnant growth is a stark contrast to the increase of around 60 trillion yen recorded just over the five years of the second half of the 1990s. According to the growth accounting approach, which breaks down the economic growth rate into (i) labor force, (ii) capital, and (iii) other ... ... [Read more]

Hayakawa Kazunobu, Senior Research Fellow, Institute of Developing Economies, Japan External Trade Organization (JETRO)   Key points Exports to the United States and imports from China are both increasing Good opportunity to transfer production and attract investment from China Risk of trade friction proliferating within the ASEAN region The Biden administration, which inherited the trade friction between the United States and China, is strengthening US export control measures day by day. The view from the Association for Southeast Asian Nations (ASEAN) includes President Rodrigo Duterte of the Philippines stating that the country will not take sides, while Prime Minister Lee Hsien Loong says that Asian countries do not wish to choose between the United States and China. On the one hand, the geographical proximity to China suggests that the ASEAN probably gains the most economic advantage from trade friction between the United States and ... ... [Read more]

Ohtake Fumio, Specially Appointed Professor at the Center for Infectious Disease Education and Research (CiDER), Osaka University   How should the healthcare system be set up? How should the vaccination rate be increased still further? And how should a strategy to exit the pandemic be formed? Some thoughts from a leading expert in behavioral economics and member of the New Coronavirus Infectious Diseases Control Subcommittee. (Discuss Japan note: This article was written in October 2021 and first appeared in the December 2021 edition of Voice. It is republished on the Discuss Japan website with the permission of the writer and publisher.) Allocating specific roles to experts and non-experts is key Although it seems there has been a lull in COVID-19 infections since September 2021, some think that a sixth wave will come this winter, so we cannot lay down our guard. At present (October ... ... [Read more]

Fukao Kyoji (Faculty Fellow, RIETI) and Makino Tatsuji (Hitotsubashi University)   In order to achieve the Kishida administration’s policy goal of raising wages, it is necessary to understand why real wages in Japan have been stagnating for the last two decades. This article therefore examines the reasons for the prolonged stagnation of wages in Japan using long-term data from the JIP Database of the Research Institute of Economy, Trade and Industry (RIETI) and Hitotsubashi University, and considers measures that should be taken. The labor productivity of a country as a whole is measured by how much real gross domestic product (GDP) is produced per hour worked. In Japan, real GDP per hour worked in 2018 was 4,416 yen (in 2018 prices). Of this, 2,580 yen accrued to workers in the form of wages, employers’ social security contributions, etc., so that the labor share of ... ... [Read more]

Urakawa Kunio, Professor, Faculty of Economics of Kyushu University   Key points Average yearly income trending downward in the bottom 40% income bracket Income redistribution limited by current tax and social security systems Lack of safety net for types of employment with a high risk of instability COVID-19 has had a major impact on the world economy. Japan’s economy has been greatly impacted, with GDP for FY2020 down 4.4% from the previous year. This is larger than the decline of 3.6% in 2008 when the Lehman Brothers collapse occurred. The Quarterly Estimates of GDP for Jul.–Sept. 2021 released on November 15, 2021, showed negative growth of -0.8% compared to the preceding term, the first negative growth in two quarters. Full economic recovery will likely take more time. The economic impact of COVID-19 has been felt most keenly in the service industry sector, including air ... ... [Read more]

Ito Shingo, Senior Economist, Institute for International Economic Studies   Key points Aim to reduce dependence on the United States and contribute to the global economy Membership will inevitably require major adjustments to the economic system Negotiations should consider China’s economic characteristics and security exceptions On September 16, China applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Membership of this high-level FTA will however inevitably require China to implement bold reform and opening up, giving rise to various observations regarding the true motive behind its application and the seriousness of its intention. In this regard, the Chinese government has stated that its application to join the CPTPP signals (1) its will and commitment to achieving continuous deepening reform and opening up further; and (2) its support for free trade and its will to contribute to the recovery and growth of ... ... [Read more]

Komine Takao, Professor, Taisho University   Key points Uniform benefits go to savings and do not boost consumption Overall income slump is more severe than widening disparities Speed up industrial and corporate metabolism and regulatory reforms Following the lower house election, I would like to consider the future direction of economic policies. The Kishida administration’s economic policies have so far only consisted of slogans such as “a new form of capitalism,” “Reiwa double income,” “without distribution, there will be no subsequent growth,” and “neoliberal policy shift.” Depending on how these are concretized in the future, they may take the economy in a good direction or in a bad direction. The first thing that will be required of future economic policies is a switch from election mode to practice mode. Election mode, which has been active throughout the Liberal Democratic Party presidential election and the ... ... [Read more]

  Sugimoto Kazuyuki, former Chairman of the Japan Fair Trade Commission   The Japan Fair Trade Commission (JFTC)’s investigations into Apple Inc. effectively came to a close on September 1, 2021 when Apple announced it would make changes to some global regulations in 2022. Apple submitted an application for changes to regulations that would let users avoid the 15–30% delivery commission for “reader apps” that offer subscriptions for content like books, music, videos, etc., which some media outlets have called an “unusual conciliation.” Currently, all applications (hereinafter “apps”) used by iPhones and other Apple products must be downloaded from the App Store. Until now, application developers had to pay a commission to sell their apps, the so-called “Apple Tax.” In other words, they paid a “protection price” to a “bookmaker.” With the new decision by Apple, developers won’t have to pay the “Apple Tax” ... ... [Read more]

Ito Kunio, Professor Emeritus, Hitotsubashi University   Key points Japanese companies rank highly worldwide for number of institutions supporting TCFD Mandatory financial disclosures should avoid disclosure of static information Need to promote corporate behavioral change through dialogue with investors   In response to worsening climate change, the Japanese government has set out its policy of becoming carbon neutral by 2050. I would like to put forward two effective approaches. The first is the disclosure by companies of just the right amount of information – not too much and not too little. The second is the proper evaluation of disclosed information by investment and loan institutions and the provision of ample funds for decarbonization activities and innovation. The Task Force on Climate-related Financial Disclosures (TCFD) is a common framework for driving the world toward climate-related financial disclosures. The Task Force was established in 2015 by ... ... [Read more]