No.18 | Discuss Japan-Japan Foreign Policy Forum

Archives : No.18

Jan-Feb 2014

No.18
Economy, No.18  Feb. 4, 2014

New Developments in the Agricultural BusinessAbolishing the policy to reduce rice production is the first step toward a national economy based on agriculture: Toward agricultural innovation and business creation

YAMASHITA Kazuhito, Research Director, Canon Institute for Global Studies

Inaccurate perceptions about agriculture  With respect to agriculture, there is the common perception that large-scale farmers run their modern agricultural operations by using a lot of fertilizer and chemicals, while poor small farmers engage in environmentally friendly agriculture, and that Japan can’t compete with agriculture in the United States and Australia due to its small land area and the scale of its agricultural operations.   The agricultural industry and certain experts claim that this is why Japan’s agriculture, especially its small farmers, must be protected, and that expanding the scale of farming operations to improve efficiency or for Japan to join the Trans-Pacific Partnership (TPP) is out of the question.  However, there are no poor small farmers in Japan today. Small farmers are employed at other jobs and do their farming on the side, thus earning more than working-class households. Since they don’t depend ... ... [Read more]

Culture, No.18
Jan. 30, 2014

INTERVIEW: WASHOKU, traditional dietary cultures of the Japanese

A traditional ichiju-sansai Japanese meal featuring steamed rice and miso soup (front), three main dishes (two vegetable dishes and one of fish), and pickles (top left) All photos: Courtesy of Professor KUMAKURA ISAO

Traditional Japanese food is collectively known as washoku. Under the title, “Washoku, traditional dietary cultures of the Japanese,” the United Nations Educational, Scientific and Cultural Organization (UNESCO) registered washoku on its Representative List of Intangible Cultural Heritage of Humanity on December 4, 2013. Discuss Japan spoke with Kumakura Isao who spearheaded the campaign for convincing UNESCO to add washoku to its intangible cultural heritage list. ―― UNESCO registered washoku on its List of Intangible Cultural Heritage of Humanity. We would like to start this interview by asking how you feel about this.  Kumakura Isao: If nothing else, as a member of the team that worked hard for this registration for two and a half years, I was extremely grateful for and delighted by the outcome. I think we can take great pride in this achievement as Japanese because our country’s washoku was registered on ... ... [Read more]

Economy, No.18
Jan. 22, 2014

Conditions for Wage Increases:Conditions for Wage Increases: Productivity improvement alone is not enoughNeed to keep the country’s manufacturing business cluster inside the country and to restrain trading losses

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

< Key Points > * Real wage rate after 2000 has been stagnant * Biggest factor is declining terms of trade * No room to boost labor share to any significant degree Prime Minister Abe Shinzo and his administration are actively encouraging businesses to raise wages. But are wage increases really possible, judging from the productivity trends? And, if so, then what are the necessary conditions? A nation’s labor productivity is measured by the real gross domestic product (GDP) generated per hour of labor. Of the real GDP per hour of labor (e.g. 5,000 yen per hour), the real labor cost per hour (e.g. 3,000 yen per hour) is distributed to labor. Therefore, in simplified terms, if the rate of increase in real wages exceeds that in labor productivity, labor share (60% in this example) should increase. If labor share continues to grow, return on ... ... [Read more]

Economy, No.18
Jan. 21, 2014

Conditions for Wage Increases: Close consultation between labor and management For important economic strategy Need to maintain close watch over impact on employment

< Key Points > * Reconcile labor and management thinking on the consumption tax * How corporate revenue is allocated influences the revenue * Necessary to monitor excessive labor intensification Since the beginning of this year, Prime Minister Abe Shinzo has actively sought wage increases for employees in the industrial sector. Wage levels in Japan are continuing to stagnate, resulting in weaker buying power for households (see the graph). The logic behind the demand for a wage increase is that a rise in wage levels would revitalize consumption, which accounts for about sixty percent of GDP, and facilitate a break with deflation.  As a result, some corporations raised wages at the negotiations between labor and management in the spring of this year, but there was hardly any reaction in the wage levels of the economy as a whole. According to the Monthly Labour Survey ... ... [Read more]

Economy, No.18
Jan. 21, 2014

Hope for a Wage Increase

At the Government-Labor-Management Meeting held in the Prime Minister’s office on October 17, representatives from two leading Japanese companies—namely, President Toyoda Akio of Toyota Motor Corporation and Chairman Kawamura Takashi of Hitachi, Ltd.—expressed their positive views toward a wage increase. Prime Minister Abe Shinzo responded to this by saying, “We have heard very encouraging news.” Several years ago, or even just a year ago, there weren’t many people who thought that a wage increase would be a real possibility. I’m probably not the only one who feels that this trend has changed. Nominal wages began to decline in Japan between 1997 and 1998, just as a financial crisis was taking place. Many economists believe that, just like inflation, deflation is a “monetary phenomenon”—that is, deflation happens when the amount of money in the market is insufficient compared to the amount of goods. However, I ... ... [Read more]

Economy, No.18
Jan. 21, 2014

Japan is a buy The Abe Administration Should Ease The Impact of The Tax Hike — The key to reviving the Japanese economy is to reduce corporate taxes

Two Myths about the Consumption Tax In late August 2013, Japanese interest was focused on whether the Abe administration would raise the consumption tax as planned. The government invited sixty experts to the prime minister’s office and interviewed them regarding the pros and cons of a consumption tax hike and the necessary policies associated with the tax hike. The second intensive review meeting on August 27, which I participated in and that the mass media called “a showdown,” attracted attention, as four experts who were opposed to a consumption tax hike, led by Hamada Koichi, Tuntex Professor Emeritus at Yale University and a special advisor to the Cabinet, and five experts including me who supported a consumption tax hike, seriously discussed the issue. The minutes of the meeting are posted on the website of the Cabinet Secretariat, and I would imagine that many people ... ... [Read more]

Politics, No.18
Jan. 21, 2014

Concerns over Abenomics Regarding Projects to “Build National Resilience” Increasing Government Spending Again Will Do Little to Solve Anything

Japan’s regional areas are currently suffering from a declining economy, while the phenomenon of underpopulation is making matters even worse in those areas. One possible solution that has been presented to solve this problem calls for increasing public works spending, supported by the idea of “Building National Resilience.” This government strategy, however, which aims to revitalize regional communities through the help of large-scale infrastructure investment, appears to be going against the long-time social trend, and I am concerned that it will have the opposite effect and end up hampering the emerging community-driven initiatives to revive the economy and business in those regions. Japan’s regional areas are plagued by a “population onus” Currently, a population onus is taking place all across Japan. Let me briefly explain what a “population onus” is, as this concept doesn’t seem to be well known to the general public. The ... ... [Read more]

Politics, No.18
Jan. 20, 2014

Establish National Targets to Halt Population Decline Follow France’s Example and Stabilize Population at 90 Million *1

Overview Japan is likely to tip into fiscal collapse due to rising tax and social security burdens in the future, or Japan’s standard of living is likely to erode. At the root of the problem lies population decline. If no action is taken, the population will shrink to 30% of its present size in 100 years and to around 10% of its current size in 200 years, and Japan’s presence in the international community will gradually diminish. To avoid such a situation, the Japan Center for Economic Research proposes the establishment of national population targets, aimed at raising the birthrate over the course of forty years and maintaining a stable population of 90 million. We propose combining this with a policy of opening up Japan and inviting people, expertise and investment from overseas.    ■ Fig. 1 Halt population decline and aging   Source: ... ... [Read more]

Politics, No.18
Jan. 20, 2014

The Death of Regional Cities: A horrendous simulation Regional Cities Will Disappear by 2040 A Polarized Society will Emerge

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Economy, No.18
Jan. 20, 2014

A Farewell to Japanese Employment Practices Why is regular employment system reform necessary? Proposals made by the regulatory reform council

This June, the government’s Council on Regulatory Reforms submitted a report on regulatory reforms to Prime Minister Abe Shinzo. The report discusses areas such as deregulation policies on employment highlighting “regular employment system reform” as one of the three approaches to be taken to reforming Japan’s employment system. Having served as a chairman of the working group on employment for compiling the report (refer to table on p. 2), I would like to give my perspectives on the background, objectives and specific policies regarding regular employment system reform.   “Labor mobility” is the key term  The Abe administration launched an economic growth package featuring a growth-generating structural reform strategy as an issue of top priority. This means that structural reform was the first item called for in order to produce economic growth. There are three possible approaches we can take to have the labor/employment ... ... [Read more]

Economy, No.18
Jan. 20, 2014

Abenomics: What economic picture will its third arrow draw in the middle-term?

[Summary] The third arrow of Abenomics, a growth strategy, aims at revitalizing industries, creating markets for selected sectors with the promise of future growth, and expanding global outreach. Prime Minister Abe’s growth strategy, formulated in June 2013, gave a timeline for implementing measures to realize these goals; many are expected to be on schedule. This would remedy one of the weaknesses of Japan’s business environment – the ease of starting a business.  However, not all measures in the growth strategy have a clear direction, nor do they all contribute directly to structural reforms. Creating markets in Japan’s health-care and agricultural sectors are examples of this, though the premier has shown a strong will to deregulate these and may have a clearer vision of their impact. Still, challenges remain for the private sector, in a rigid employment system and with high corporate taxes. Attention should ... ... [Read more]

Diplomacy, No.18
Jan. 20, 2014

A Nation of Proactive Pacifism — National Strategy for Twenty-first-Century Japan

Japan’s first National Security Strategy, along with the new National Defense Program Guidelines, which were approved by the Cabinet on December 17, 2013, established the idea of “proactively contributing to peace based on the principle of international cooperation” as part of the basic principles of Japan’s future diplomacy and national security policies.  This shift is based on the “proactive pacifism” approach that has been advocated by Prime Minister Abe Shinzo since September 2013. For more than a few foreign observers, it came like a bolt from the blue when Abe began to assert that Japan should become a more proactive contributor to peace, and they therefore found it somewhat difficult to discern his real intentions. However, in fact, Abe was not the first to conceive of a “proactive contribution to peace.” Since the end of the Cold War, certain circles within Japan’s diplomatic and ... ... [Read more]