No.62 - Discuss Japan

Archives : No.62

No.62, Economy  Jan. 31, 2021

Importance of allocation mechanisms that don’t rely on price adjustment: Rebuilding the concept of markets

Kojima Fuhito, Professor and Director at the University of Tokyo Market Design Center (UTMD) Key points Focusing on the visible hand that replaces traditional price mechanisms Expanding the use of market design for kidney transplants Improving institutional design to eliminate the childcare waiting lists issue   One of the most prominent ideas in economics is Adam Smith’s concept of the “invisible hand.” The invisible hand is the magical mechanism for price adjustment that is capable of maximizing the wealth of society if self-interested consumers and companies respond to the prices of goods and services. With advances of research in economics,  this idea has been elaborated upon. However, neoliberals have also used this phrase to promote deregulation. And yet, no one has ever actually seen the invisible hand. In fact, examples of the price mechanism not working can be found everywhere in society. Although it ... ... [Read more]

No.62, Economy
Jan. 24, 2021

Maintaining Capital in Tourism Sector Urgently Needed

Yoshida Yushi, Professor of Economics, Shiga University   In the 21st century, Japan’s current account (CA) has undergone a sea change. This is partly due to external shocks, namely the Global Financial Crisis of 2008, which depressed global demand, and the Great East Japan Earthquake of 2011, which caused substantial damage to the domestic production base. The COVID-19 Shock of 2020, however, has had a completely different impact. Broadly speaking, CA can be divided into the balance of trade, services, and income. The balance of trade is the difference between the value of exports and the value of imports; the balance on services is the difference between country’s inbound travel and transportation and country’s outbound travel and transportation; and the balance on income is the difference between income (compensation of employees and investment income) earned from overseas and income paid overseas. For many years, ... ... [Read more]

No.62, Discussions, Politics
Jan. 19, 2021

Three-way conversation—Ongoing social cleavages in Japan, facing severe challenges of a super-aging society: Neither the ruling nor opposition parties are able to seize “the new dimension of political competition”

Nakanishi Hiroshi (Professor of Kyoto University), Sunahara Yosuke (Professor of Kobe University) and Imai Takako (Professor of Seikei University) The Abe Shinzo administration brought the Japanese public a sense of euphoria —The Suga administration claims to be a successor to the former administration. What are your reflections on the nearly eight years of the Abe administration? Nakanishi Hiroshi: I try to organize the characteristics of the Abe Shinzo administration based on three perspectives. Firstly, the administration had a good understanding of how the national consciousness changed from reform-minded in the early years of Heisei (1989–2019) to stability-minded. In the early Heisei period, we had the Gulf War, the collapse of the asset bubble, and a constant clamor for reform—political reform, administrative reform, economic reform—in the context of the non-LDP government that followed splits in the Liberal Democratic Party (LDP). However, after the bankruptcy of ... ... [Read more]

No.62, Economy
Jan. 17, 2021

Corona Crisis and Fiscal Expansion: Continued Debt Refinancing Entails High Risk

Ueda Kazuo, Professor, Kyoritsu Women’s University   Key points A shift to a total rejection of fiscal deficit and government debt Large government debts negatively impact potential growth rate Continuing to refinance entails the risk of heavy losses   Every country’s finances have deteriorated significantly, mainly due to expansionary fiscal policies in response to COVID-19. According to the International Monetary Fund (IMF), the ratio of outstanding debt to GDP in developed countries in 2020 will exceed that immediately following World War II, making it the highest since the late nineteenth century. Currently, governments have no choice but to continue to support their economies through fiscal policy. However, a major challenge is the medium- to long-term reduction of fiscal deficit and government debts, which have ballooned to an unprecedented scale. Modern Monetary Theory (MMT) has become a hot topic in relation to how to address ... ... [Read more]

No.62, Politics
Jan. 14, 2021

Employment policy issues in light of Abenomics: Aims of the policy to raise the minimum wage and negative scenarios

Genda Yuji, Professor, University of Tokyo Context for the increase in the number of workers during the Abe administration In response to the end of the second Abe Shinzo administration, the longest serving cabinet in the history of constitutional government in Japan, newly appointed Prime Minister Suga Yoshihide signaled that he would continue the policies of the previous administration.   On August 28, 2020 when then Prime Minister Abe held a press conference to announce his unexpected resignation, he cited the increase in the number of workers as part of his self-assessment of the administration. In actual fact, between 2012, when Abe became prime minister for the second time, and 2019, before the spread of COVID-19, Japan as a whole recorded a substantial increase of 4.44 million workers (Labour Force Survey” by the Statistics Bureau, Ministry of Internal Affairs and Communications).  Previously, the number of ... ... [Read more]

No.62, Society
Jan. 11, 2021

Osaka Naomi’s BLM Activism Wins More Worldwide Respect Than Her US Open Victory

Watanabe Yuko, consultant, freelance writer     On September 12, 2020, Osaka Naomi won her second US Open women’s singles title, a victory which clinched her third Grand Slam title. Her opponent in the final was former world number one Victoria Azarenka. After losing the first set in a nightmare start, Osaka recovered brilliantly to turn the match around and triumph. This dramatic comeback also caused a sensation, as it was the first time in 26 years the women’s final was won by the player who lost the first set.  On September 13, the day after her victory, the New York Times featured a large photograph of Osaka and sang her praises across two pages. The headline of the article read “Naomi Osaka, While Rallying for Social Justice, Wins U.S. Open Title.” I cannot remember the last time the face of a Japanese – politician or sportsperson – ... ... [Read more]

No.62, Politics
Jan. 8, 2021

Challenges Facing the New Government: Thorough Explanations Needed for Prioritizing Specific Issues

Kohno Masaru, Professor, Waseda University   Key points Abe ikkyo, the phenomenon that describes the political dominance of the former Prime Minister Abe Shinzo, was supported by a low voter turnout rate Explanation is needed for why pressuring mobile phone companies to lower fees is compatible with the principle of regulatory reform The question of how to define getting COVID-19 “under control” is difficult   The Suga Yoshihide government has been formed. At his first press conference as Prime Minister, Suga spoke frankly about his sense of responsibility to carry on the efforts of his predecessor Abe Shinzo who fell ill while leading the fight against the coronavirus, as well as his conviction and determination to strike a balance with economic revitalization even amid concern over growing infections. Suga was also praised for quickly announcing a set of concrete policy goals: lowering mobile phone ... ... [Read more]

No.62, Economy
Jan. 7, 2021

Changing Relationship between a Company and an Individual due to the Crisis

Owan Hideo, Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI), Professor, Faculty of Political Science and Economics, Waseda University   Much attention has been paid to how the external shock of the COVID-19 pandemic is affecting the relationship between companies and workers. The aging of Japan’s traditional employment system has long been an issue, but even before the Corona crisis, large companies had been working on reforming their personnel systems along with their work styles reform efforts. One example of such attempts is the introduction of “job-based” employment by Hitachi, Ltd.[1] Some believe that the COVID-19 crisis will accelerate the trend. In this article I summarize what has changed due to the crises and explore for what changes are likely in the future. Seniority and late promotion have been cited as problems with the Japanese conventional employment model. These two features were ... ... [Read more]

No.62, Diplomacy
Dec. 22, 2020

From the Frontlines of Defense to Aegis Ashore: Japan’s changing security environment and Japan-U.S. Alliance

Serving as Chief of Staff, Joint Staff, the highest ranking officer of the Japan Self-Defense Forces (JSDF), for five years, Mr. Kawano enjoyed the confidence of then Prime Minister Abe Shinzo and was thoroughly informed about all aspects from the frontlines to the center of command. Now that he has retired from office, he speaks about the security arrangements from his own experience.   Kawano Katsutoshi, Former Admiral, Chief of Staff, Joint Staff   ―― Mr. Kawano, your career coincided with major changes in Japan’s security arrangements after the end of the Cold War. How has the role of the JSDF changed over time? Kawano Katsutoshi: The turning point was the Gulf Crisis in August 1990 followed by the start of the Gulf War in January 1991. It was the first global military crisis to occur after the end of the Cold War, and ... ... [Read more]

No.62, Economy
Nov. 29, 2020

A Review of Abenomics: Results in Terms of Escaping Deflation and Positive Economic Change

ITO Takatoshi, Professor at Columbia University, Senior Professor at the National Graduate Institute for Policy Studies (GRIPS)   Key points The “first arrow” succeeded, but the “Price Stability Target” of 2 percent has not been reached Building a framework for monetary and fiscal collaboration to combat COVID-19 Success in terms of TPP11 coming into effect and attracting tourists to Japan   The reason the Abe administration stayed in power for such a long time was that it maintained an approval rating of more than 40%. Moreover, a major contributing factor to that high approval rating was positive macroeconomic change through the success of Abenomics. This paper mainly discusses the Abe administration from December 2012 to September 2020. Let us compare the inflation rate, unemployment rate, and Nikkei Stock Average during the Abe administration with those of cabinets since 1998 (short-lived cabinets are totaled) (see ... ... [Read more]

No.62, Economy
Nov. 20, 2020

COVID-19 Pandemic and the Economy: Need Sound Public Finance for Maintaining Social Safety-Net

Nobuhiro Kiyotaki, Professor of Economics, Princeton University   Key points Should corporate bankruptcies increase, credit crunch may follow Postponing retirement is more effective than high inflation for fiscal consolidation Promoting open economy is important for growth after the containment of COVID-19   Following COVID-19 pandemic and government restrictions on social and economic activities, the global economy plunged into the deepest recession of the postwar era and the lives of people have been affected profoundly. This article discusses the impact of the COVID-19 pandemic, policy responses and the future direction from a macro-economic perspective. The COVID-19 pandemic makes it difficult to engage in activities that involve social contact and possibility of infection. Consumption, especially services consumption in restaurants, leisure and hospitality, has decreased significantly. Let us look at consumption and employment in the United States by referring to data collected by Professor Raj Chetty of ... ... [Read more]

No.62, Society
Nov. 16, 2020

We Are Approaching the Limits of Having Only Policies that Preserve Employment!: The Largest Number of People Taking a Leave of Absence Since World War II—What Has Happened in the Labor Market?

Genda Yuji, Professor, University of Tokyo Only a Slight Increase in Unemployment in April When the declaration of a state of emergency was issued for all of Japan due to the spread of COVID-19 in April 2020, the survival of many companies was in jeopardy and the Japanese workplace faced unprecedented difficulties. Job opportunities collapsed and there was concern that we might see workers lose their jobs and struggle to survive. According to the Labor Force Survey by the Statistics Bureau, Ministry of Internal Affairs and Communications, released at the end of May, the number of workers across Japan was reduced by 1.07 million (seasonally adjusted) in just one month from March to April when infections rapidly spread. As a great reduction from the previous month since May 1953 when comparisons can be made, it was second to the 1.13 million workers from January ... ... [Read more]

No.62, Economy
Nov. 15, 2020

Future Direction of International Trade Systems: Institutions matter – a rise of “peer value chains”

Inomata Satoshi, Chief Senior Researcher, Institute of Developing Economies, Japan External Trade Organization (JETRO)   Key points Institutional similarity will be even more important in shaping global value chains than geographical proximity Multinational firms will seek to offshore production to countries with robust institutions akin to their home business environment Complete decoupling of the world economy is inconceivable, but partial decoupling is probable   According to Richard E. Baldwin, Professor of the Graduate Institute of International and Development Studies, the international production system is based on tri-polar networks of Factory Asia, Factory North America and Factory Europe. Namely, global value chains (GVC) are not truly global, but are more likely to be regional. How will GVC look like in the post-COVID19 world? They are considered to evolve from regional value chains based on geographical proximity to production networks connected through institutional similarity (of legal ... ... [Read more]

No.62, Diplomacy
Nov. 13, 2020

Looking Back at Prime Minister Abe’s Diplomacy: A Political Legacy of the Long-term Abe Administration—Leadership for liberal international order

Kanehara Nobukatsu, Former Assistant Chief Cabinet Secretary, Professor of Doshisha University   Interview by Nakamura Kiichiro, Editor-in-Chief of Gaiko (Diplomacy)   ――Professor Kanehara, you were appointed Assistant Chief Cabinet Secretary with the formation of the second Abe Cabinet. Prof. Kanehara Nobukatsu: I remember suddenly being told to go to the Prime Minister’s Office on December 28, the day the Abe Cabinet was formed. When forming the Cabinet, a team of three was set up under Chief Cabinet Secretary Suga Yoshihide and Deputy Chief Cabinet Secretary Sugita Kazuhiro. It consisted of Assistant Chief Cabinet Secretary for Internal Affairs Sasaki Toyonari (from the Ministry of Finance) (later replaced by Furuya Kazuyuki), Assistant Chief Cabinet Secretary for Security Takamizawa Nobushige (from the Ministry of Defense), and myself who was in charge of External Affairs. We had excellent teamwork.   ――What was the feeling at the time of ... ... [Read more]

No.62, Discussions, Diplomacy
Nov. 12, 2020

What of the United States? Or Japan? New Visions of Leadership under COVID-19: How Will Leaders Engage the Libertarian Youths Sweeping over the World?

Uno Shigeki vs Watanabe Yasushi The True Nature of Leaders Uncovered in Crisis ―What are your views on the success stories and failures of different countries’ leaders in their COVID-19 responses? Uno Shigeki: When it comes to COVID-19 measures, it’s said that the East Asian countries that have taken a micro approach of tracking individual behavior have been more successful that the European countries that have focused on lockdowns. However, the causal link between differences in policy and the infectious spread is complex. It’s true that the exposure of political leaders has surged due to increasing social media contact by staying at home, but it’s still unclear what difference it’s made in terms of preventing infections. Having said that, it’s also not so that it’s the same the world over. As the first stage of focusing solely on preventing the spread of the virus ... ... [Read more]

No.62, Economy
Nov. 12, 2020

How to Face up to an Uncompromising China? (II): China’s Economy Towards a Stronger Governance Coexisting with Negotiations/Coordination with US

Ito Asei, Associate Professor, University of Tokyo   Key points Toward an “unknown normality” after the US-China conflict and COVID-19 Stronger governance and a more sophisticated, expanding Chinese economy Japan to continue to exert influence on thoughtful action   The concept of the new normal entered the picture after the advent of the Xi Jinping administration. The end of the rapid economic growth and China becoming a middle-income country transformed national issues. The new normal indicated that the administration recognized this fact. But now, after the US-China conflict and COVID-19, China’s political economy finds itself in an unknown normality in a dual sense. This article will confirm the economic situation during the COVID-19 crisis and examine trends in China from the perspective of structural change. There are both strong and weak aspects to the economy in China after COVID-19. At the start of the ... ... [Read more]

No.62, Diplomacy
Nov. 12, 2020

How should Japan approach China, a country that takes a hardline stance against the backdrop of insecurity in the world order?

Kamo Tomoki, Professor, Keio University   Key points China aims to embed its requests into the current world order Both cooperation and coercion, two conflicting concepts, are prominent in its diplomacy with major countries Japan should present a new world order that includes China   China’s external actions are growing tensions in the Asia-Pacific region due to the deepening of the US-China trade friction.   The Communist Party of China (CPC) established developmentalism as one of its slogans and is on a path of reform and open-door policies in which its ruling guarantees internal and external environments that must be established to support the slogan. Through its diplomacy, China aims to facilitate reform and open-door policies; that is, to establish a stable international environment that secures development. It has already accomplished high economic growth and is in the process of becoming a middle-income country. ... ... [Read more]