The past few weeks have been a whirlwind of activity in Japan, centered on a series of issues all of which pit the Japanese elite against the Japanese people. Unfortunately, even though the people outnumber the elite about 127 million to several thousand, the people find themselves in the losing position. Despite rising opposition to about everything the government does these days, little is being done to address the public’s complaints except for politicians to completely ignore them.
The people have made it clear that they will not accept a consumption tax hike without real reform in the government and the manner in which it spends the people’s money. And yet, the government is well on its way to make the tax hike a reality while paying lip service to reform. Worse, the global bureaucracies, about which the Japanese elite have seemingly sworn allegiance, have told Japan that a mere doubling of the 5% current consumption tax rate is not nearly enough to save Japan and that the Japanese families can easily afford to pay much higher taxes in addition to other changes that will negatively impact every Japanese household while costing the bureaucrats at the IMF nothing.
8. Careful design of these measures could limit their impact on growth. Building on the proposed consumption tax increase, a broad range of reforms is needed to contain social security spending, improve incentives to work and invest, and address equity concerns. While the design of an appropriate fiscal package would need to take a pragmatic approach, some elements could include the following, many of which have already been debated publicly (quantified in text table):
- Increasing the consumption tax to a uniform rate of at least 15 percent, as it is a stable source of revenue in an aging society, one of the least distortionary taxes, and easy to administer. It would also be fairer than other taxes in addressing inequities between young and old generations. Targeted transfers to lower-income households could be introduced to address concerns about the regressive nature of the tax, rather than adopting multiple tax rates that would reduce its efficiency in raising revenue.
- Cutting the corporate tax rate further, beyond the planned reduction to 35 percent in 2015 to improve incentives to invest.
- Broadening the personal income tax base to raise revenue and improve work incentives, including by reducing the exemption for pension income and eliminating the tax deduction for dependent spouses.
- Reducing social security spending, including by raising the pension retirement age to 67, collecting contributions from dependent spouses, and clawing back benefits from wealthy retirees. These savings could fund a reduction in payroll taxes and targeted transfers to low-income households, aided by the introduction of a uniform tax identification number.
We will note that one of the expenses incurred by the Japanese public is being the largest funder of the IMF when one factors in Japan’s pledges for EU bailout funds which other major nations refuse to fund. So, higher taxes in Japan will ensure a steady flow of money to the IMF.
Which makes us wonder why the Japanese people voted for the IMF bureaucrats currently in power. Oh, that’s right, they didn’t vote for the IMF leadership nor have they voted for sending the IMF money. What they did do, however, is sit silently while their government made these decisions, just two more in the long line of damaging policies the Japanese government burdens on the people.
And speaking of damaging policies, the government has also ignored the public’s demand to halt the restart of nuclear reactors until safety can be assured. The government’s response to those demands is to go ahead with the restart while promising that the reactors are safe, neither of which deal with the reality of the situation, especially when both are dependent on trusting the government.
PM Noda declared that failure to restart the reactors would destroy the Japanese economy. This seems to ignore the fact that the Fukushima reactor has already destroyed a large portion of Japan and has yet to be contained. And it destroyed more than the economy of the area. People’s lives and a large swath of Japanese land have likewise been destroyed.
So, the choice is saving Japan’s central government-controlled economy, already in decade-long decline from past failures of the government, or ensure that no more of Japan’s precious lives and land are lost to nuclear power. This is a no-brainer for the critical thinking person. Since the failed economy currently exists only to suck the blood, sweat, and money out of the Japanese household, it would seem that a new economy is in order, one that is not controlled by central planners corrupted by the remains of zaibatsu family corporations and foreign influence.
If shutting off nuclear reactors would guarantee the demise of the current system while also ensuring the safety of the Japanese public, then shutting down those reactors is a win-win for the public. Sadly, it won’t happen because such a situation would be a lose-lose for the elite and the Japanese public has yet to find the ability to take back their own lives from these vampires.
Other issues continue to exasperate the increasingly incensed public while befuddling the corrupt and inept elite, among them Okinawa. In this case, the people have repeated and resoundingly opposed the relocation of the Futenma air base or the continued operation of the base. In order to deal with this stalemate, PM Noda has named a civilian Defense Minister to the Cabinet, one who has a history of advocating for the US military, including emending – or eliminating – Article 9 from Japan’s so-called Peace Constitution (for those who are not aware, Article 9 is the “Peace” section of the “Peace Constitution”) so that Japan’s Self Defense Forces can become a part of the US military’s war on resource-rich nations who are reluctant to become puppets for American interests. You know…like Japan). As for Okinawa, all indications are that the next step will be akin to the restarting of the nuclear reactors; the government will simply ignore the people and carry out the base relocation plan. We will note, however, that the Okinawans have been steadfast in their opposition so there is a glimmer of hope that they will win.
Of course, Tohoku and Fukushima are ongoing problems, ones sure to become generational which means the government would just as soon as no one talk about it. While the government is secretly excited about the triple disaster because it allows politicians and bureaucrats to do what they love best, spend money (especially if that money is being shoved in the pockets of cozy nuclear and construction industries), the official line is that the whole thing has been resolved, there is no more danger, and now the focus must return to fixing the economy.
And thus the circle of life for the elite is complete. Sadly, for the public, their burdens continue to grow.