More of the same well short of the mark for Japanese recovery
HERE we go again. Like a cracked record, Japanese Premier Keizo Obuchi told parliament on Friday that yet another stimulus budget was needed to keep the beginnings of an economic recovery rolling.
When sensible people bash their heads against brick walls and find the wall intact but their heads less so, they quickly conclude another route should be tried if they want to achieve their goals. Not so Japanese governments.
Tokyo has insisted on driving itself further and further into debt with endless spending packages that have achieved very little.
Ditto its other stimulus policy plank of driving down interest rates to zero.
But a third policy lever has been strangely avoided like a trip to the dentist - cutting taxes. Since its bubble economy burst in 1990, the only time that Tokyo has contrived to get the economy moving with its spending packages was in 1996. But, in the words of one fund manager, it then made the 'horrible mistake' of raising consumption taxes, sending the economy back into a slump.
Why does the dominant Liberal Democratic Party and powerful civil service prefer taking the budget-spending tack to stimulate the economy rather than try the more obvious route of putting money back in citizens' pockets? Could this have something to do with the ruling elite's cosy ties with big business, particularly the construction companies which have benefited from building roads to nowhere in the name of stimulating the economy? It is high time voices were raised in Japan demanding an end to this madness and cuts in income and consumption taxes.
