Japan's cash-rich companies ready to spend more on M&A, not wages: poll

By Tetsushi Kajimoto

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What a bunch of greedy bastards! Where do they think their wealth comes from? The hard work of their employees! But heaven forbid they reward them and raise their wages. A friend just returned from Australia and was commenting on how expensive things were, but then quickly added that the salaries were much higher which offset the high prices. If Japan does the same, then they will finally see their dream of inflation!

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Doesn't this contradict an earlier article "Japanese households' financial assets rising: survey"

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Prime Minister Shinzo Abe's government has struggled for years to coax companies to lift wages

It's not enough to ask nicely. Companies will not do anything unless it becomes law.

"We want to avoid having too little in reserve, so we won't spend any of it no matter what we are told to do"

Then the only way is to force them.

But the government does care about that, so it won't happen.

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In what other countries in the world are companies surveyed to ask whether they will spend their shareholders profits on raising wages?

Wages are an input cost that is paid in order to produce goods and services and hopefully leave profits. The purpose is to make profits for shareholders. The purpose of producing profit for shareholders is not so that the profit earned for shareholders can then be taken away in order to pay higher input costs.

Shareholders are taking a risk owning businesses. Sharedholders may lose their money, or lots of it (Kobe Steel? Toshiba? Tepco?). Although they run the risk of losing their money, there is this concept in Japan that should they get lucky and receive a profit, they should then give some more of it up to pay higher input costs.

Any business operator that aims to increase the input costs of the business has no business running one.

Wages in normal economies are set by what the market demands. Pay sufficient wages, or lose staff to the competitors.

The cart is put before the horse in Japan.

Prime Minister Shinzo Abe's government has struggled for years to coax companies to lift wages

It's the labour market that is supposed to do that. If it's not working out as hoped it implies your labour market is broken (and needs fixing). Stop trying to take shortcuts all the time.

"We want to avoid having too little in reserve, so we won't spend any of it no matter what we are told to do," wrote an official at a precision machinery manufacturer.

Wise. If you can't shrink your workforce easily as is the case in Japan, you need reserves as a buffer for during the lean times.

respondents urged a step back from negative interest rates, a commitment to a balanced budget, and the implementation of long-stalled structural reforms.

That is, they don't like "Kurodanomics", they don't want a "2nd arrow", but do want that elusive "3rd arrow", which should include labour market reforms.

a majority of respondents, at 58 percent, pointed to the "third arrow" of growth strategy and structural reforms, which have come under criticism for failing to tackle difficult issues such as Japan's rigid labor markets.

Exactly. But these are only difficult issues to the extent that the politicians are gutless. The survey results show that (most) everyone knows that reforms are required, and it won't be a cakewalk. But people will respect politicians that have the guts to do what is the right thing for the long term prospects of the country. The leader that stands up and does this will go down in history as Japanese leader of the century.

with three-quarters of respondents saying it was possible to rein in public debt, while 69 percent called for setting a target for a balanced budget. 

Agreed, although Abe is too gutless to do either.

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The labor unions need to take their gloves off and make some ultimatums, like shutting down the transport system, refusing to collect garbage and shutting off the heating and plumbing in factories and office buildings.

The government should start scaling back its subsidies and procurement contracts until the corporations agree to share the benefits wrought by the "accomodative policies" of Abenomics.

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Same thing happened with the US

"USA's cash-rich companies ready to spend more on M&A, not wages"

That's why trickle-down economics don't work

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