Japan's August retail sales dip renews pressure on policymakers

By Stanley White

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Japan does not need more infrastructure work. Not new projects, anyway. Repairing old tunnels and reinforcement isn't a bad idea, and would be a better use of that particular money. It won't boost domestic consumption, though, because there aren't remotely a large enough number of people affected by such projects up and down the chain to move the needle.

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Abenomix is not working. Right?

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There would be a simple solution, if the government had the strength of character to act. Penalize those companies that develop their business models on a plentiful supply of temps beyond a short period of time (say 6 months to a year - beyond that, it really is not a temporary situation any more). And make the penalties punitive, so it will actually hurt employers and not just a tiny slap on the wrist.

There is no shortage of workers who would love to become 'seishain' who are stuck in temp ('hakken') living month to month or quarter to quarter (the luckier ones from year to year - but never really sure where they will be in 3 or 6 months. They will not buy homes, cars, things which would cost a lot to move if they had to relocate. While I am not convinced it would magically solve the problem of driving Japan's economy, it would provide a boost, and that is something that at this point is desperately needed.

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The parliament will soon start to deliberate a government stimulus package with planned spending of 7.5 trillion yen by the national and local governments on infrastructure projects in an attempt to boost domestic demand.

It won't work, we all know it won't work, it can't possibly work. All the 7.5 trillion will do is to pad the balance sheets of Japan Inc, and further lighten the wallets of the taxpayers. And this will only be a temporary measure which will buy only a little more time.

When a person or a business borrows money to spend frivolously on things they don't need, and doesn't have the means to pay it back, we call what they do fraud. When the government borrows money and spends money frivolously on things we don't need, without the means to repay the money, they call it "economic policy."

An economy can only work if every party in it is restrained equally by the same rules.

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Penalize those companies

"The beatings will continue until morale improves".

IMO Japan needs a thoroughly overhaul of its labour laws to even the playing field for workers, and incentives put in place for a more fluid, dynamic labour market. Making companies compete for their labour needs is the best way to make for sustainable improvements in work conditions.

The 'seishain' would initially hate this though - actually having to work for their living once they no longer have the government essentially protecting their employment status for life... but they'd get over it, once the economy picks up as a result.

No chance of the necessary reforms being made any time soon though.

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