politics

Abe unveils grand plan to boost economic growth

35 Comments
By Tetsushi Kajimoto and Leika Kihara

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In a nod to that need for balance, the tax plan will seek to offset the cuts by broadening the tax base.

Great plan there, genius. Cut taxes for huge corporations (your biggest supporters and donors) and increase taxes for already broke people who's wages aren't rising in spite of the wonderful inflation that's destroying the nation.

The first two "arrows" are massive monetary easing, which has helped push up asset prices, and fiscal spending to stimulate demand.

Let's summarize this genius master plan, shall we?

1) Print Money

2) Spend Money

3) Cut Taxes

4) Raise Taxes

23 ( +23 / -0 )

Abe's Third Arrow growth strategy seems to me like a dart not an arrow, said Naoki Iizuka, an economist at Citigroup Global Markets Japan. I hope he will come up with bolder plans ahead.

More like a needle. The only thing I see is the corporate tax cut. Raise the number of highly skilled foreign workers, really? It's not hard to get an Engineer's visa in Japan in you have a job, nothing new here. The lifetime employment system is left untouched. As I have said before, unless there is a bond crash, yen goes up to 200 or some other kind of catastrophe, the "real" third arrow won't be fired anytime soon.

3 ( +3 / -0 )

Limp arrow from a lackluster government.

5 ( +5 / -0 )

but applause from investors is likely to be muted after Tokyo backpedalled on bolder reforms.

Just about sums up Japan's track record for the past two decades at least.

4 ( +4 / -0 )

Japan doesn't need to shoot for a lot of aggregate GDP growth anyway, because it's population is declining. 0% real GDP growth is good news, since it means positive per capita growth (which is more important).

-3 ( +2 / -5 )

Limp arrow from a lackluster government

exactly and that's the reason Abe's support rate has dropped to the lowest, according to Kyodo and Asahi. .

4 ( +5 / -1 )

It all depends on how much Abe will actually do in the end. These plans are a step in the right direction, maybe he'll take another step after this. Maybe, maybe not.

-1 ( +0 / -1 )

Japan doesn't need to shoot for a lot of aggregate GDP growth anyway, because it's population is declining. 0% real GDP growth is good news, since it means positive per capita growth (which is more important).

I agree.

That being said, the growth package isn't that bad and I'm still confident in Abe.

-7 ( +1 / -8 )

Richard Katz's recent article in Foreign Affairs does a good job of skewering Abe's policies.

What really needs to happen is for Japan's laws to be revamped to encourage actual competition and creative destruction among its dinosaur firms. Workers need to be paid more across the board--perhaps by legally requiring temporary / contract workers to be given "equal pay for equal work." And the government needs to stop hiking taxes for its citizens while devaluing the yen.

All of Abe's policies are just translating into a very real increase in prices for citizens with only a smoke-and-mirrors increase (if any) in consumer confidence.

5 ( +5 / -0 )

Japan doesn't need to shoot for a lot of aggregate GDP growth anyway, because it's population is declining. 0% real GDP growth is good news, since it means positive per capita growth (which is more important).

JeffLee -- not sure. Japan still needs to revitalize its economy, or it won't even get 0% GDP growth. As you are surely aware, Japan's domestic efficiency is among the worst of the developed countries. What keeps Japan's GDP at its current level, are exports. And, to his credit, Abe realizes that Japan must make structural changes to keep its companies competitive on a global basis. Too bad he cannot get the backing to make the needed domestic changes as well -- like to employment laws, agriculture, etc.

1 ( +1 / -0 )

"Gaijinfo" made it very clear again!

Cut corporate taxes, increase taxes on those who already struggle to survive. The next election will show Abe as the winner again. Money talks again ... for the benefit of those who already have it.

3 ( +5 / -2 )

Abe making the rich richer and the poor poorer

10 ( +10 / -0 )

It is just typical class warfare, following after Reganomics. Trickle down didn't work then and it won't now.

4 ( +5 / -1 )

Why not ask American's about their pension funds (public and private) being invested in the Stock Market and what the outcome was?

In almost every case following the 2008 financial crisis those pension funds lost large sums of money. Millions of American's had the pensions wiped out thanks to those funds having been invested in the Stock Market.

Abe the economic guru of Asia has a magic plan that will just insure all will live in a utopia. Abe has no clear understanding of the effects these reforms will have on the average Japanese citizen or how much it will hurt them.

8 ( +7 / -0 )

Oh yes what a great plan!!! Cut taxes on corporations and gamble with people's money in the stock market. What could go wrong?

4 ( +4 / -0 )

"Kitsap" .... that's the point. This guy and his cohorts live in their little world. Why not ship all of them to Tokyo Disneyland. Would be the attraction there = more people would go to see them an spend more money. Hey, maybe that's a good idea. Something like the 3 stooges!?!?

2 ( +4 / -2 )

Grasp the nettle, dammit!

There are no specifics here, just the usual generalities that can can easily dropped, loopholed or simply ignored (with no sanction) for the toothless tigers they are.

A case in point par excellence is Ms Shiomura's recent treatment by LDP men in Tokyo City Hall.

2 ( +2 / -0 )

Why would highly skilled workers come to a country with a 55% tax rate when you can go to Singapore (20%), Korea (18%), Hong Kong (16%) or Dubai (0%)?

4 ( +4 / -0 )

People doing 10-12 hour days and work related tasks at home will receive the same or a reduced bonus even though Abe raised consumption tax in April.The reality is that the Japanese are taking one step forward and two steps back.....

6 ( +6 / -0 )

@TravellingSales

Maybe because they understand that there's more to life than money and naked self- interest?

1 ( +1 / -0 )

I'll believe when I see it. As they say, proof is in the pudding.

1 ( +1 / -0 )

Abe-san, look around you...Your plan - is NOT working !!

6 ( +6 / -0 )

It all depends on how much Abe will actually do in the end. These plans are a step in the right direction, maybe he'll take another step after this. Maybe, maybe not.

My money's on maybe not. Actually, make that probably not. The needs of the few (reliable sources of LDP votes, campaign cash and various other perks) outweigh the needs of the many (i.e. everyone in Japan who doesn't vote LDP or donate money to LDP politicians).

2 ( +2 / -0 )

There are no taboos or sacred cows for my growth strategy,

Taboos and sacred cows? Which means what? Your economic plan will fail simply because it lacks any imagination or initiative. You've just recycled the same old crap from 30 years ago that pushed Japan's economy into the toilet in the first place. Giving corporations tax cuts to support them in international markets that no longer exist is just ludicrous! Your plan to get women back into the workforce without restructuring the wage system is also a huge fail. Globalization is a two-way street Abe-San. Nobody wants to buy overpriced Japanese goods when they can buy the same product for 50% of the price made in a different country. If you want to rebuild a house you start from the foundations, not at the top. Japan's greatest resource is it's workforce, not the corporations. The 1970's are over! Wake up!

4 ( +5 / -1 )

Why would highly skilled workers come to a country with a 55% tax rate when you can go to ....Dubai (0%)?

Dubai!?!?! You gotta be kidding. Expats get thrown in jail there for showing affection in public. And having the wrong kind of cold medicine lands you four years in jail.

0 ( +2 / -2 )

@jeff Singapore/hongKong both are better options than Japan

0 ( +1 / -1 )

"Singapore/hongKong both are better options than Japan"

Apart from the cost of housing, which is kinda important.

1 ( +2 / -1 )

Abe-san, look around you...Your plan - is NOT working !!

true, not working at all, no support from Samurai Blues (dismal performance) returning early and late arrival of Indian PM Modi...!

0 ( +2 / -2 )

Apart from the cost of housing, which is kinda important.

And the heat. Both countries are like Japan summer, all year long.

3 ( +3 / -0 )

It's always interesting to see some making a lot of noise about Japanese economic stagnation and its dinosaur firms and ojisans, and suggesting free-market solutions like "fostering creative destruction", "dismantling lifetime employment" based on the flimsiest economic theories which have caused many of their own economies to tank.

Our lost quarter-century has been rather comfortable, in contrast to the stark realities facing many "developed" countries.

-3 ( +2 / -5 )

Abenomics is being hailed by pundits the world over.' He is the first prime minister to step up and take decisive action on the economy' others say. But at the end of the day what has he actually done? Borrowed from Peter to pay back Paul is more like it.

His approach is similar to using a credit card every month to pay back whats owed on the same credit card the previous month. The debt is paid for the moment,, but on the otherhand the interest keeps rising...minimally to be sure...but it rises...and the debt still has to be paid the next month.

When the consumption tax hits its projected 15% percent it will be interesting to see how the feel good factor is doing then.

As the BOJ Governor said he will have to secure 'an alternative source of tax revenue, given the country's massive debt'. Where will that come from? God forbid corporate taxes because that will stymie the main engine of growth. How about raising personal income taxes and reviewing pensions? That's more like it.

2 ( +4 / -2 )

Please focus on the economy and not your "pride" issues.

-2 ( +0 / -2 )

Maybe because they understand that there's more to life than money and naked self- interest?

So you deride the SC giving corporations the right to free speech under the rationale that they constitute 'people' in a legal sense, yet expect them to act like humans when it benefits you?

0 ( +0 / -0 )

Japan doesn't need "economic reforms", it needs social reforms. The fact that these old guys who are still stuck in 1970's way of life of expecting everyone to be filial to a corporate boss is the problem. The youth are becoming less interested in that way of life so professions like agriculture and writing should be made much more attractive.

0 ( +0 / -0 )

@ Gogogo if you are already poor how much poor can you get!!

0 ( +0 / -0 )

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