politics

Abe's reform plan leaves tough questions unanswered

42 Comments
By Takaya Yamaguchi

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Abe's reform plan leaves tough questions unanswered

Forward this report to IMF Japan's trusted adviser and see if they can answer some of these questions.

0 ( +2 / -2 )

Well...I mean...its a draft...? According to the report:

Both of those controversial issues are marked as pending in the still-evolving policy draft.

I'm sure they'll be resolved once the plan is officially presented to the diet.

-8 ( +1 / -9 )

What a lot of waffle:

transparency

more open to women in the workplace and friendlier to foreign investors.

a set of guidelines to bring oversight of the country’s public companies in line with international standards.

banks to have at least one outside director.

improved governance in an effort to boost foreign investment.

women in managerial posts should jump from last year’s 7.5% to 30%

create a new world-class research center and to provide support for Silicon Valley-style start-ups

Wow!

Great to know that we have a man of such insight, wisdom and direction at the helm!

(sarcasm)

10 ( +13 / -3 )

"The draft plan also sees a big role for the increased use of robotics in boosting productivity at a time when Japan’s population is declining"

More of the same old proposals. More women and robotics, nothing on immigration. easy low hanging fruit like casinos

Yawn...

4 ( +5 / -1 )

So basically, the third arrow is a lot of pleasant ideas, with no actual ideas about how to actually implement the changes involved?

For example, just how would the government increase the number of women in managerial posts? Just what is the government going to do to promote the increase of foreign investment to 3 trillion yen per year? And just how in the world is there going to be a doubling of the number of robots in the manufacturing industry?

Sorry, but declaring a bunch of forums, goals for rules to be completed, meetings, etc is not actually doing anything. It's just hot air. Then again, perhaps all that hot air could be used to power turbines that could reduce reliance on foreign energy.

7 ( +11 / -4 )

Do what is best for the country and not yourself

-1 ( +2 / -3 )

So basically nothing has changed - after spending countless hours in meetings and workshops over the last year all that the oyajis could come up with are fuzzy "goals " and "targets" without any details on the roadmap or mechanism of how to get there. Just blowing a lot of hot air, wonder how the foreign market players will react to this....

A third arrow ? Not even a third dart....

5 ( +9 / -4 )

A draft plan to boost Japanese growth promises to overhaul corporate governance, promote technology and attract private investment, but it leaves many of the toughest questions unanswered as the country seeks to claw its way out of a crippling cycle of deflation.

Can anyone really be surprised? Japan has been all foam and no beer for over two decades now. Nothing is going to change.

5 ( +8 / -3 )

The author of this report seems to be critical that the plan does not go into detail about:

-whether the government would cut the corporate tax rate. -plans to overhaul the nation’s public pension fund, so it takes on more risk for the benefit of investment companies. -whether corporations will be allowed to own farmland. -whether companies will get reforms of the labor arbitration process to make it easier to dismiss workers. -whether Abe’s government will push for legalizing casino gambling in Japan.

So in other words, it is critical that there are not enough details about how private corporate interests will reap great benefits from Abe's clear neo-liberal agenda. And this lack of details and delays--because of some opposition ^--is a bad thing?

Yet we know how this agenda elsewhere and already in Japan has greatly increased inequality, furthered social injustice, harmed the natural environment and society and weakened democracy. How about a balanced report that looks at the actual social indicators in countries that have adopted a neo-liberal reform agenda.

1 ( +3 / -2 )

Most of the policy commitments are broad and lack detail on funding or related legislation, however.

Abe's economic reform plan is summed up very well in this statement. It's all smoke and mirrors with no backbone. It's just political guff.

1 ( +4 / -3 )

It looks like Abe’s third arrow is frozen in the quiver, any real surprise about his fuzzy math ?

Abe is essentially a talker who is good at to give empty and broken promises: Fukushima Daiichi disaster relief, structure reform, TPP … you named it.

What a shame!

5 ( +5 / -0 )

agree with MGigante. It is a draft at this stage and a very Japanese one at that. A lot of subtlety, and general lack of hardline rules.

For the directors and women, they have listed steps such as reporting these to the planned governance body which I see as a step in the the right direction (rather than no steps at all).

The rest of the report seems to be blaming the draft from a corporate view such as lack of tax cuts (corporate), casino business, easier dismissal of employees, all of which are still not agreed, let alone start implementing steps on these.

It's a long haul plan, I'd wait and watch. If you're looking short term, it's time to look elsewhere, like a few years ago.

-3 ( +2 / -5 )

It looks like Abe has neither the strength nor the ability to implement any real reforms. All he was able to do was spend many trillions of our yen to finance projects for his party's supporters. Many of these supports are using the profits they have made to finance moving more of their operations overseas. This does none of us any good. If Abe wants to improve the economy, here is what he should do.

For corporate governance, require all public companies (including banks) to appoint outside board members. Half the seats should be held by outsiders. This is common practice in other developed countries, but is unheard of in Japan.

Institute a cost/benefit analysis system for all government projects which are funded by the taxpayers. If the projects cannot generate a positive return to the taxpayer in the form of monetary return, or valuable services, then such a program should be overhauled, or eliminated. Any private life insurance company can give me a large return if I invest in one of their retirement plans, and they still make money in the process, why can't the government do the same?

Enact competition laws like those which exist in other developed countries. Strictly punish those companies which engage in price fixing, and imprison those business people who collude with each other to set minimum prices for their goods. If they cannot earn a profit while selling their goods for what their customers think is a fair price, then they must either improve the efficiency of their businesses, or get out of the way and let other businesses which can do a better job provide the products.

Eliminate amakudari, and ban the practice of hiring government officials into high-paying private-sector jobs when they retire from public service. This is blatant corruption, and should be severely punished, instead of being considered common business practice. Japan needs something like the FBI, which operates outside the sphere of government/business control to root out the corruption endemic in the political system. The press in Japan must be made free and independent, and not under the control of the advertisers and their political puppets. The people know only what information they receive from the news, and when the news services cannot print anything which offends their advertisers, or their political friends, then the people cannot be fully aware of what is going on in their country.

Labor laws should be eased to allow companies to dismiss unproductive employees quickly and easily. On the other hand, equal-opportunity employment laws need to be fully enforced. In America, you are not required to include a photo of yourself with your application or resume, nor are you required to state your age or sex, as none of these things can be considered when a company looks at your application or resume. Any discrimination on the grounds of sex or age should be strictly punished, and recourse in the courts for those who are offended should be available.

The education system, particularly at the university level, needs to be overhauled. The current education system teaches young people to submit and become part of the machine. It does not encourage individual thought or debate. Basic skills are drilled into primary school students, while universities teach almost nothing. Graduates from Japanese universities bring few life skills and little meaningful education to their new jobs, which makes them dependent on their companies to provide these things. They are molded into insignificant parts of a large machine, which turn 12 hours a day for 40 or so years. Companies are only as good as the people they hire, and if the are hiring drones instead of people capable of independent thought, then these companies are going to face a tough future.

Lastly, Japan needs to open it's markets to outside competition. Tariffs must not merely be reduced, they must be entirely abolished, and non-tariff restrictions must also be abolished. Japan needs competition to improve the way it does things. This one act alone would probably bring about all of the changes listed above, as these changes would be necessary for Japan to become a competitive economy.

All of these steps would be painful, and require great change. But if Japan continues to do things the way it has been, the pain is going to be much worse.

9 ( +13 / -4 )

screw cutting the corporate tax rate. what is needed is less red tape in order to create new companies. the hoops that people have to jump through starting a new business is incredibly difficult. japan needs new energy and blood, not the same old corporate titans.

6 ( +7 / -1 )

Using “draft” as an excuse sounds lame.

Here is why, when Abe’s appointed advisory board gave “collective self-defense proposal, the document filled with detailed nitty-gritty scenarios. Why can they apply the same principle to structure reform doc?

BTW, Abe’s dragging tactics are nothing new. For instance, Japan’s TPP negotiation is a primary example.

5 ( +5 / -0 )

You have said it already - the toughest questions remain unanswered! But if Abe could answer them, he wouldn't had to step down in 2007 in the first place. Unfortunately, the Japanese people have been tricked into believing he has transformed into another person, an economic genius. It's the same old corrupt bullshit Abe and LDP, no more, no less.

2 ( +3 / -1 )

So what's the new catch word for 2020 gonna be:

Abebotics?

or

Robotic Abelution?

0 ( +1 / -1 )

The 60-page draft outline of Prime Minister Shinzo Abe’s growth strategy reviewed by Reuters, which has not been made public

... but has been provided to Reuters, a major source of business and financial news...

If anything, that this draft plan has been given to Reuters shows that Abe's team are keen to hear what the markets think, and they are presumably going to try to manage expectations ahead of the official release of the plan. I expect they will make some improvements to it.

Perhaps confounding the market reaction however, is the news that the GPIF is possibly going to move to allocate 20% of it's pension fund stash to Japanese stocks. And the yen was a touch down overnight.

All told stocks are up on the day as of right now.

-1 ( +0 / -1 )

In Japan there seems to be something hidden behind everything. There is a plan Im sure, Im guessing defense export will be what Japan will become famous for.

-2 ( +0 / -2 )

If there's anything Abenomic achieved was quickly falling off into irrelevancy by increasing the debt even more. LDP seems to have cornered themselves even further.

2 ( +3 / -1 )

"Institute a cost/benefit analysis system for all government projects which are funded by the taxpayers. If the projects cannot generate a positive return to the taxpayer in the form of monetary return, or valuable services, then such a program should be overhauled, or eliminated. Any private life insurance company can give me a large return if I invest in one of their retirement plans, and they still make money in the process, why can't the government do the same? "

Its impossible to hold any gov accountable for your tax receipt "investment" Look at Snowden, they "invested" tens or hundreds of thousands of dollars in his trainng, benefits and now prosecution. Where is your investment? He is taking it and doing the opposite of what you invested for. You can only hope that the checks and balances built in catch the major offenders.

-3 ( +0 / -3 )

Its impossible to hold any gov accountable for your tax receipt "investment" Look at Snowden, they "invested" tens or hundreds of thousands of dollars in his trainng, benefits and now prosecution. Where is your investment? He is taking it and doing the opposite of what you invested for. You can only hope that the checks and balances built in catch the major offenders.

Of course it is possible, you and I do it every day. If I want to buy something, I have to think about if what I am buying is useful, and if I can afford to pay for it. If the answer is "no" to either, then I don't buy. Businesses also perform cost/benefit analysis of every decision, they always have. Businesses are accountable to their employees, their customers, their investors, etc. Why should our government not be held to the same standards we hold ourselves to?

Situations like what happened with Snowden are always taken into account. Companies sometimes hire bad people, make bad decisions, etc. It is part of the cost of doing business. But these problems are part of the equation, and enough room is left to subtract their costs while still keeping the balance positive. That the government cannot do the same is simply absurd, and unacceptable.

0 ( +3 / -3 )

There is no third arrow. Abe is a nationalist not an economist. Always was, always is and always will be.

3 ( +4 / -1 )

Seems more and more people are realizing Abe's promises have just been a lot of hot air -- his revisionist promises aside -- and are questioning his effectiveness. I can hear the tummy rumbling!

5 ( +6 / -1 )

He has a plan. ............. And that is a good start............... In two years Abenomics has created positive shifts in Japan's economy -- - and also positive PRO-ACTIVE, peacful collaborative shifts in FOREIGN POLICY in Asia + Europe . . . .If ABE accomplishes 50 % of this 3rd arrow he will have , iNDEED, moved Japan forward

-2 ( +2 / -4 )

the only thing growing is the size of government. the government keeps borrowing money so they can pay their own salaries and buy votes to keep them in power and then squeezes the money to pay for it by taxing the the people. i wish really abenomic would work but raising taxes before instituting reforms only creates cost push inflation not demand pull inflation which is a sign of an improving economy. the so-called third arrow is too little too late.

6 ( +6 / -0 )

Without third arrow structural reforms 'Abenomics' the first and second arrows will miss their target change direction hitting pension funds and savings as the money printing drives down gilt yields drawing the ever mounting retirement crisis facing Japan closer, there is no escape from the law of diminishing marginal returns, every time the economy needs a hit of QE, the economic euphoric effects diminish, so the next QE hit has to be more potent to have the same effect.

-1 ( +0 / -1 )

Not much need for a Third Arrow, is there?

The Bubble already burst!

0 ( +2 / -2 )

Your confusing companies with gov. Gov can get all the money it wants, anytime it wants. Just tax or sell bonds then print money.

A company doesnt work that way Even if a company issues bonds, it owes the investor, but it cannot print more money. Its a not for profit organization. Not to hate on the gov, just pointing out differences )

1 ( +2 / -1 )

Dear God, we can all agree that Japan's economic out look is not positive? The future is bleak for those under 40 at a guess. The Government are unable to implement any policies that will result in an improvement in everyday life. So....let's start a war!

-2 ( +1 / -3 )

If you or I attempted our own version using our trusty cannon, 20 years for counterfeiting is the current going rate of return

1 ( +1 / -0 )

Cricky: Dear God, we can all agree that Japan's economic out look is not positive?

And can you list the countries which have an unqualified POSITIVE outlook, please.

0 ( +1 / -1 )

New Zealand, for one, budget in the black...free health, progressive social welfare programs, great place to live. Low suicide rate good birth rate, pretty much the exact opposite of Japan. Might be an example to emulate.

0 ( +3 / -3 )

Back on topic please.

0 ( +0 / -0 )

The ordinary, naive, and unsuspecting citizens around the World put their hopes on empty promises from politicians. An informed person of the real reality would never do that.

0 ( +0 / -0 )

Japanese economic policies are reactionary and not proactive. They had every advantage 30 years ago to make the right policy changes. At this point it's too little too late. The standard of living for the average Japanese person will continue to drop over the next few decades

0 ( +0 / -0 )

I can't imagine you'd advocate actually punishing these people for taking lucrative appointments, or have them branded as corrupt and subjected to the legal process. Would you say they ought to pay large fines, or even deserve to go to prison?

Many officials were once industry people, and if they return to industry after leaving the government, you can't fault them. But if during their time as a public official they brokered contracts or deals, and then receive a lucrative appointment from a contractee when they leave their government positions, then it is indeed a problem.

The situation in Japan is different than in other developed countries. Collusion and corruption exist everywhere, even in the places where it is most strictly punished. But in Japan, collusion-for-profit is a cultural practice which is taken for granted, despite the fact that it is technically illegal. Exchanging gifts for favors or help is culturally accepted. Any official or group of officials who decide to enforce Japan's few competition laws (or otherwise offend big business) are either going to lose these lucrative after-retirement positions, or they will be "outed" when a news story pops up about their having accepted "loans" from some company or other. Do you think Tokyo's former governer resigned because some investigative reporter some how discovered he had accepted cash loans?

These types of things are the most difficult thing to overcome if Abe wants reform. If he pushes too hard, don't be surprised if he suddenly becomes mired in a corruption scandal of some type. On the other hand, if he does what he is directed to do, he will never want for a good income when he retires.

New Zealand, for one, budget in the black...free health, progressive social welfare programs, great place to live. Low suicide rate good birth rate, pretty much the exact opposite of Japan. Might be an example to emulate.

Enjoy it while you can. The road to hell is paved with good intentions, and the first miles are smooth indeed. But it gets rougher later on. As the population grows, more government employees will be hired, and when then when there are enough, they will unionize. Their pay will go up, and the quality of their work will go down. They will vote only for candidates who promise to create more government-funded programs, which will hire yet more government employees. Politicians will convince people to approve unnecessary and expensive projects, which will be finished late, and two-to-three times over budget, allowing for more graft. The government will foment crises to instill fear into the voters, and use this fear to allow things like increased spending on defense or environmental protection spending, etc. This in turn will drive up taxes and other costs. Deficit spending will eventually be required to make ends meet, and debt will accumulate, and eventually New Zealand will be as bad off as anyone else.

0 ( +2 / -2 )

LOL At Bertie! Great stuff!

That's Abe's "scope" of Japan. Talking about microeconomics at the macro level. Its so stupendous that sometimes I wonder if there are any intellectual left in the Japanese gov't.

-2 ( +0 / -2 )

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