politics

Fiscal health takes backseat amid free education drive

37 Comments
By Noriyuki Suzuki

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37 Comments
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There is no reason in the world that newly graduated college grads need to be under the burden of crushing debt that will take literally a decade for many to pay off!

Education SHOULD be free! Make it so!

4 ( +7 / -3 )

What else is new?

"We're going to re-establish fiscal health."

Don't cut spending, increase spending, suck through teeth.

"Ahhhhh.... well, it's going to be difficult....."

Don't cut spending, dish out more pork to our buddies, suck through teeth.

"Hey, poll numbers are up! Snap election! Let's promise everyone and their brother a pony with whipped matcha cream on top! We'll pay for it with deficit spending!"

7 ( +8 / -1 )

Kumano is right except that the debt situation is not a crisis.

It is a crisis-waiting-to-happen.

As a parent with children, I don't want more 'free' public service provision, which is a proven failure in this country. I want competition and free choice. That is when I will actually have a good chance to obtain adequate services at a fair price.

-5 ( +1 / -6 )

Get the corporations to fund "human resources," like they used to in the old days. If they need software engineers, then they can pay for their training.

This scheme is yet again about using public money to make life easier for corporations that are richer and more powerful than in any other time in history.

3 ( +6 / -3 )

So the Japanese government owes a gazillion yen to the Japanese government.

No it's not a scam. The Japanese Japanese government is itself purchasing the bond issues and selling only a small portion on the international markets. The debt is being funded by the taxpayers.

2 ( +3 / -1 )

"The economic impact of making education free, meanwhile, will likely be meager at best for the short-term," Suehiro added.

Here is where this guy has his head up his butt. The impact will last for decades with increased income and a better educated and trained workforce.

With a declining population, making education free, will allow new workers to contribute faster to the economy through purchasing power and tax revenues, and they will not be burdened with making debt payments.

1 ( +3 / -2 )

When it comes to fiscal reconstruction, Japan has a history of failing to deliver on its promises, largely because of economic turmoil originating abroad.

So it's hardly at all to do with decades of wasteful spending and ineffective economic policy?

Thanks for clearing that up.

6 ( +6 / -0 )

This time, it is Prime Minister Shinzo Abe's move to increase spending on education and child care that has forced the prime minister to effectively give up Japan's fiscal 2020 target for achieving a primary budget surplus

So crooked Abe has "forced" himself to abandon his own target? Nobody is forcing him to do anything: he willingly chooses to continue spending like a drunken sailor, following the LDP tradition of fiscal incontinence. How much of the increased spending on education will find its way to his nationalist mates?

When it comes to fiscal reconstruction, Japan has a history of failing to deliver on its promises, largely because of economic turmoil originating abroad

This is a blatantly false statement: the LDP has no interest in fiscal reconstruction, for them it's all about spending as much money as possible on bid-rigged public work projects that benefit themselves and their friends.

6 ( +6 / -0 )

All for free education without an educated population one party states appear. But Japan's Dire Financial woos combined with a shrinking tax base and expanding social security costs, would call into question free education. Those that receive this free education are going to pay more tax to cover the ballooning deficit in their life time. So not free just deferred. Government cost cutting, waistful spending propping up profitless companies. The Government spends more on roads for its size than most G8 countries? And they are small 2 or 3 lanes wide at best. Where does all the money go. The last goods tax was earmarked for ........then that changed and changed, them split. the next is earmarked for paying for election promises.

Not one word about transparent spending, debt reduction, reducing government costs regulation reform. There is no future plan.

7 ( +7 / -0 )

If they need software engineers, then they can pay for their training.

Couldn't they hire people who have the required skills already? Isn't that what happens in normal markets around the world?

The Japanese government is itself purchasing the bond issues and selling only a small portion on the international markets.

The Bank of Japan has independence (the government only gets to choose the people who make monetary policy decisions).

The debt is being funded by the taxpayers.

The debt is being funded by the Bank of Japan with newly created yen at this point in time. It's for the taxpayers (e.g. our government) to pay back the debt holders, including the Bank of Japan, back one day in future. And that's one reason why there is so much pessimism in Japan. The government continues to make it worse, not better, by neglecting to take the tough but necessary decisions of reforming wasteful / inefficient spending.

making education free, will allow new workers to contribute faster to the economy through purchasing power and tax revenues, and they will not be burdened with making debt payments.

Tax payers generally will be burdened with the cost of making eduction "free" instead. I disagree that making something "free" by imposing a burden on society overall is a sure winner. I believe that this approach leads to inefficient government spending, which is the problem we already have in Japan. What service in Japan is "free" and also without waste?

-1 ( +1 / -2 )

Free education means free education. for every Japanese until graduating Senior HS. Article 16 had been empty promise for many Japanese.

BTW Japan is the biggest USA debt bonds buyer after China stopped buying some years ago.

1 ( +2 / -1 )

Abe has yet to live up to any of his promises pre-election, which he ALWAYS immediately shifts to Constitutional reform once the election is finished, so who cares whether it's fiscal reform he's lied about and failed on, or whether it's yet another arrow he'll never pull from his quiver because he never had it to begin with. Remember, fiscal reform, along with championing women's rights and equality, were both things he trumpeted on the UN as things he was going to bring about. As usual, once back home he changes his mind.

8 ( +8 / -0 )

 Japan has a history of failing to deliver on its promises, largely because of economic turmoil originating abroad

umm no, it's because they'd rather spend money on pork barrel projects and road repaveing than make long term economic investments in education, IT (have you been to your local fire hazard aka ward office) etc...

i hate how often Japan plays the victim card on issues like this. Japan is in a 30 year economic rut because of its own incompetence.

7 ( +7 / -0 )

once again, abe spouts populist ideas to win over the sheep. this time he's got families and health care for the elderly covered with his plans. last time it was mostly working class voters and a cash handout to the elderly. will it work? probably. will  it make japan better? not at all. until there is structural reform both in gov't and businesses, then nothing will really change.

2 ( +2 / -0 )

Japan's economy is schizophrenic with always having new progressive ideas to their actual systems like the officially free but really expensive school graduation, ideas which become pure propaganda.

Only purpose is to change constitution for more lucrative military projects to come as I see it.

Free education even if implemented now would take a generation to produce effects. Not going to happen anyway in the near future except to be sure he wins the snap election, which he is adept now.

4 ( +4 / -0 )

I was thinking maybe it's time to sell yen and buy dollars, though the US seems to also want to increase debt, whilst reducing taxation, so for now, perhaps a balance between the two currencies. I doubt any of the money from the Tax increase will be put to the use stated by Politicians - when has it before, just a lack of transparency. I'd still like to know where all that money for the disaster recovery in Fukushima went.

3 ( +3 / -0 )

Japan Public school education is free, but "mostly" close to basic, so you end up having to pay for JyuKu (after school-cram sessions) in order to have a chance of getting into a good Private Junior High school (from 11+), but unless you get into the best Public Schools, you'll end up having to pay the high private school fees.

2 ( +2 / -0 )

The reason we are where we are now is generations of politicians like Abe buying votes from the people. And generations of people have allowed their votes to be bought, never thinking that it is they themselves who pay the costs.

There is no such thing as "free" anything. The money Abe will spend on childcare and education will not be printed by the BOJ, it will come from the pockets of the taxpayers. Any increase in economic activity from these programs will be negated by the loss of personal income required to pay for them.

But Abe and the LDP is suffering in the polls, and as they want to keep their hands on the golden checkbook, they will kite a few more checks to pump up their poll numbers. And of course, Abe and his friends are not going to be the ones who have to cover those checks, we'll be the ones who have to pay.

1 ( +2 / -1 )

Imagine all the services they could pay for if they didn't have to pay a quarter of their budget paying interest on their debt!

1 ( +2 / -1 )

There is no reason in the world that newly graduated college grads need to be under the burden of crushing debt that will take literally a decade for many to pay off!

You know how to not be in debt? Don't borrow. You know how to stiff other people? Borrow and bail.

0 ( +1 / -1 )

Smoke screen. Article 9.

0 ( +0 / -0 )

There is no debt. It's just a paper game.

Basically correct. More like a spreadsheet game. For Japan to default on its fiscal debt, it would have to run out of yen, which it prints.

It is a crisis-waiting-to-happen.

It's a crisis that always fails to happen. Because the people who have spent the past couple of decades predicting such a crisis don't understand how public finance works in a sovereign fiat-currency issuing nation.

-1 ( +0 / -1 )

Basically correct. More like a spreadsheet game.

It may be a spreadsheet game and it may not be in danger of defaulting because it can print its own money (I'll assume you're correct for the argument's sake), but it still has to pay a huge price to service it's debt, which is just poor money management.

1 ( +1 / -0 )

"... but it still has to pay a huge price to service it's debt."

Who does the government pay that money to? (Hint: the money remains in the country, given that Japan is the only place in the world where yen can be used.)

-2 ( +0 / -2 )

The spreadsheet charade worked out great for the Zimbabwe dollar didn't it!

-1 ( +0 / -1 )

they could pay it off with the stroke of a pen, simply write a cheque.

Such an exit strategy would require collusion between the independent Bank of Japan and the government. That be it may, the cheque write off strategy hasn't been attempted in the case of the current debt mountain. If it were so simple and free of risks and consequences it'd just be done.

Japan borrows money from itself

If this never ceases to be the case in aging Japan then things could be dandy.

The crisis-waiting-to-happen eventuates when the assumption that nothing will ever change, ceases to be true.

What for example might happen if the Bank of Japan were to (I know this sounds crazy) 'succeed' in reaching its inflation targets and cease to wish to be complicit in bankrolling the government indefinitely?

Maybe they can manage it, but good luck, to those who believe such a day will never come.

0 ( +1 / -1 )

Such an exit strategy would require collusion between the independent Bank of Japan and the government. 

Which actually exists, as it the BOJ agreeing fulfill one of Abe's "Third Arrows."

"The crisis-waiting-to-happen..."

So when it is the crisis going to happen? You've been saying this for a long time, and frankly it's tiresome when it never happens and you squirm out of providing any specifics.

Real events have contradicted you at every turn. Like the yen become the leading safe haven among global investors. That wasn't supposed to happen, was it? LOL JGBs are another safe-haven favorite, with foreign buyers on the rise. You wanna be safe in a world of uncertainty? Then buy Japanese government assets. Because that's what's actually happening in the real world. At one point, you're going to have to acknowledge, um, reality.

-1 ( +0 / -1 )

So when it is the crisis going to happen?

When is the next earthquake disaster to happen?

Not knowing when a crisis will occur is no proof that there is no risk of one.

You've been saying this for a long time

And you've learned nothing inspite of it!

will continue to buy bonds

History alone is proof that things change, from time to time. Even in Japan.

0 ( +1 / -1 )

"....and constantly transferring money between them. There's no end to it, and the net balance is always the same."

Yep, it's an asset swap. They can do that til the cows come home. That's why all the warnings over QE ("sugar high" "hyper inflation" "funny money," etc.) are being proved wrong.

I pointed this out several years ago. My econ degree has shown its worth.

-1 ( +0 / -1 )

Who does the government pay that money to?

JGBs are another safe-haven favorite, with foreign buyers on the rise.

You answer your own question in a later post. JGB's is one example of how the government has to pay interest on it's debt. You say you have an econ degree so I will assume you know how bonds work.

1 ( +1 / -0 )

Long Term Capital Management was run by Nobel Prize-winning economists. Hideo Kumano has a degree in economics, too.

Where were we? Never mind...

-1 ( +0 / -1 )

You say you have an econ degree so I will assume you know how bonds work.

Yep. The biggest holders are the BOJ, whose interest payment revenue eventually ends back in the coffers of the Finance Ministry. Another big holder is the government pension fund, so that money goes toward, yes, our pensions (same deal with the US social security fund). Private pension funds also big holders. The money ends up as income or savings, one way or another.

As for the foreigners, (9% of total) they will get paid yen. That yen stays in Japan, since it can't be used anywhere else in the world, for income, savings and investment...in Japan.

Indeed, if foreigners were NOT interested in JGBs, that could signal trouble. As it is they're willing to park their money in a very, very low returning security because it's Japanese government. That speaks volumes.

Remember, my opponents stressed Japan would be forced to hike rates to attract JGB buyers. Another area of the debate wherein I claim victory, given that Japan has since rolled out a policy to keep long terms around... zero. Zero! Hehe.

One person's spending is another person's income.

-1 ( +0 / -1 )

All the Zimbabwe dollars stayed in their financial system too, except for those trillion dollar denomination notes taken abroad as souvenirs. Better for that purpose they became than for paying pensions or buying eggs.

Your claiming victory before the game is anywhere near over is pretty silly... Come back and crow after the BoJ has executed an exit strategy - and even if successful it would not indicate that there are risks to what the BoJ has been doing.

I certainly hope they can navigate out safely. Foolish to put one's livelihood on it though, to my mind.

-1 ( +0 / -1 )

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