politics

Gov't says it won't meet FY 2020 fiscal discipline targets

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Is there anyone really surprised by this? Just like corporate Japan, Japan government paints a rosy picture to get people's hopes up and then later falls on it's face.

4 ( +6 / -2 )

Rather than get serious about reducing government waste and abuse, such as the Olympic stadium folly, the economic mis-managers are relying on inflation to decrease the debt burden, even if this means increasing the burden on the 30+ percent of the population that are working poor.

4 ( +5 / -1 )

No surprises here. As a general rule, attempting to achieve a mathematically impossible target results in the target not being met. A government surplus requires a private sector deficit, which means either a ) more private sector borrowing or b ) running down of savings. Nowhere else for the money to come from, and it isn't going to happen (short of impoverishing people, which would be VERY popular!)

suggesting further steps will be needed to boost revenue and lower spending.

Here they foolishly think deficits are caused by government spending. They aren't, deficits are just the difference between how much you spend and how much you take back through taxation and are determined by your taxation system. Level of spending is irrelevant, if you spend more than you tax you will have a deficit, which then gets added to your total debt. And again, you can't tax more than you spend without the private sector going into deficit. Cut spending and all you do is reduce GDP, making the debt / GDP ratio higher while your debt continues to climb. Barely elementary school level arithmetic, but beyond the competence level of the highly educated "economists" in charge.

-5 ( +2 / -7 )

How about;

stop giving billions of tax payers yen to other countries stop over staffing ward offices, police boxes, etc. cut upper house salaries by 20% (they can still keep their three vacation homes) have all polititians drive themselves to work. just to name a few.
6 ( +8 / -2 )

Yes, everyone already knew that the Japanese government has abandoned all pretenses of fiscal discipline.

warispeace,

Very good comment (although I don't think "working poor" are 30% of the overall population).

The idea of government spending trillions of yen each year was supposed to be "redistribution of income" so as to support those less well-off. But inflation is like a tax in that it reduces purchasing power and thus the plan will fail to achieve the purported objective.

And the redistribution of income is out of whack anyway - the government is redistributing income that hasn't even been earned yet - e.g. by borrowing from the future of a country with a shrinking, aging overall population and a shrinking, aging workforce.

since1981,

Sounds good, but does Japan even need an upper house? Just combine them and eliminate a few hundred politicians altogether.

3 ( +4 / -1 )

Here they foolishly think deficits are caused by government spending. They aren't, deficits are just the difference between how much you spend and how much you take back through taxation and are determined by your taxation system. Level of spending is irrelevant, if you spend more than you tax you will have a deficit, which then gets added to your total debt. And again, you can't tax more than you spend without the private sector going into deficit.

Excuse be, but do you have even the remotest idea of how strange that sounds? Your second sentence completely contradicts your first sentence. Of course deficits are caused by spending, by spending more than you collect or earn. And then the deficit must be covered by borrowing, and deficits turn into debts.

And tell me, how does the private sector "go into deficit"? Companies which spend more than they earn quickly go out of business (unless of course they are Japanese companies). If my company runs a deficit, I cannot borrow more money (and, unlike the government, I cannot print my own, and unlike a Japanese company, I cannot give a banker a job on my board in return for the bank's support). If I can't borrow money, and I am not earning any, I cannot pay my employees or suppliers. I will be forced into bankruptcy. The court will either liquidate my assets and pay what is left to my creditors, or they will reorganise my company, and give it to someone else to run.

Cut spending and all you do is reduce GDP, making the debt / GDP ratio higher while your debt continues to climb. Barely elementary school level arithmetic, but beyond the competence level of the highly educated "economists" in charge.

Unfortunately, government spending generally takes more from GDP than it adds to it (particularly when that spending is done with money borrowed at interest). In capitalist economies, it is the private sector which builds goods, provides the majority of services, provides the most jobs, and creates most of whatever GDP exists. For every dollar the private sector invests, it seeks to earn a positive return, and positive returns are in turn reinvested with the hopes of doing the same, and economic growth occurs. Government spending generates a negative return, meaning that every dollar you pay in the form of taxes, you will receive less in return. Every dollar consumed by the public sector is a dollar which cannot be used to create growth. Think of the recently canceled Olympic stadium, all government building projects are greatly overpriced. If a private company builds an office tower, that tower will be built for a competitive price, it will be finished on time, and within budget. If the building cannot create more revenue than it cost to build, it will not be built. If the government builds a similar building, it will cost two-to-five times the original quote, and it is very unlikely to be finished on time (the delays usually being the cause of the cost overruns). Whether or not the building provides more to the community than it cost to build is irrelevant.

We have seen the growth of deficit spending and national debt increase in-step with the increase of the size of the public sector. And as the non-productive public sector grows, the productive private sector must of course shrink. So while the size and cost of government increase, it consumes more revenue, and as the private sector shrinks, it must of course create less revenue. Greece is a prime example of what happens when government becomes the largest employer and consumer.

Think of all the money recently spent on "stimulus". Did you get any of it? Did anyone? All of the stimulus money was spent on waste-generating projects that padded the pockets of politicians and their politically-connected friends. Had they simply reduced the tax burden on everyone by the same amount, there would have been a strong positive effect on the economy.

Reducing the size of the public sector would in no way decrease GDP, the opposite would occur. If the pubic sector spends less, it will consume less, and if the public sector consumes less, the private sector will spend and consume more, and do so much more efficiently.

2 ( +5 / -3 )

Gary,

What is a "living wage"? Some new jargon?

But 30% of 128 million people would be close to 40 million people. Out of a workforce of 65 million people... that's like saying that roughly 2 in 3 workers are "working poor". That doesn't sound realistic to me, and I think people from Myanmar and Bangladesh would raise their eyebrows at such suggestions of Japan.

Also in Japan, it's a valid option for people to live under the same roof as their parents. My new nextdoor neighbours just built a massive big house, and 3 generations live in it. Not one of them looks poor to me by any measure (except when they come out the door in their pajamas to collect the newspaper).

-1 ( +0 / -1 )

As Gomer Pile said " Surprise! Surprise! "

1 ( +2 / -1 )

Oh, whatever could be done to decrease this debt? Concrete isn't free, you know.

0 ( +1 / -1 )

A government surplus requires a private sector deficit, which means either a ) more private sector borrowing or b ) running down of savings. Nowhere else for the money to come from,

How many times are you going to repeat the same nonsense? Myself and others have de-bunked your pseudo economics many times. But, let me simplify it one more time for you -- a government surplus, as was vividly demonstrated during the Clinton years, can be the direct result of economic growth beyond the government's projections. In the case of Japan, for example, exports could rise as a result of the lowered yen, which improves corporate profits, and, therefore, more tax revenue -- with NO "more private sector borrowing" or "running down of savings". Or, those increased profits could be used for increased wages, which, in turn, leads to increased payroll tax revenue and possibly domestic consumption, leading to higher tax revenues as well. But, again, since these are incremental profits, private sector borrowing has not risen, nor has savings been "run down". Can this be the last time, please?

1 ( +5 / -4 )

How many times are you going to repeat the same nonsense?

Indefinitely, I'd guess.

Can this be the last time, please?

Agree with the sentiment, but have lower hope for that than I do of this Abe government making moves to get itself into shape.

One thing not emphasized in this article is that the government assumptions are for 2% real economic growth. Basing your financial "plans" on economic miracles, relatively speaking, is not prudent.

3 ( +4 / -1 )

But, let me simplify it one more time for you -- a government surplus, as was vividly demonstrated during the Clinton years, can be the direct result of economic growth beyond the government's projections. In the case of Japan, for example, exports could rise as a result of the lowered yen, which improves corporate profits, and, therefore, more tax revenue -- with NO "more private sector borrowing" or "running down of savings".

LOL. Yes, I am well aware that increased exports increase tax revenues. And my apologies, I edited out the effect of the foreign sector in my previous post, because I wouldn't want to be accused of rambling on too long again. As for "economic growth beyond the government's projections" - BINGO, you've got it!!! The question now is where did that growth come from. If it is from increased exports, yeah the government might be able to run a surplus. If it is from more economic activity where currently issued money is circulating more before being drained out into savings, tax revenues will go up, and the deficit will go down. But there will be no surplus. If it comes from people taking on more debt due to things like a tech bubble (Clinton) or a housing bubble, then you get your surplus. If you have any ideas how to create such bubbles in Japan in 2015, you should get in touch with Mr. Abe and Mr. Kuroda, they would love to hear from you.

How many times are you going to repeat the same nonsense?

LOL2. Clearly the guy who has repeatedly predicted on this message board (and explained why) that the Japanese government will not meet its fiscal targets / fantasies is full of nonsense. Especially in the comments section on an article that says "JAPAN WON'T MEET FISCAL TARGETS". It is the people who repeatedly predict things that never happen (BUT WILL SOON INEVITABLY SOMEDAY HAPPEN, I KNOW IT YES YES YES!!!) who know their stuff.

-2 ( +1 / -3 )

A government surplus requires a private sector deficit, which means either a ) more private sector borrowing or b ) running down of savings. Nowhere else for the money to come from,

And my apologies, I edited out the effect of the foreign sector in my previous post, because I wouldn't want to be accused of rambling on too long again.

Heh, so you opted to be deliberately wrong instead.

0 ( +0 / -0 )

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