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Although the prime minister’s determination to revitalize the nation’s economy came through, there was a lack of strength in the policies that are key to achieving that revitalization. Measures to achieve growth and wage increases must be developed through debate in the Diet.
Prime Minister Fumio Kishida delivered his policy speech at plenary sessions of both houses of the Diet. He emphasized his stance of placing importance on the economy, saying “economy, economy, economy,” and expressed his desire to break away from “a cost-cutting economy with low prices, low wages and low growth.”
Japan has long been shrouded in a mindset that favors deflation, and the tendency to believe that “cheap is good” has taken root in society. The prime minister’s recognition of the need to change this mindset can be called appropriate.
Kishida also emphasized his intention to focus on drastically strengthening supply capacity and returning funds to the people to help them overcome high prices.
However, the specific measures to achieve these goals are not new. A program to give preferential tax treatment to companies that raise wages is already in place, but it cannot be said that the program is functioning well. The government has also already provided subsidies for the construction in Japan of factories to make products that are important for the nation’s economic security, such as semiconductors.
Extending existing measures is unlikely to produce sufficient results.
Policy items that have been implemented so far have to be analyzed with an open mind as to why they have not been effective and what the problems are. In addition, the results of such analysis need to be applied to future measures.
In his policy speech two years ago, Kishida called for the “realization of a new form of capitalism” that focuses on wealth distribution, saying that neoliberal policies have created disparities. He also made remarks to the effect that he would change the current emphasis on shareholders.
In his most recent speech, the prime minister indicated a shift to “strengthening supply capacity,” without mentioning a “new form of capitalism,” but his explanation of why he did so must be deemed inadequate.
It is possible to modify policies in response to changing economic conditions. However, putting out one slogan after another is unlikely to draw sympathy if policies do not have teeth.
Kishida also said he will work to “mitigate the burden of high prices on the people” by returning a portion of the increased tax revenue resulting from economic growth. He seems to have in mind income tax cuts and benefits for low-income earners.
The “increased tax revenue” is believed to refer to the fact that tax revenue in fiscal 2022 exceeded the initial projection by ¥6 trillion. However, with over ¥1 quadrillion in outstanding government bonds, this does not mean there is a ¥6 trillion surplus.
High prices are largely the result of the soaring costs of imported goods and resources due to the weak yen. There will be limits on extending subsidies to households while leaving alone the weak yen.
