Is Economic Progress Being Held Back in Japan By Vested Interests?

Is Economic Progress Being Held Back in Japan By Vested Interests?
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Shinzo Abe led the Liberal Democratic Party back into power after a 3-year absence with a landslide victory in December 2012 and immediately moved ahead with his pledge of improving the Japanese economy with his “Abenomics” policy. His plans were to escape deflation, increase employment as well as corporate taxes. This policy is often referred to as the “three arrows” of monetary easing, structural reforms and fiscal stimulus. Since then both the central and local governments have seen increased tax revenues and business growth.

This “third arrow” policy is a long-term plan though and will require many years for all parts to be implemented before the results can be realised.

If progress is not made with structural reforms, it’s not just that new areas of activity will not be created, productivity will not increase and consumers will not have access to cheap and convenient imported products. In Japan the population growth has slowed considerably in the last two decades and has actually now started to decrease due to its aging population and low birthrate so it is vital that growth is maintained.

The Abe administration has now decided to implement an innovative approach. This approach is a National Strategic Special Zone system. This will be a system where regulations are not relaxed nationwide all at once, but instead in areas with a lot of demand are designated, and regulations are relaxed in that area only. Initially limited to major cities such as Tokyo, it now possible for households to hire foreign nannies ddue to relaxed immigration laws in these zones. By limiting the areas of deregulation, this prevents opposition activities against changes to the system to relax regulations in areas outside these. Thanks to nannies, it will be easier for both parents to work instead of one parent having to stay at home.

Recently in Japan, criticisms of Prime Minister Abe’s economic policy, particularly the attempts to progress with structural reform, have been growing stronger among citizens, and particularly the elderly who are concerned about the future of their pensions. Many bureaucrats are now openly against all attempts of structural reform by the Abe administration as many wish to maintain things in the more traditional Japanese ways and do not care for the “new politics” that Shinzo Abe is trying to implement. The opposition parties in Japan are also insisting that the National Strategic Special Zone system be stopped altogether. It is not known if those who are criticizing are in favor or opposed to economic structural reform or if they even have any alternative policies to help the Japanese economy over the coming decades.

Looking at it like this, in Japan, one wants to suspect: are assertions of “progressing with structural reforms,” “getting rid of vested interests,” and “breaking down corrupt relationships between bureaucrats and business groups” nothing more than slogans? Despite the many young people who wish to become veterinarians, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) has, for decades, not approved the establishment of a new veterinary department. In the background of this, there is the presence of an opposition campaign from current veterinarians. In the first half of this year, these existing methods of doing things have been increasing in support in Japan.

After all, in the country of Japan, rather than economic structural reform, one must ask: will vested interest groups (in this case the Veterinarian Medical Association), the bureaucrats who follow along with them (in this case, the bureaucrats of MEXT), and the politicians and those in the media who create the climate to gain public support, not change no matter who is leading the administration? What is the real nature of Japan, a developed country, who as a member of the G7 proclaims fundamental values such as democracy and freedom of expression? It is difficult to understand. Perhaps many citizens do not want structural reform, and maybe they want active vested interests and bureaucrats instead. Do we have to change our way of looking at Japan?

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