Government's economic policy will further increase poverty and social disparity

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Government's economic policy will further increase poverty and social disparity
Akahata editorial (excerpts)

The Abe Cabinet on January 25 approved an economic and financial basic policy for the next five years entitled "Course and Strategy for the Japanese Economy," the backbone of which is to put the Japanese economy on a new growth course.

Citing the decline in population, the social disparity, and the severe financial situation as the three major tasks for Japan to tackle, this new medium-term policy insists that economic growth brought by a large increase in productivity will render an easier solution to these issues.

In order to increase productivity, the "Course and Strategy" paper calls for innovation and the establishment of an economic and social system serving the goal of increases in productive efficiency.

Innovation, however, largely depends on making use of IT, a policy that has been repeatedly called for as a measure to revive the economy in the past 10 years. In fact, the government cannot open a new prospect for innovation unless it drastically changes its large corporation-oriented economic policy because it has devastated small- and medium-sized enterprises, which should play key roles in innovation, adversely affected local economies, and headed to a decreased new business opening rate.

Worse still, aiming at establishing an economic and social system serving the goal of increasing productive efficiency, the "Course and Strategy" policy paper gives top priority to a drastic "reform" of the labor market, including the introduction of a "white-collar exemption" system that will force most white-collar workers to work overtime without pay, further increasing the danger of karoshi (death from overwork).

Although this policy may help increase large corporations' productive efficiency, it will prevent wage increases in return, further aggravating the problem of the growth in poverty and social disparities.

The "Course and Strategy" paper proposes no measure to improve the sluggish household income and consumption, the weakest point in Japan's economy. As long as the Abe Cabinet pushes forward cuts in social welfare services and massive tax increases on the public, household incomes will inevitably continue to decline.

This cabinet-approved policy calls for an economic growth of 4 percent, but this scenario presupposes a strong growth of the world economy. As a matter of fact, this scenario only presents a model of an unstable economy relying on foreign demand.

Change policy to support living conditions

Although the government claims that economic recovery has continued for five years, private consumption, which accounts for 60 percent of the Japanese economy, has yet to recover. The government and ruling parties are insisting that favorable corporate performance will favorably affect households at some future point. They ignore the fact that large corporations' record profits have materialized by sacrificing employment opportunities and wages.

What is needed for a sustainable development of the economy and living conditions is to change the corporate-oriented economic policy and the taxation system into ones in support of the living conditions of the general public.
- Akahata, January 29, 2007