The Guardian May 8, 2002


Koizumi Japan's shattered reformist idol

by Tomiyama Eiko*

"Reforms first, even though the Liberal Democratic Party may be destroyed", 
declared Japan's Junichiro Koizumi when he assumed the Prime Ministership 
of Japan last year.

Within a year, distrust of his leadership now surpasses his approval rating 
in the polls. The Prime Minister, however, continues to make irresponsible 
remarks as he is ambitious to maintain his power in the administration.

What will happen to Japan in the future?

Japan's economic bubble was blown in 1990 and since then a total of eight 
prime ministers have come and gone.

Behind this lies the severe economic depression that has expanded and 
deepened over these years. No Prime Minister and none of their "financial 
mobilisations" have worked.

In 1997, in particular, the "financial reforms" of the Hashimoto 
Administration failed. The GDP plunged rapidly.

The succeeding administrations poured over 100 trillion yen into their 
financial mobilisation policies. This also proved to be in vain. The 
bankruptcies of business enterprises became a plague and more than 3 
million workers lost their jobs.

The Koizumi administration hoisted the banner of "structural reform" once 
again but no economic revival is to be seen.

The failure of the "structural reform" policy was clearly demonstrated 
during the previous Hashimoto administration but the support rate for 
Koizumi surged to a high of 80 per cent in his first months.

Koizumi's popularity was a fabrication of the corporate mass media. It 
repeatedly presented an image of Koizumi as a TV Star. He was made out to 
be a Messiah who would revitalise Japan's economy.

Devastation

The market, however, realised the nature of Koizumi and business people 
asserted that the structural reform policy would lead the economy to 
devastation.

The value of stocks and land have rapidly decreased in the past year, 
bringing about more and more bankruptcies and unemployment.

Some members in the Government's Advisory Council for Economy and Finance 
say that the causes of depression lie on the side of supply They claim that 
Japan's economy would revive if several competitive and powerful firms are 
nurtured. It is argued that resources and labour should be channelled to 
them. Deficit-ridden small and medium business bodies that are unable to 
repay their loans should be destroyed.

This viewpoint reflects that of the big transnational corporations. Japan's 
Federation of Employer Associations, has maintained this position ever 
since they published a report on the "Reform of the High Cost Structure of 
the Japanese Economy" in 1995.

What will happen if these measures are applied? Toyota and Panasonic, which 
are giant transnational corporations could survive and advance into 
overseas markets, gaining more impetus.

Bankrupt

But, on the other hand, a great number of small and medium firms that form 
the very basis of the economy would go bankrupt, agriculture would be 
debilitated and more and more workers would become unemployed. The demand 
for consumption goods would shrink and the economy would go into a 
deflationary spiral.

Path to revitalise the economy

The causes of the economic recession lie, not on the "supply" side, but on 
the "demand" side.

The developments in the economy since the financial bubble burst in 1990 
clearly show this fact. The value of stocks and land have dropped, many 
business enterprises have gone bankrupt and unemployment has surged to a 
high level. There have been a series of budget cuts to social services that 
have attacked the livelihood of the people.

People in the country have become uneasy. They are witnessing unemployment 
and future prospects are uncertain and obscure. This in turn shrinks 
demands for consumption goods.

When this happens investments in production facilities contract making the 
total demand even smaller. The entire economy of Japan has been trapped in 
this deflationary spiral.

The sole path to the revitalisation of the economy is to assure social 
services and provide assistance to small and medium business bodies as well 
as agriculture in order to stabilise employment.

* * *
*Tomiyama Eiko is a member of the New Socialist Party of Japan eikotom@bh.wakwak.com

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