Prime Minister Junichiro Koizumi went on the defensive Wednesday, denying charges that his administration has been slow to bring about promised economic reforms.
“My critics say I did nothing; I simply did not do anything that was not necessary,” Koizumi said in his opening address at a government conference on economic policy, held at his official residence.
He said the government should inspire the public to innovate and take risks, and help them back onto their feet if they fail.
The conference, arranged by the Cabinet Office, brought together Japanese and international experts with close ties to Koizumi’s Cabinet to discuss the government’s structural reform initiatives.
Conference attendees included Lawrence Lindsey, former White House economic adviser; Glenn Hubbard, former chairman of U.S. President George W. Bush’s Council of Economic Advisers; and private-sector members of the Council on Economic and Fiscal Policy. The Cabinet Office said Heizo Takenaka, economics and financial services minister, was mainly responsible for drawing up the guest list.
“You’re not going to hear hard criticism about how the Koizumi administration has been implementing reforms from the guests,” a Cabinet Office official said. “The guests are Mr. Takenaka’s friends.”
“Even without government spending, there are bright signs in the economy,” Koizumi told reporters after the conference. “We must work with the central bank to make this economic revival real.”
For the rest of the day, the 40 participants bandied ideas to resuscitate the economy and bring about greater growth and more jobs.
Referring to the Bank of Japan’s “stop-and-go policies,” Hubbard called for bolder and more consistent monetary expansion by the central bank to help the fledgling recovery.
He said currency interventions alone would not fight deflation.
“The strategy of monetary expansion through a series of ad hoc unsterilized interventions is not the way to achieve reflation,” Hubbard said in his address. The BOJ could try committing itself to restoring reference price levels in Japan, he said.
“The Bank of Japan could define the price-level gap that it wants to make up, and announce that it will undertake any and all measures to achieve it,” he said. “The precise tactics are less important than articulating the strategy.”
Lindsey pointed to the success of speedy and flexible implementation of fiscal and financial policy measures in the U.S. toward bringing about growth.
Noordin Sopiee, chairman and CEO of Malaysia’s Institute of Strategic and International Studies, said the most effective reforms are summed up in a program of one to five steps.
“My understanding is that the council for regulatory reform has proposed 900 steps,” Sopiee said. “This indicates to me that you don’t know what to do.”
But the harshest criticism came from domestic business leaders.
“The economy is not standing still,” said Kakutaro Kitashiro, chairman of Japan Association of Corporate Executives.
Harumi Sakamoto, vice chairwoman of the body organizing the 2005 expo in Aichi Prefecture, meanwhile praised Koizumi for speaking “in his own words.”