On May 24 the Keidanren started anew under the leadership of Canon Inc. Chairman Fujio Mitarai, who has declared his goals to be the “innovation of Japan” and the continuation of the organization’s drive for structural reforms under his predecessor Hiroshi Okuda.
Years of structural reform efforts have finally allowed the Japanese economy — after a decade in the doldrums — to regain its vigor.
The economy continues to be strong in real terms, with gross domestic product marking an annualized 3.1 percent growth in the January-March quarter, led by brisk private-sector demand, including capital investments.
However, Japan needs to continuously acquire competitive advantages as it tries to generate powerful growth for the future amid ever-intensifying international competition.
What will make that possible is an increase in total factor productivity through continued innovation.
Economics isn’t the only place where innovation is needed. Innovations to social mechanisms — including its legal systems and practices, perhaps the very mind set of the people — seem to be lagging behind those being pursued in economics.
One example is the recent argument that structural reforms have widened the gap between the rich and the poor in Japan, with some even saying the reforms should be stopped.
However, the reality is that the income gap is still relatively small when compared with other countries.
Many critics are decrying what seems to be a marginal — and still unproven — expansion in the gap.
People harbor the deep-rooted feeling that everyone is guaranteed to receive equal benefits, but in a truly fair social system, everyone should be given equal opportunities and rewarded for their efforts. Otherwise, there will be no vigor in society.
The same should apply to the social security, administrative and fiscal systems.
Today’s mechanisms are designed so people can receive more benefits and administrative services than the taxes and premiums they pay. However, it is obvious such a mechanism is not sustainable. It may seem generous at a glance, but it will only create a burden for future generations.
Coupled with economic innovations, an innovation in social mechanisms realized by relinquishing dependence on the state will make Japan a more attractive country.
Based on this thinking, Keidanren plans to compile a “Mitarai vision” around the beginning of next year to spell out our group’s solutions to the challenges Japan must confront in the next decade.