10th in a series
Japan needs a swift and drastic change to reconstruct its ailing economy, but the forthcoming Upper House election will unlikely bring about fundamental changes, said Glen S. Fukushima, president of the American Chamber of Commerce in Japan.
Japan may need yet another round of “gaiatsu,” or foreign pressure, to stimulate necessary reforms, he said.
Although a 16.65 trillion yen economic stimulus package, including both tax cuts and public works spending, was eventually announced, he said, the move came late and only after considerable pressure for it.
“There seems to be hesitation or reluctance on the part of the Japanese government to be more forceful and proactive,” he said. “Japanese consumers are not yet convinced that the Japanese government is seriously undertaking the dramatic, bold steps that are necessary in order to fully stimulate the economy.”
Despite the prevailing pessimism over the performance of the Japanese economy, however, he said, there does not appear to be a sense of crisis within Japan.
In the 1992 U.S. presidential election, he said, one of the factors that led to the victory of Bill Clinton over George Bush was the level of dissatisfaction of the American public with the state of the U.S. economy. But this will unlikely be the case with Japan, he said.
“The Japanese people still seem to believe that massive unemployment is unlikely. There isn’t a sense of disaster. And there isn’t the sense that things are so bad that they require fundamental or dramatic changes,” he said.
Pointing to the likelihood that the Liberal Democratic Party will do reasonably well in the Upper House election, Fukushima said that the Japanese public is “not so dissatisfied” as to vote for fundamental changes.
“I think the Japanese public’s view is that yes, Japan has some serious problems on the financial side that need to be dealt with. But Japanese government and business leaders seem to believe those are problems that can be dealt with over time using Japanese methods,” he said.
Following Japanese methods, actions will be incremental, performed in a way that is not disruptive or dramatic, and without undue pains and risks being accrued by any particular sector of society, he explained.
Meanwhile, some U.S. economic officials have been calling for quicker and more drastic action, which could result in bankruptcies, failures and higher unemployment in a short-term period but would eventually bring greater benefits to the overall economy.
“My own personal view is, yes, that Japan will benefit from some dramatic changes,” Fukushima said. “But the calculation of whether those risks and those costs are outweighed by the benefits (that result from the reforms) is something that Japan has to weigh … It’s really up to Japan to decide what is in the best interest for Japan to do.”
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