Prominent U.S. economist Lester Thurow is urging Japan to focus more on economic stimulus measures even though politicians appear more focused on raising the consumption tax.
In an interview in Tokyo Friday, the 72-year-old Thurow, a professor emeritus at the Massachusetts Institute of Technology Sloan School of Management, said Japan should “stimulate, stimulate, stimulate” and “print all the money you can print” to engineer the economy to a recovery.
“If you raise taxes and cut spending, your recession would get worse,” he added.
To help reduce the massive national debt, Prime Minister Naoto Kan has floated the idea of doubling the consumption tax to around 10 percent.
Thurow blasted the government for “being stupid” for failing for so long to bring the economy out of its sluggishness, adding it didn’t provide stimulus in a “sensible way.”
“Japan needs a lot of infrastructure . . . in the urban areas,” he said, citing Narita International Airport’s location 60 km from the center of Tokyo as an example.
Speaking ahead of the Group of 20 gathering, Thurow said while the global economy is recovering, he was confident the weekend summit in Canada wouldn’t be “a decision-making event.”
“Big numbers mean you can’t decide anything . . . no important decisions would be made,” he said.
Thurow also speculated that the “real” intention behind the Chinese central bank’s recent announcement to ensure greater flexibility in the yuan’s exchange rate was to get the Chinese currency issue off the agenda of the G20 meeting.
“Nobody wants to be the subject of conversation to G20,” he said.
As for the rate, Thurow said, “It’s got to be a lot higher” than it is now.
The yuan rose to a five-year high against the dollar in Shanghai on Friday for the third straight day of advance.
Asked about Japan’s intention to rely on China to fuel its own growth, Thurow hinted that Tokyo’s first step should be “apologizing” to China over its wartime atrocities.
“Think about Germany and France. You wouldn’t have the European Union if the Germans hadn’t apologized to the French for invading them,” he said.
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