The government is getting its response to the virus wrong by adding strings to its financial assistance for companies and people, and by not engineering a tighter lockdown, according to best-selling author and economist Yukio Noguchi.
The former finance ministry official says Japan should stop worrying about adding to its debt and spend whatever it takes to keep the crisis from spiraling out of control.
"A man shouldn’t worry about his beard, when he’s about to get his head chopped off,” Noguchi said Tuesday in an interview from his Tokyo home via video-conference.
Even after Prime Minister Shinzo Abe last week declared a state of emergency in parts of the country and unveiled a record stimulus package to shield the economy, the nation hasn’t shut down as dramatically as elsewhere. Foot traffic is way down at some central transport hubs, but others are still bustling. One survey showed around 70 percent of people were still commuting to work last week in the emergency areas.
Noguchi said the way to get more businesses to comply is to give them money, and do it fast. Making tax deferrals apply to everyone would help. Right now, Japan’s emergency measures give leeway only to firms that can show the epidemic has cost them income, but that limits the benefits. Also, figuring out who qualifies is taking time Japan can’t afford to waste, Noguchi said.
The same concern that lost-income criteria could slow down cash handouts to people already appear to be fueling a possible government rethink. Local media reported Thursday that Abe has called for changes in an extra budget to finance Japan’s record stimulus package after his coalition partner called for smaller handouts without conditions.
To pay for the extra spending Noguchi said the Bank of Japan could buy short-term bonds from the government on a temporary basis like the Bank of England is doing. Strictly speaking, Japanese law is meant to prevent the government from monetizing its debt, but there’s wiggle room that could make it possible, as long as no long-term debt is part of the deal, according to Noguchi.
"These are extraordinary times,” he said. "We can’t go around thinking about fiscal limits.”