Former Foreign Minister Fumio Kishida, one of the top contenders in the ruling Liberal Democratic Party’s leadership race, said Wednesday that mitigating income gaps that are widening amid the COVID-19 pandemic would be one of his top priorities if he becomes party president and therefore prime minister.
Since the early 2000s, Japan has embraced the deregulation and market-oriented policies associated with the neoliberal philosophy, a shift that was continued under the Abenomics agenda of former Prime Minister Shinzo Abe in the 2010s. That approach boosted Japan’s economy but widened gaps, and Kishida’s call for a move away from neoliberalism seeks to address this and ensure a more equitable distribution of wealth.
“There were things that didn’t really work” by just letting free market competition take its course, with amplified income inequality among the failures, he said during a news conference to unveil his economic policies. “Fruits of growth need to be distributed … otherwise divisions in society will deepen.”
Kishida stressed the importance of redistributing wealth while the nation is still suffering from the pandemic. The information technology industry has thrived amid the health crisis but tourism and other service industries have been dealt a heavy blow, widening the gaps between them.
“If we keep taking the same approach, disparities will only worsen and we won’t achieve a healthy economic cycle,” he explained. “Moreover, society and politics will become unstable.”
To achieve his goal, Kishida plans to increase financial aid for renters and boost education subsidies for families with younger children, as well as raise wages for workers in industries facing severe labor shortages, such as the medical, nursing care and day care sectors.
In addition, he plans to introduce policies to prevent big companies from “bullying” small and midsize firms.
“Big companies substantially increased their earnings in the 2010s, but smaller firms are still suffering. Profit is not being distributed properly within supply chains,” Kishida said.
But in order to redistribute wealth, the former LDP policy chief pointed to the need for a growth strategy.
To facilitate economic growth, Kishida said he will set up a ministerial post to oversee economic security policies and strengthen that security through a new legal framework. With the pandemic having exposed the risk of supply chain disruptions, Japanese companies producing some essential goods will be encouraged to move their manufacturing bases back to their homeland.
In the area of energy policy, Kishida said that while boosting renewables is key, Japan needs other sources as well, including nuclear energy. He said restarting existing nuclear plants is a priority, but he did not elaborate on whether he would give the green light to new plants.
Japan needs to maintain its nuclear technology to give it options in the future, such as small modular reactors and nuclear fusion reactors, he said.
Other economic policies Kishida touched on include:
- Compiling a stimulus package worth tens of trillions of yen to counter the economic fallout from the coronavirus pandemic
- Drastically increasing investment in science and technology to promote innovation, including establishing a ¥10 trillion college fund by the end of March to bolster the research competitiveness of universities
- Keeping the consumption tax at the current rate for the time being
- Maintaining the Bank of Japan’s 2% inflation target to fight deflation
- Setting up a panel to discuss a new model of capitalism
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