Japan’s main banks appear to be getting a grip on disposing of nonperforming loans, which was the big issue 3 1/2 years ago when Prime Minister Junichiro Koizumi took power. Corporate earnings have improved a lot, and the economy is seeing its most robust growth since the collapse of the bubble. At one point Japan looked ready to be crushed by the information technology revolution in the United States, but its pride as a manufacturing power has been restored by good performances in the digital, household electrical appliance and automobile industries. Japan as a whole now appears to be emerging from a period of declining confidence.
And yet, many people continue to harbor strong feelings of uncertainty about the future. Although Mr. Koizumi has been tackling issues such as the privatization of the Japan Highway Public Corp., deregulation and the establishment of special zones for structural reform, much of the public still cannot imagine a bright future. Recently the government launched Japan 21st Century Vision, a special panel comprising learned people, business leaders and government officials, which aims to work out a future vision of Japanese society after structural reform. With its sights set toward the year 2030, the panel is to submit a report sometime after March.
Our hope is that the panel will come up with a concept resembling the “income-doubling plan” that was announced by then-Prime Minister Hayato Ikeda in 1960 — a plan that would enable the nation to live securely and to boldly challenge the future. When the plan was announced, many people were surprised and dubious about whether it could really be achieved. But the target was realized a decade later, ahead of deadline. As a result, the Japanese standard of living was dramatically enhanced, and that gave much confidence and courage to those who had worked hard to attain the goal of the national slogan.
Today, the leading policy goal that would encourage the public along the lines of the income-doubling plan would be improvements in the field of social security, including pensions and health insurance.
Japan’s population is expected to peak in 2006 and then decline, giving further impetus to the falling birthrate and rapid aging of society. Many people, regardless of age and gender, are seriously concerned about their postretirement security, health and care for their parents. The recently enacted pension-reform legislation ended up as almost a worst-case scenario. Insurance fees were hiked, while benefits were reduced.
The younger generation faces the prospect of not receiving the benefits that match the insurance fees they have paid. This is far from being the kind of safety net that enables people to live without anxiety. Many people are strongly dissatisfied with the latest reform as it appears merely to be a change for the worse.
This mood can be seen in the results of public opinion surveys conducted by media companies following Mr. Koizumi’s recent Cabinet reshuffle. Respondents cited social-security reform, including pensions and health insurance, as the top priority issue. Although the prime minister has enthusiastically positioned privatization of the postal services as the mainstay of reform, it does not interest most people very much. Mr. Koizumi should lend a humble ear to this public opinion.
Given the present fiscal situation in which pension finances run to 450 trillion yen and the government debt, national and local combined, amounts to 700 trillion yen, many experts stress that it is impossible to design a system of decreasing burdens and increasing benefits. At the very least, however, the government should establish a sustainable system that maintains present levels of burden/benefit and that links pensions to a price index. Otherwise, the public is not going to display any enthusiasm or courage to proceed with system reforms.
What the public seeks now is a government version of Project X, which turned the impossible in the fields of technology into the possible. Unlike the recent Cabinet reshuffle and appointments of top executives in the Liberal Democratic Party, such a project would really be a surprise. The members of the Japan 21st Century Vision panel are described as “wise men of the world” and “learned persons.” Unless they pool their wisdom and come up with some substantial proposals, they do not deserve those titles.
In Western society there is a tradition of noblesse oblige, whereby people of a higher rank or social position have a greater obligation. In the 21st century, the principle for Japanese society should be one of “richesse oblige,” whereby the wealthier and more well-off a person is, the greater is his or her financial obligation to society.
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