What Mr. Abe Wants to Do

Prime Minister Shinzo Abe gives his first policy speech at the Diet on Friday. Mr. Abe's policy is put into three points: (1) Amending the Constitution, (2) Improving the relations with China and South Korea, (3) Revising the Fundamental Law of Education.

Here's the excerpt:

The Yomiuri Shimbun
Sep. 30, 2006

....As reasons for his decision to review the right to collective self-defense, which the country currently has but cannot exercise under the government's interpretation of the Constitution, Abe pointed out changes in the international situation, such as the fight against terrorism and the world's expectation that Japan will make an international contribution. He said the government would study the matter "to make the Japan-U.S. alliance function more efficiently, so peace can be maintained." As the country's first prime minister born after World War II, Abe stressed his resolve to build a new nation and his hopes of passing at an early date a national referendum bill defining the procedures for constitutional amendment. "The present Constitution was established 60 years ago, when Japan was under occupation," Abe said. *

.....He also said he would improve soured relations with China and South Korea, saying the two countries are important neighbors, calling on all sides making efforts to have forward-looking, frank dialogues.

In addition to seeking a revision to the Fundamental Law of Education, Abe said he would establish a new council in the Cabinet to promote measures to overhaul the nation's education system, such as a requirement for teachers to renew their teaching licenses periodically to ensure standards are maintained, and evaluations of schools by third parties.

....On his policy to deal with the issue of Japanese nationals abducted by North Korean agents, over which Abe's tough attitude drew national acclaim, the new prime minister hinted he would continue to press North Korea.
"Without a resolution of the abduction issue, there will be no normalization of diplomatic ties with North Korea," Abe said. He added he would demand Pyongyang return all the abductees home alive and would head a task force to tackle the abduction issue.

*Bold letters by the author of this blog

(1) Amending the Constitution

To excersize the right to collective self-defense and to maintain peace, Mr. Abe wants to revise the Constitution. As he says (pointed by bold letters), "the present Constitution was established when Japan was occupied by the Allies." While some pundits critisize it as the "MacArthur's Constitution", others disagree to the constitutional amendment. According to the cons, Mr. Abe wants to enable Japan to arm itself and to invade other countries. I think it's a ridiculous conjecture.

You may not know that arming itself is prohibited under the present Constitution. Thus now Japan cannot have the Self-Defence Forces. And it also cannot invade or attack other countries! Mr. Abe, in my conjecture, wants the existence of the Self-Defence Forces not to be interpreted currently by the government but to be admitted by amending the Constitution. And then he wants to put an end to the fruitless discussion on whether it is against the Constitution.

(2) Improving the relations with China and South Korea

He would like to improve the relations with China and South Korea to resolve the issue of the abduction by North Korean agents. He wants to continue to press North Korea to return all the abductees home alive.

(3) Revising the Fundamental Law of Education

To raise up talented people and thus to promote the innovation, he wants to change the nation's education system. This is the most eye-striking in his proposing policy. I don't know what he really wants to do by revising the Fundamental Law of Education and the detail on this issue, however.

Japan's strength

When Michael Porter wrote about the "advantage competitiveness" in the global economy, there was much dispute on that in Japan: will Japan survive in the global market in the future? On such a naive question, there were also pros and cons: although Japan now has a large trade surplus, which seems to be the strength of Japanese manufacture, they wonder if it probably will decrease in the future due to powerful competitors such as China and India.

Trade surplus, however, doesn't prove to be the advantage competitiveness, but a large amount of saving held by the domestic people or short for domestic investment for equipment. It shows merely the stagnant economy in the 1990s. What is the Japan's strength? Here is the excerpt of good article:

Yomiuri Shinbun
YIES / 'Japan's strength lies in keeping jobs at home'
Koya Ozeki / Daily Yomiuri Staff Writer
Sep. 26, 2006

Japanese firms may have better odds of beating out their U.S. rivals in the global market in coming years, thanks to their reluctance to ship jobs overseas, Prof. Suzanne Berger of Massachusetts Institute of Technology said during a lecture in Tokyo.

"Mistakes that companies make is that somehow cheap labor can be a solution that will save them, and I think in the long run, cheap labor is really not a winning solution," she said at a Yomiuri International Economic Society (YIES) lecture Monday.

Berger led a study on 500 companies worldwide over the past five years, in search of a model for success in today's global economy. She recently put her findings into a book, titled "How We Compete."

.....Sony Corp. manufactures half of its top-of-the-line computers in Nagano Prefecture, whereas Dell Inc. made none of its computer components in the United States, according to her study. By keeping skilled labor in their homeland, Japanese companies retained a "capability that they could use in recreating themselves," she said. She also pointed out that although many companies in Japan and the United States have shifted manufacturing operations to China, the Japanese firms tended to build their own plants in China, whereas U.S. firms used outside contractors.

"My concern is that in dealing with contract manufacturers for our production in China, [U.S. firms] are failing to take advantage of the opportunity to learn about the China market," Berger said. But she believes Japanese firms are in a much better position to learn about the preferences of Chinese consumers. "Learning about a new market is a source of innovation," she said, and by missing that opportunity, "[U.S. firms] are failing to develop the capability for future sources of innovations."

Here I summarize Prof. Suzanne Berger 's remarks. Her points at discussion are put into three:

(1) By keeping skilled labor in their homeland, Japanese companies retained a "capability that they could use in recreating themselves."

(2) The Japanese firms tended to build their own plants in China, whereas U.S. firms used outside contractors.

(3) Learning about a new market is a source of innovation.

These are good lessons for not only businesspeople but also educators at school. The new prime minister, Abe, calls for the structural reform of Japanese education system. To many teachers and staffs at Japanese schools, Dr.Berger's points would be changed into:

(1) By keeping competent students in their homeland, the US universities retained a "capability that they could use in recreating themselves."

(2) The US universities tended to build their own campuses in itself, whereas Japanese universities used outside contractors like MIT, Princeton, Stanford, Yale, Columbia and Harvard.

(3) Learning about a new market is a source of innovation.

These might be good lessons for the people who are afraid of the future of Japanese universities. They should learn about a new market and thus lead to a source of innovation for rebuilding Japanese universities.

Stupid!! Mirror Man

Stupid! what's the matter with him? If I were you, I would never try to do that in order not to lose an excellent job, a policy-analytic economist, who I would like to be. Here is the excerpt:

Mainich shinbun
September 27, 2006

'Mirror Man' professor sacked over latest molestation allegations

NAGOYA -- The graduate school of Nagoya University of Commerce and Business has dismissed economics professor Kazuhide Uekusa after he was arrested for molesting a high school girl on a train, officials of the institution said Wednesday. Uekusa lectured on the national economic strategy as a visiting professor at the graduate school from April this year until July.

"We will make every effort to recover honor and trust in us," a spokesman from the university commented after announcing the dismissal of Uekusa, 45. Uekusa, from Tokyo, was arrested for molesting the girl earlier this month. In 2004, Uekusa was arrested for trying to look up the skirt of a high school girl at JR Shinagawa Station by using a hand mirror.

Another article reports:

Mainichi Shinbun
September 14, 2006

Famous economist Kazuhide Uekusa, now a visiting professor at a university, has been arrested for molesting a high school girl on a train, police said. Uekusa, 45, a visiting professor at the graduate school of Nagoya University of Commerce and Business, molested the 17-year-old girl on a Keihin Kyuko Line train. ......Uekusa's alleged actions came to light after the girl reportedly screamed, "Stop it." He was drunk at the time of the purported incident. "I don't remember what happened," Uekusa was quoted as saying.

Earlier in April 2004 when he was a graduate school professor at Waseda University, Uekusa was arrested for trying to look up the skirt of a high school girl at JR Shinagawa Station by using a hand mirror. He was indicted for the 2004 incident and fined 500,000 yen. He didn't appeal the ruling on the 2004 case, but has since insisted he was not guilty.

Mr. Abe on Tax Policy

Mr.Abe proposes cuts in corporate taxes to promote capital investment and considers expanding a preferential treatment for the investment in venture-capital corporations. Here is the excerpt:

The Yomiuri Shinbun
Sep. 24, 2006

Liberal Democratic Party President Shinzo Abe will likely propose 600 billion yen cuts in corporate taxes for fiscal 2007 to promote capital investment in information technology-related equipment, a source close to him said Saturday. As a concrete measure, the upper limit for depreciation of equipment, an amount which companies can deduct as losses from its profits when they purchase equipment or machines, will be raised from the current 95 percent to 100 percent of the purchase price. As the taxable profit will be compressed from now, the tax burden of companies will be reduced, said the source.

Abe is also considering expanding the so-called angel taxation system, a preferential treatment for individuals who invest in venture-capital corporations, the source explained. During his campaign for the LDP presidential election, Abe said that he would like to improve industrial productivity through technological innovation to aim at attaining real economic growth of around 3 percent. The envisaged corporate tax cuts will be one of the main pillars of his policy to back up technological innovation.

....According to a report compiled by the Economy, Trade and Industry Ministry in 2005, the amount of domestic investment in IT-related fields against gross domestic product is 2 percent, lower than 3 percent in the United States and 2.8 percent on a global average. In most major countries, including Britain and the United States, the upper limit for depreciation of equipment is 100 percent. Business leaders have long been asking the government to bridge the international divide.

Concerning the measure to assist venture capital, the scope of the angel taxation system will be expanded. Under the current system, individual investors can deduct an amount of investment made in venture-capital organizations from profits obtained through stock investments. The amount of investment into venture firms will also be deducted from interest on savings and other income from financial products, according to Abe's plan.

OK, Mr. Abe wants to stimulate the aggregate demand of the economy: A cut in corporate tax promotes capital investment and so does the demand for the related equipments. The equipment maker also promotes investment to enlarge its business. This "multiple effect" at last increases the effective demand of the economy as a whole.

Expanding a preferential treatment for investor in venture-capital corporations is also likely to boost the economy. New business generally stimulates the purchase for the goods and services. I think Mr. Abe is right. In Japan the economy is still stagnant because of insufficient demand for the goods and services sold in the market, although current news are reporting its recover.

I hope for the sound effect of Abe's tax cut and the promotion of new business.

Is Inequality a Bad Thing? (3)

I have written about the economic gap twice before. Today I write about the inequality in Japan. Here is the excerpt from my favorite British economic magazine- The Economist:

The Economist Jun 15th 2006
The rising sun leaves some Japanese in the shade

.....Arch-conservatives and left-wingers alike blame the income gap not just on globalisation clobbering the unskilled, but on the structural reforms and deregulation championed by the prime minister, Junichiro Koizumi, and his Liberal Democratic Party (LDP).

.....With the income gap a big topic in the race to succeed Mr Koizumi as prime minister this September, it is worth taking a closer look. Statistical problems always guarantee that the income gap, in any country, is contested ground. Even so, no matter which data are used, the trend looks the same: income inequality in Japan has risen since the early 1980s.

....Toshiaki Tachibanaki, an economics professor at Kyoto University, puts Japan behind only the United States, Britain and Italy in income inequality among the big rich economies. It once boasted Scandinavian levels of equality.*

Yet a closer look at the reasons behind the rise in inequality reassures somewhat. Fumio Ohtake, at Osaka University, notes that income distribution by age of household head has remained constant.* ....Older people tend to have the widest income disparity, since while some people retire to live on modest pensions, more senior managers get hefty pay rises in the last years of their working life, with pensions afterwards to match. An ageing population therefore scores higher on overall measures of inequality.*

....［The income gap］ has grown among those under 30, according to a 2004 survey. This is probably due to an increase in the number of unemployed and those in part-time work. Between 1990 and 2005, the number of “non-regular” workers—ie, those on lower pay with neither full-time contracts nor benefits—rose from less than one-fifth to nearly one-third of the workforce, hitting the young (and working women) disproportionately. Labour flexibility did much to help Japanese companies escape from piles of debt over the past decade, and partly as a consequence they are now making record profits.

Take the taxi industry, for example, which has been opened up. Critics say there has been a fall in pay among drivers since deregulation, yet Mr Ohtake points out that the number of drivers has leapt, thereby reducing inequality. The rise in “non-regular” workers in Japan may in fact have narrowed the income gap, because the alternative was probably unemployment. But people do not see it that way.
*Bold letters by the author.

There are three points at issue:

(1) Is the income gap due to the structural reforms and deregulation led by Mr.Koizumi and his LDP?

It is very difficult to prove such a thing. Some economists say that the income inequality in Japan has risen since the early 1980s. If so, Mr. Koizumi and his policy is far less likely the culprit. Moreover others say that the income distribution by age of household head has remained constant. As Mr. Otake says, the increasing number of older people may have widen income disparity. According to that, widening income gap is a matter of course.

(2) Is the gap due to an increase in the number of unemployed and those in part-time work?

Between 1990 and 2005, the number of non-regular workers rose from less than one-fifth to nearly one-third of the workforce. This is more likely the culprit. In fact the wage gap between regular and non-regular workers is widening and causes to the educational gap between their children. This may be led by Mr. Koizumi's deregulation ― for example, opening up taxi industry has been the cause of a fall in pay among drivers. On the other hand, the increasing number of temps is said to lead to a fall in the unemployment. Which is higher, the benefit from a fall in jobless or the cost of the wage gap? I don't know that.

(3) Is the gap due to globalization?

In the world, this is more controversial issue than the above other 2 points. The income gap becomes larger due to the fierce competition between the national workers and the foreign workers. The national workers in developed countries like the U.S. and Japan are generally paid more than the developing countries' workers such as the Chinese and Brazilian. The manufacture factories are now being transformed to the developing countries and so are the jobs. As a result, some of national workers in developed countries are unemployed. It is, so-called, the problem of offshore outsourcing. This is, as a Harvard economist Gregory Mankiw remarks, a new type of international trade, which benefits many national people as well as many foreign people in developing countries. It is, however, very hard to say that the offshore outsourcing is the culprit of the income gap.

Communist Party against Mr.Abe

Chief Cabinet Secretary Shinzo Abe on September 1 officially announced his candidacy for the Liberal Democratic Party president. And he became the LDP president on September 20 and will be the prime minister on September 26. In Japan there is still the Communist Party. They told about Mr. Abe:

Japan Press Weekly
September 2, 2006

Abe made public his election platform that gives priority to enacting a new constitution as well as a "drastic educational reform." At a press conference in Hiroshima City, he expressed his intention to take the leadership in having the Diet initiate the revision of the Constitution. By stating, "I want to first work to get the national referendum bill enacted," he showed his strong determination to enact in the next Diet session the bill that will establish a procedure for the revision of the Constitution.

Asked by reporters, Japanese Communist Party Secretariat Head Ichida Tadayoshi on the same day said, "Abe's remarks and his book show his imprudence and precariousness."* Abe characterizes the preamble to the Constitution as a "written apology to the Allies in WWII," and asserts that Japan needs to abandon the "masochistic view of history."

Referring to these remarks, Ichida said, "It is very dangerous to make such remarks and deny that the war Japan waged was a war of aggression."*

Ichida pointed out that .....the next government will inevitably further promote the mal-administration of the Koizumi Cabinet, because (Mr. Abe) insist on maintaining the structural reform policy that has increased the social gap as well as adversely revising the Constitution and the Fundamental Law of Education.

With regard to the Yasukuni Shrine question, pointing out that (Mr. Abe) asserts that the prime minister must refrain from visiting the shrine based on a reflection over the past war of aggression and colonial rule, Ichida said, "(Mr. Abe )cannot advance diplomacy for peace and friendship in Asia."*
　　　　　　　　　　　　　　　　　　　　　　　　 *Bold letters by the author

I summarized Mr. Ichida's remarks: Abe's remarks and his book show his imprudence and precariousness. It is very dangerous to make such remarks and deny that the war Japan waged was a war of aggression. He cannot advance diplomacy for peace and friendship in Asia.

He said no more than that he is against Mr. Abe. No policy proposal is made by Mr. Ichida. I think Mr.Ichida and the Communist Party should show us more rigorous policy visions and proposals to obtain a wide support from many people. I have heard nothing but they say the LDP breaks the society of Japan.

Mr. Abe's Assignments

There are many problems with which Mr. Abe should deal. Previously I wrote about that issue. Today I write and summarize what Mr. Abe should do as a next prime minister.

Mainly there is put into three points:

(1) Diplomatic Policy

Now Japan can't do without the interdependences with the East-Asia countries like China and South Korea. So Japan should build a close friendship with them as well as strengthen the Japan-U.S. alliance for the sake of the security of Asia and Pacific region.

To promote the prosperity of the Asia and Pacific region and build a safer and stable community in the Asia and Pacific region, we must face the nuclear and kidnapping concerns and tensions on the Korean Peninsula and must persuade the Chinese and South Korean leaders to cooperate with each other toward the strategic regional security.

(2) Economic Policy

The Japanese economy is recovering from the persistent decade-long recession. Mr. Abe has the prime mission to promote the economic growth. He also gives priority to reducing government spendings and staffs. In the point of keeping the government's budget sustainable, he makes a right remark. However, he needs to propose raising the consumption tax rate at a time in the future for the sound pension system and social security. Raising consumption tax rate is likely to decrease the aggregate demand and make the economy gloomy. He faces a difficult policy choice between tax hike and growth promotion.

(3) Social Security Policy

Mr. Abe fails to convey a strong message on how to rectify the gap between the rich and the poor. I don't think that the social gap is the problem. However, it is likely the symptom of the problem. I think that he should keep in mind the free market economy and relatively reasonable government to conduct any policies. A free market economy benefits many people but on the other hand causes the economic gap and thus the conflict. Mr. Abe needs to remedy any tensions led by the cut-throat competition in order it can't impede the works of market mechanism and the economic gain caused by hard work.

To do that, he should revise the pension system and build firmer social security system for elder people. He suggests that the poor and the unhappy be provided with many opportunities to work for company and to brush up career skills. To create employment, he should also boost the demand of economy by cutting taxes and supplying money. It is, however, very hard to implement such a fiscal expansionary policy.

A Beautiful Mind in Action

Where is the Nash equilibrium around us? At here?

Game Theory in Action

Game theory is needed to study economics. It is because some of social and economic issues could be described by the framework of game theory. In a market economy in which we trade, we can't do without competing with each other and thinking strategically to succeed. Game theory,which once had been a branch of pure mathematics since Von Neumann started to study, now seems to be a kind of social science and is sometimes discussed even without math.

Today I attended the lecture on game theory for the general public. Although this lecture was for beginners or elementary students, it was more hard to understand than had I thought. I wondered if every audience could understand what and how game theory describes our society and is applied to the real world. Some audience must have wondered how useful game theory would be in the real life. Also I did.

I once read an article on the use of game theory in the Harvard Business Review written by a consultant of McKinsey & Company. According to it, in the McKinsey & Company, they usually use game theory to build up the strategy for their clients to succeed in business. I doubted how they use game theory to suggest the plan of successful management to their clients.

In reality, to what degree is game theory useful? How can I change the world by knowing the cause and result of "Prisoner's Dilemma"? Certainly there are many scenes of Prisoner's Dilemma in our life: for example, price war between icecream shops, past nuclear competition between the US and the USSR, advertising lavishly new DVD products on TV between Sony and Panasonic and so on.

I like the idea of game theory but doubt the application of game theory for the firms' decision-making in the real world. To work for company, is game theory really useful to us?

After Wind's Blowing:Returns

After wind's blowing, basinsmiths get money.---- This is a famous Japanese saying. It means what I said yesterday in this blog. (Look at the below column.) Today let me tell you the rest of the story.

If you knew the whole outline of the tale:

After wind's blowing, sand flutters in the wind. →Many people have got some sand in their eye.→・・・・・→Basinsmiths get money.

you would be asked what we should have do when we had the leaky roof and answer it: Get rid of rats! Why? From this tale, rats ruin the roof and so we have the leaky roof. When a number of rats increases because many cats around the town were caught to skin in order to make the Japanese lute, the roof is more likely to be ruined and thus be leaky. When we have the leakly roof, too nany rats should be got rid of. This is the policy implication obtained from the tale.

Well, again, if you knew that tale but the different whole outline:

After wind's blowing, the roof is blown off.→We have the leaky roof.→We need the basins.→Basinsmiths get money.

you would be asked the same question and answer it: Strengthen the roof! From this story, a wind blows away the roof. We have to strengthen the roof not to be blown away. This is the policy implication from the above tale.

Which answer, on earth, is right? The answer depends on the cause of leaky roof, that is, whether it is because of rats or blowing wind. If many rats went around because of blowing wind, we might have the leaky roof even though we strengthened the roof. If the roof were blown off by wind, we would likely have the leaky roof even though we got rid of rats.

There is some reason why we have that saying at the macroeconomics class in Japan: If we took the cause of recession mistakenly, we would likely have the wrong prescription. The above saying is used well at class to have the econ students know the reason and the meaning of the hard time investigating the cause of recession. We can't solve the problem correctly if we misread it. Bring to light the problem and we can get the more correct solution to it.

After Wind's Blowing

After wind's blowing, basinsmiths get money.---- This is a famous Japanese saying. It means as follows:

(1) After wind's blowing, sand flutters in the wind.

(2)Many people have got some sand in their eye.

(3)Some people go blind.

(4)They play the Japanese lute to make a living.

(5)To make the Japanese lute, many cats are caught to skin them. (Japanese lute is made of the hide of cat. Those who protect animals may blame us Japanese for it.)

(6)Few cats are around there.

(7)Many rats go around and ruin the roof of house.

(8)The roof has a leak.

(9)Many basins are needed to take the falling drops of rain.

(10)Basinsmiths get money.

Do you like it? Some Japanese have the wrong tale of this saying: After wind's blowing, the roof is broken, basins are needed and thus basinsmiths get money.

This tale is used well for explaining and taking the case of the process of recession in the class of macroeconomics at college in Japan. (In fact I was taught this saying as a freshman at college.) This tale has a very similar flow chart to that of business cycle: Rising inflation, for example, leads to a recession.

(1)Economy is booming.

(2)Inflation rises.

(3)Ben Bernanke(the Chairman of FRB) contracts amount of money circulating the economy for fear of rising inflation.

(4)Interest rate rises.

(5) Spending for consumption is postponed and demand for investment diminishes.

(6)Aggregate demand(consumption & investment)falls.

(7)Inflation decreases.

(8)Economy goes to a recession.

This type of flow chart is somewhat similar to that of the above saying. Ben Bernanke keeps the above flow chart in mind when conducting monetary policy. And many economists also know that, even though they don't know that basinsmiths get money after wind's blowing.

Dr Mankiw, how about such a saying in your Eco10 class?

What's the Matter with Him?

Ex-Nomura Research Institute's economist, Kazuhide Uegusa, was again arrested.This time he touched the hips of 17-year-old high school girl. Hmmm, What's the matter with him?

The last time he peeped into inside the skirt of high school girl with hand mirror.Since then, he had been called "Mirror Man".

I had a respect for him as a think-tank economist. I wished I wanted to be an economist like him when I was an undergraduate student.

A Beautiful Country

In the ruling Liberal Democratic Party's presidential election, the tripartite race between Chief Cabinet Secretary Shinzo Abe, Foreign Minister Taro Aso and Finance Minister Sadakazu Tanigaki has heated up. Of three candidates, Mr. Abe is most likely to be elected as LDP president and thus the next prime minister.

Therefore Mr. Abe's policy platform and the ideology behind it need examining carefully. The Japan Times also tells:

Tuesday, Sept. 5, 2006
The Japan Times EDITORIAL
What is expected of Mr. Abe

In his platform, titled "A Beautiful Country -- Japan," "building a nation that cherishes its culture, traditions, nature and history" comes first. Under this same heading, he calls for revising the Constitution to make it one "that is conducive to a Japan that cuts open a new age," among other things. It is clear that he is targeting the pacifist principle of the Constitution embodied in the Preamble and the war-renouncing Article 9 -- a principle that has restrained Japan's military activities and helped it to gain a respected position in the international community.

Mr. Abe's antipathy toward the Constitution's Preamble has been expressed in his book "Toward a Beautiful Country," which plainly discloses his ideology. Certain phrases in the Constitution's Preamble -- "We have determined to preserve our security and existence, trusting in the justice and faith of the peace-loving peoples of the world" and "We desire to occupy an honored place in an international society, striving for the preservation of peace, and the banishment of tyranny and slavery, oppression and intolerance for all time from the earth"-- are characterized by Mr. Abe as a degrading "signed deed of apology" from Japan to the Allied Powers.

.....On the diplomatic front, Mr. Abe calls for "establishing strong fraternity in an open Asia" and promises to strengthen "trustful relations with neighboring countries such as China and South Korea."

Mr. Abe also calls for strengthening "the Japan-U.S. alliance for the sake of the world and Asia" and establishing a system in which "both Japan and the United States sweat blood." He needs to elaborate on this so that the candidates can meaningfully discuss how to shape the future of the ties between the two countries and what roles Japan should and should not play in the bilateral security arrangement.

As for the nation's financial rehabilitation -- an issue vital to the nation's economic health, Mr. Abe and Mr. Aso give priority to reduction of spending while Mr. Tanigaki proposes raising the consumption tax rate to at least 10 percent by the latter half the 2010s.

Mr. Abe and Mr. Aso are not clear on the size of spending cuts and what effects such cuts would have on the economy while Mr. Tanigaki does not talk about the possibility of a higher consumption-tax rate dampening the economic recovery.

All three candidates also fail to convey a strong message on how to rectify the gap between the rich and the poor. They should realize that what is needed is not piecemeal measures but a broad policy orientation that will contribute to rectifying overall social imbalances and instability. The candidates should discuss policy measures based on their philosophies on government and politics.


The problems Mr. Abe should tackle are put into three points:

(1) Diplomatic Policy

Mr. Abe calls for establishing strong fraternity in an open Asia and promises to strengthen trustful relations with neighboring countries such as China and South Korea. That's right. Now Japan can't do without the interdependences with China and South Korea. So Japan should clear its own position, that is, say what it should do as a country.

Mr. Abe also calls for strengthening the Japan-U.S. alliance for the sake of the world and Asia and establishing a system in which both Japan and the United States sweat blood. Japan should place emphasis on the relations not only with the Asian countries but also with the U.S. Japan and the U.S. are both economically largest countries in the world and so should try to take the initiative for promoting the prosperity of the Asian-Pacific countries and building a safer and stable community in the Asian region.

(2) Spending Cut

Mr. Abe gives priority to reducing government spending. In this point he is also right. On the other hand Mr. Tanigaki proposes raising the consumption tax rate. Mr.Tanigaki is somewhat irresponsible for stating that suggestion in this point. If the consumption tax rate increases, the consumers reduce spending and the economy as a whole again goes down to a recession. He hasn't learned it from the Hashimoto tax rise of 1997. However consumption tax rate should be raised someday because ever-increasing spending for social security has to be financed.

(3) Social Security

Mr. Abe fails to convey a strong message on how to rectify the gap between the rich and the poor. But he said he wants to revise the pension system and to build firmer social security system. And he is earnest in tackling the economic inequality. He suggests that the poor and the unhappy be provided with many chances to work for company and to brush up the skills. In an aging society, there are many things for Mr.Abe to do.

You may say I agree with Mr. Abe. Yes, I am for Mr. Abe. I' ll write again later about what Mr. Abe should do as next prime minister.

Newborn Prince "Hisahito" Sama

Newborn prince's name is Hisahito. It's a nice name. I hope our new prince will grow up healthily and happily.

The meaning of his name is as follows:

Wednesday, Sept. 13, 2006
The Japan Times

....The name Hisahito is made up of the Chinese character for "hisa," meaning "far and away" and "at ease," and "hito," or "virtuous person." "Hito" has been the customary way to end boys' names in the Imperial family since the Heian Period (794-1185).

The name was chosen in the hope that the little prince will live a long and comfortable life. The umbrella pine, an indigenous evergreen, was made his symbol so he will grow straight and tall,...


The word "Sama" in this blog title, is the Japanese word of a honorific title given to the respected. I would like to see him smiling in Princess Kiko's arms.

What Can We Learn From 9/11?

Five years have passed since the terrorist attacks on New York and Washington of September 11, 2001.

I can't forget that horror. I knew that from the news provided by NHK. When I watched TV around 9 p.m. at night, suddenly the program on TV was changed to the scene of attacks on New York and I saw the World Trade Center collapsed. "Is that a new movie show, isn't it?", I questioned to myself. I was terribly shocked at the news...

Time goes by very quickly. I offer condolences to the victims of attacks on the U.S.

What can we learn from the attacks on 9/11, 2001? The Japan Times has an article of good lesson:


Saturday, Sept. 9, 2006
Sisyphean war against a virtual enemy
By H.T. GORANSON

.....yet it seems that policymakers have learned little about how terrorist cells operate, and what their weaknesses are. The Bush administration still uses the phrase "war on terror" and behaves as though it really is a war, the ordinary kind where one government fights another.

.....In order to make the "war" paradigm fit, the Bush administration alludes to al-Qaida as a centrally directed enemy. In fact, there is now no master planner or funder of terrorist activities. The Madrid, London, and Bali attacks, as well as several thwarted operations in the United States and Britain, were all characterized by their dispersed organization. Independently generated plots emerged and used ad hoc resources, often within the target country.

Those small operations also lacked a common internal design. Terrorist motivations differ from cell to cell, even from person to person. Individuals can be involved for profit and power, or for political and religious reasons, while others participate for hate or thrills. Moreover, there are vast differences in terms of risks, rewards, and imperatives as one moves up the organizational chain, or jumps from cell to cell. Conventional military models are geared to decapitate something that, in this case, has no head.

The characteristics of this new structure have already been studied in a very different context. Terrorism is a violent version of an "agile virtual enterprise." A virtual enterprise is any small group that self-assembles into an organization that is just large enough to accomplish the collective intention.

Virtual enterprises are unusually innovative, and, in the business sector, they are possibly the only system that can build a one-off product well. A conspicuous example already exists in the movie production industry. In fact, they are probably the commercial model of the future.
The benefits of virtual enterprises stem from their lightness over stability. At present, most of the price of any product supports the huge, inefficient organization that assembled it. Nearly all the creativity and problem solving occurs in small companies and is later "integrated" by mega-corporations, which have an expensive and vulnerable infrastructure, and keep most of the profit.

This model is the current basis of the business world, just as centralization has also been the favored defense strategy. When you buy a car from General Motors, 80 cents from each dollar goes to GM, which mostly only manages itself. The small suppliers actually provide you with 80 percent of the value and innovation but only receive 20 percent of the reward.

Ironically, extensive research into alternative models was funded through the U.S. Department of Defense, which, as the world's largest buyer of complex machinery, wanted better, cheaper and more tailored goods. The research noted the conditions and triggers needed to facilitate the self-assembly of small opportunistic groups and enable them to act like large companies.

.....It is often forgotten that U.S. Defense Secretary Donald Rumsfeld emerged from a comfortable retirement to reorganize the American military into a smaller, more agile force, using some of these same insights. But the planning for the Iraq invasion, in which Rumsfeld advocated the use of fewer troops than advised, suggests a poor understanding of distributed systems. While the forces were deployed for a flexible entry and withdrawal, the Bush administration ended up using them for an old-fashioned occupation.

Terrorists have been better at capitalizing on models of distributed operation. Scores of texts are appearing in the Muslim world on jihadi strategic studies.

.....Perhaps the first lesson for Western policymakers is that virtual enterprises run on a culture of trust. Some kinds of trust can be based on an artificial notion of "not us" rather than on real values and direct experience. That is why the Bush administration's actions actually strengthen the virtual terrorist enterprise dynamic. Bush's "us and them" rhetoric clearly defines an "other" and positions it as a cohesive enemy. His "war" approach is making it easier for Islamist terrorists to view the West as an equally united and malevolent force.

.... if Western governments do not develop a deep understanding of how the distributed structures operate, they stand no chance of combating the agile terrorist enterprise.

Copyright Project Syndicate 2006

We face up new situations and try to understand how the terrorist behaves. It is our business.

Are Few Japanese the Users of Blogger?

I feel that few Japanese use this Blogger. I see many blogs on this Blogger expressed in not Japanese but English. Even Japanese bloggers use English. When I started to blog, I planned to write Japanese essays. Because many readers may read only English, I can't do without writing English in this Blogger.

Hey, Jap! Use the Blogger and write Japanese. You did away with your nationality, didn't you? You must write in Japanese if you are a Japanese and proud of being a Japanese.

English Teacher Changes His Job

Soseki Natsume is an influential and representative writer in Meiji period, about 100 years ago since now, in Japan and once was the portrait of 1000￥bill. One of many novels he wrote, "Bochan" was bestselling and now becomes textbook of Japanese language at junior high school. Some people say that the novels written by Soseki are the very dictionary of Japanese language.

He had been an English teacher at high school before he wrote novels. His famous novel, "Bochan", is written about the lives of high-school teacher. By the way, was he a good English teacher? He succeeded as a novelist. However did he succeed English teacher? He is said to have been a peculiar person and often lost his temper. Why did he change to a writer attached to the Asahi Shinbun, one of prominent newspapers in Japan?

It has caught my interest. Please tell me if you know about it.

Greg Mankiw's Blog

In fact I followed the Greg Mankiw's Blog, when I started to blog. Its blogger, N.Gregory Mankiw, is a world-famous economics professor of Harvard University.

He is known for the field of macroeconomics: especially the issue of sticky price in the monopolisticly competitive market. He is, so-called, the pioneer of New Keynesian economics, which says that the staggering adjustment of price in the market economy leads to serious recession. Professor Mankiw wrote it in the memorial article, "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly", Quarterly Journal of Economics, 1985.

It says that small menu costs can cause large welfare losses. Menu costs mean the costs of altering a posted price in the store, printing new catalogs and informing salesmen or saleswomen of the new price. And welfare losses stand for the hardship led by serious recession.

Explaining its detail is beyond the scope of this blog. Dr. Mankiw, anyway, has made a great contribution to the researches on macroeconomics. And he also teaches very briefly and clearly macroeconomics to the students all over the world including me. His macroeconomics textbook robbed me of my time and energy and made me enthusiastic about the issues on macroeconomics. He writes very well and explains something difficult very easily. His blog is noteworthy and easy and interesting for even non-economics people to read.

Poor English

I think I am poor at writing and speaking English. Because I am not a native speaker of English and I don't use English very well in everyday life, I am often unconscious that I have made elementary mistakes in my English composition. So I am very sorry that you read a poor-English essay in this blog. Brush up my skill of English writing and try to use English everyday to have you enjoy reading my blog essay!

Is Inequality a Bad Thing? (2)

If good luck determined whether we are rich or poor, is the inequality led by good luck a bad thing? If the inequality is bad, does the public policy remedy it? How does the public policy do it? Let me think about it:

When you were a student, you might have a lot of tests. Did you have high scores? In fact I have got not high scores. I wasn't a brilliant student at school. If you were a smart student, I think that you should have the pride of being smart.

Here I would like to have a analogy: not economic gap but test-score gap would be the problem to be solved. (An analogy is a way of explaining something by comparing it to something else. In this case, I explain the issue of economic gap by comparing it to the issue of test-score gap. I once met a person and she didn't understand what an analogy is like and so what I said. Probably my explanation with an analogy was unclear and intangible to her. Using an analogy is very helpful to explain difficult questions but sometimes is deceptive to some people. Be careful for using an analogy when you explain something important.)

A brilliant student can have good scores of test at school. He or she is capable of having a good reputation and passing the entrance exam of high privileged school. In contrast an incompetent student cannot have high scores and go to prestigious school. Generally highly scored students are more likely to be the candidates for good and highly paid jobs. And so test-score gap is likely closely correlated with economic gap. The results of test taken at school are thought to be linked to the economic status to which they belong. Kazuo Nishimura, an economics professor of Kyoto University, says that those who have taken a math test are likely to be higher paid employees.

As he says, those who took a math test usually had studied math at school and built up a logical thinking in their mind, which would likely make them paid highly. I am somewhat skeptical that math causes a high-paid work. I agree that a logical mind leads us to a good work but I doubt that a way of thinking of those who studied math is always more logical and more mathematical and more likely to be a high-paid job.

Is mathematician paid better than writer? It is beyond the scope of my today's topic. To be back to the test-score analogy, if you said that economic inequality is a bad thing and should be reduced in the satndpoint of social justice, would you think that the test scores of smart students should be reduced in the standpoint of social justice? If you thought it hopeful that everyone is equal, would you think it hopeful that everyone gets the same score? If a smart student gets high scores, should he or she be scolded for his or her high performance? In the same way, should he or she be blamed for low performance?

No parent and no teacher would tell us to get low grades of test. However no person would suggest that our society should be inequal. Somebody's getting high grades leads to a gap among the members of the classroom: one student who gets high scores would be appreciated than the other. Similarly, one person who produces more outputs would be evaluated highly than the other.

In our society, we are not and I think should not be completely equal. It is natural that we are somewhat different from each other. I don't think that economic gap itself is a bad thing. I would like to say that it is not the problem but may be the symptom of the problem. Rather what the economic inequality tells is the serious problem that policymaker should takle. What is behind the economic gap in Japan?I'll tell you what I think is behind it. (To be continued...)

Is Mr. Abe New Leader?

New prime minister of Japan is expected to be Mr. Abe. Is he a good new leader?What is he going to do as his original policy? What is, his catchword of policy, "a beautiful state" like?

Friday, Sept. 8, 2006
Japan Times
New leader to be named on Sept. 26
The main ruling and opposition parties agreed Thursday to pick the successor to Prime Minister Junichiro Koizumi in an extra Diet session on Sept. 26, lawmakers said.
The Diet is expected to tap Chief Cabinet Secretary Shinzo Abe as the new prime minister, since he is widely expected to be elected president of the Liberal Democratic Party on Sept. 20.
...According to the agreement, on the day the extra session convenes, both chambers will hold separate elections in the afternoon to select the next prime minister.
The Lower House's pick will prevail if the results between the two chambers differ.
Abe earlier vowed that he would try to get the Diet to enact bills in the session to revise Japan's postwar basic education law and to upgrade the Defense Agency into a ministry.

Anyway everyone knows the winner of the race: Mr.Abe. What the policies which he should promote are will be mentioned later.

Congraturations!!

Today is a specially happy day. Princess Kiko gave birth to a boy today's morning. Congraturations! I wish Princess Kiko, her new boy and family all the happiness and health. Here is the excerpt:

The Japan Times
By AKEMI NAKAMURA
Staff writer

Princess Kiko, the wife of Prince Akishino, the Emperor's second son, gave birth to a boy Wednesday morning, a long-awaited male heir to the Chrysanthemum Throne....

.....The 39-year-old princess gave birth to her third child, who weighs 2,558 grams, at 8:27 a.m. by Cesarean section at Aiiku Hospital in Minato Ward, Tokyo. Both the baby and the mother were in good health, according to government sources. The boy is the fourth grandchild of Emperor Akihito and Empress Michiko....

It is a good news that Princess Kiko and her baby are all in good health. I am looking forward to seeing a new baby and hearing what he will be named.

Is Inequality a Bad Thing? (1)

Economic inequality is a controversial issue. In Japan the economic gap between the rich and the poor is said to be widening and is paid attention to as a serious problem to be solved.

I raise an elementary question: Is economic inequality a bad thing? This question is very hard to answer. To begin with, is economic inequality a problem? If it is a problem, what does it affect? And can it be solved by a policymaker? My views about economic inequality are as follows:

First, what causes an economic inequality? My answer (some economists' answer) is that a good lack causes an economic gap. If I was born with a silver spoon in my mouth, I could learn at a good private school whose tuition is very high and so I could more likely catch a good job whose salary is very high. If you were born into lower-class family, you might less likely go to a good private school and less likely get a high-pay job. Where I and you are born is a problem of good lack, neither of hard work nor of effort, that is, an uncontrollable matter. The only god knows whether you are rich or poor.

If some of my readers hear the above story, they might ask me: does a hard work also cause the gap? Yes, it does. A hard work would more likely take you into economic success. And many people believe in the power of hard work. Some of entrepreneurs who get rich were born in a less wealthy or working-poor family. Their success story would encourage some dreamers to launch a new business and to take the challenge. Dream of making a fortune drive the motor vehicle of modern capitalism. And taking the risk boosts up their mind of hard work. As a great British economist, John Maynard Keynes said, "the animal spirit" is the cause of the endeavor with danger and the engine of modern capitalist economy. The success due to hard work is called "success story ", or "the American dream" called in the U.S. society and is admired among many people.

However as a fact that we don't want to admit, other entrepreneurs fail their business and in the worst case commit suicide, worried about outstanding debt. This tragedy also promotes capitalism to work. Learning from the failure, some businesspersons would try to success and their behaviors change their business model into more making-profit model.

Economic gap is the proof of good lack and of hard work. Hard work bears fruit or not. It depends on good luck. High competence and high quality of worker would give the worker high income. To say more precisely, greater demand for the output produced by the worker in the market would more likely end up high payment for the worker. In contrast decreasing demand for the good produced by you leads to low income. Demand and supply in the market of the worker work together and determine the worker's pay or income. Even if you are competent(the supply of your output is efficiently increased), the demand for your output is decreasing and thus gives you low income. What operates the demand? Nobody knows it. Maybe the current people's preference for the output shifts the demand upward or downward. This is also an evidence of good luck.

If good luck makes us rich or poor, is the inequality brought about by good luck a bad thing? For whom is that bad? For the poor and unhappy people? If the inequality is bad, does the public policy remedy it? And if possible how does the public policy do it? My answer may be incomplete but somehow reasoning. (To be continued.)

The Elder Know More Than Do The younger?

Suddenly I raise a question: Do the elder know more than do the younger? I think in terms of life-long experience, the elder know more things than the younger do. Because the elder was born earlier and learn and experience more things than the younger. However sometimes the elder know less things than the younger. For instance the elder don't know more things about what is going around: the recent fashion, music and books. In terms of what is now in the air, the elder know less than the younger. The younger are thought to respond more quickly to what is now happening and paid much attention to.

I am now 25 years old and know more things than do the present high school students of 15 ~ 18 years old. For example more English words and business jargons do I know than them. However I don't know more things about the recent culture of high school students. I don't know what they are thinking about, listening to, reading, writing, and anyway how they are living a life.

When I was a high school student, then the elder(of course, now the elder to me) did know more things about the real society and business and didn't know more things about our lives and ideas. I was at least more responsive and thus vulnerable to what was then happening. Things happened in front of me seemed to be fresh and vivid. As I get elder, I can learn more from some elders around me and come to know more things: how I look for a part-time job, what I have to do at my workplace and how I talk to the elder people. And as I get to know more, I become less responsive to and less impressed by how the world is working. I suppose that it is because I think that I learn and know more things.

Generally the younger people are said to know less things about the social manners and rules. Certainly they don't know about those things, but I don't think so. In fact, some of them are really polite and know better. They seem to be more enthusiastic than the elder and they know more about what impression is like. As they get older, they usually forget being impressed and being vulnerable. One day, I met and talked with an elder woman and she told me that a man of 20 years old whom she had talked to seemed a living creature from outer space to her: From her viewpoint, she can't understand what the young is saying and doing.

However she had a day of youth. As she gets elder, she gradually forgets what she was then like, I think. She and I can't be more impressed than we used to be. Being moved is the privilege that the young have and is the proof of immaturity. Impression is very important and necessary for us to grow up and to learn many things.

To return to our first question, do the elder know more than do the younger? The elder know more things about what they should do in our society but less about what and how they should feel in our life. They are less responsive and less likely to learn more things about what is going around. They believe that they know more. In contrast, the younger know less things about the social manner and rule but more about how they feel what is going on in our present life. They want to be an adult earlier and to know more. It is sure that neither the elder nor the younger know how much things they know. Or they probably pretend to know more.

When The Autumn Leaves Start to Fall

It is now getting colder as day goes by and I am also getting older. The Fall is coming and tells me how quickly time goes by. In the Fall, the leaves turns brown, red and yellow and the sunshine gets less stronger and more softer on us.

The Fall is a very comfortable season: Foods are very good, books are kept an eye on and music, especially a vocal jazz is very suitable to listen to: "Autumn Leaves" sung by Nat King Cole.

When the autumn leaves start to fall, the street is covered with brown mattress and men and women walking along the street feel their hearts warmer and their loves start to be fired. When the autumn leaves start to fall, I must prepare for the voyage to the next stage of my life because time goes away very quickly.

When the autumn leaves start to fall, what are you going to do? What do you have to do until the autumn leaves start to fall? See you when the autumn leaves start to fall.