Kanagawa Prefecture...
Japan
Though no floods and a great earthquake have happened in Japan in these months, it is cold. Northern half of the Japanese Islands, especially regions facing the Sea of Japan, are suffering big snow. For homeless people, however, some people are colder than the winter.
Identified Cause? (Japanese Economy)
Mencius said:
"Grow your true self with all of your heart and strength, and then you will realize that your true nature is good.
If you realize that your true nature is good, you will eventually understand the mind of Heaven that gave you the true nature.
Accordingly, to know, keep, and grow your true nature, which is good, is to serve Heaven.
If you follow this teaching, you can be short-lived or live long, since you will reach Heaven in either case."
So, belief in the innate goodness of man is a holy way.
CHAPTER I: Causes of Deflation in Japan
Prime Minister Mr. Naoto Kan today said that he read a book titled "Identified Cause of Deflation (Defure-no Shotai)" written by a Japanese economist.
(http://sankei.jp.msn.com/culture/books/101002/bks1010020753005-n1.htm)
The book is said to "prove" that deflation in Japan started with a decrease in economically active population and a drastic increase of retired people.
Accordingly, P.M. Mr. Kan seemed to claim that deflation cannot be conquered by adopting any policies, so that voters should not blame him, since it is a natural phenomenon of the decrease in population in Japan.
But, it is controversial, though I also recently introduced the following chart in this blog.
(The blue columns are for Japan's nominal GDP; the red curve is for the Japanese population.)GDP is affected by the size of population. But, the issues are:
Why does the Japanese population decrease?
How much has the decrease of the population have an influence on the deflation?
Are there more decisive factors?
Anyway, it is not good for the prime minister of Japan publicly suggest that we cannot do anything to improve economy because our populations is getting less and less.
CHAPTER II: Decreasing Productive-Age Population Ratio
It is true that the ratio of the productive-age population in Japan has been decreasing since 1990.
(http://www.geocities.jp/yamamrhr/ProIKE0911-133.html)But, in a larger view it does look different.
As the author tells in an interview, the absolute number of the productive-age population in Japan is more stable than its ratio in the whole population, but the point at issue is on the ratio.
The following figure shows the absolute number of the productive-age population in Japan in a unit of 10,000 persons.
(http://homepage2.nifty.com/tanimurasakaei/roudou.htm)In the above figure, the economically active population in Japan is divided into the three groups:
15 to 29 (green), 30 to 59 (pink), and above 60 years old (blue).
It is apparent that the total absolute number of economically active population in Japan has not clearly decreased. As they are also a major part of consumers in Japan, their decline in a ration to the whole population cannot fully explain why 20-years long recession/deflation has occurred in Japan.
Again, without taking into consideration the "China factor," you cannot see the truth of the economic state of Japan.
There is even a possibility that the "China factor" is one of major causes of the decreasing ratio of the productive-age population in Japan.
CHAPTER III: Japanese Investment into China
It is clear that Japanese businesses have not helped Japan increase its population.
They have opted for increasing investment into China so as to use cheaper labor force in the country with the population 10 times larger than Japan's.
(http://www.21ccs.jp/china_performance/performance2007_01.html)The Japanese Government controlled by the pro-capitalist party LDP has helped the Japanese corporations shifting their manufacturing operation to China.
Even today, Japan is the No.1 exporter to China over the U.S., which means Japanese makers are sending components to their plants or contracted plants to China, though nowadays China has grown up as a big market for final products. (Japanese import from China is almost half of America's. But, as the U.S. has 2.5 times more population, Japanese are using more Chinese products per person than Americans.)
A major incentive for expanding the Japanese society has been thus blocked by the "China factor."
Specifically, a salary rise stopped in Japan before 1995, actually in the wake of the burst of the economic bubble around 1990. Domestic makers came to compete with other manufacturers producing goods at lower costs in China, so that they were also forced to cut labor costs in Japan. Young Japanese workers and couples came to face a difficulty in having more than two children.
This is the truth of the decreasing ratio of the productive-age population in Japan and thus of 20-years long recession/deflation.
CHAPTER IV: Truth of Recession/Deflation in Japan
Around 2003, Japan recorded a 2% GDP growth.
It is when Mr. Junichiro Koizumi was prime minister of Japan. Some people said that Koizumi's reformation on the supply side, namely the business/production/supply environment, succeeded.
But, the truth is:
Around 2003, China became a big market. It was no more a simple manufacturing base. Accordingly, Japanese exporters were boosted, as their investment came to be returned. Those exporters ordered many components, material, and services to domestic companies, improving the total economy in Japan.
Also, around 2003, the U.S. entered a boom period. Accordingly, Japanese exporters were boosted. Those exporters ordered many components, material, and services to domestic companies, improving the total economy in Japan.
Accordingly, sales of makers in Japan increased remarkably around 2003, as observed in the figure below:
(http://www.meti.go.jp/report/whitepaper/mono/2010/g00601a02j-2.pdf)Unlike in 1960's, 1970's, and 1980's, Japan needs both the gigantic markets, America and China, so as to sustain its growth since 1990's. And the two markets must be steadily growing.
Without meeting this condition, Japan has to face recession/deflation, since it is so closely linked to China and America in terms of business, economy, and human relationships.
CHAPTER V: Truth in Economic Truth of Japan
Of course, from the beginning, it must be stated that the population growth in Japan would be sooner or later halted in order to protect and preserve natural and spiritual environments of Japan. Too much plants and factories in Japan would damage the Japanese land whose size is almost equal to California's. But, a sound growth of nominal GDP would offset the effect of an expected gradual decrease in population.
The sharp decrease in the birth rate in Japan is still not sound. Deflation in Japan forces many young people to live in semi-poverty as they receive less salary. And, recurring recession really makes people unhappy and feel anxious about their future.
To point at a decrease in economically active population as the cause of unhappiness or deflation in Japan and make people give up a hope of improvement (since it is a natural phenomenon) is not a sound attitude.
P.M. Mr. Naoto Kan must read this posting of EEE-Reporter if in a Japanese-translated version.
(Even Hitler succeeded in increasing the German population before WWII.)
*** *** *** ***
The best policy realized by the ruling DPJ, in power since the fall of 2009, is full support for student fees in public high schools all over Japan and special aid for private high-school students.
Only to realize this measure, the regime change in Japan in 2009 might have been necessary.
But, the Kan Cabinet looks being under strong guidance of the Finance Ministry who aims to increase the consumption tax rate from 5% to 10%. Elite bureaucrats of the Ministry must have suggested that P.M. Mr. Kan should ask veteran lawmaker Mr. Kaoru Yosano to join his Cabinet, though Mr. Yosano, an ex-LDP member, was finance minister in the Aso Cabinet, the last LDP Cabinet before the regime change.
Just one and a half years ago, Mr. Yukio Hatoyama and Mr. Kan were fiercely competing with the then P.M. Mr. Aso and the then F.M. Mr. Yosano in the general election held on August 30, 2009. But, now it is highly expected that Mr. Yosano, currently an independent Lower-House member, is going to be a state minister of the DPJ Cabinet to be reshuffled soon.
Probably, those who support P.M. Mr. Kan will support him more but those who deny the Kan Cabinet will deny the Kan Cabinet all the more, for this expected new assignment.
Anyway, this was a big news item in Japan today.
(http://www.youtube.com/watch?v=6KtsxswKZII
Maybe when you come to a tropical coastal area, you should not keep looking back to your old hometown in the winter, though not everybody can casually fly to the south on holidays...)
Mar 1:13 And he was there in the wilderness forty days, tempted of Satan; and was with the wild beasts; and the angels ministered unto him.