Reviving an economy hit hard by the novel coronavirus pandemic will be a central theme in the Liberal Democratic Party’s presidential election. Each candidate should present his own specific, and convincing, economic policies.
The Abenomics economic policies of Prime Minister Shinzo Abe’s administration invigorated corporate performance and created jobs through massive monetary easing and fiscal spending.
Chief Cabinet Secretary Yoshihide Suga has announced his view that the course of monetary easing should continue. LDP Policy Research Council Chairman Fumio Kishida and former LDP Secretary General Shigeru Ishiba both also support maintaining this policy for the time being. Continuing with monetary easing is reasonable.
The coronavirus outbreak has left many companies and their employees in the tourism, restaurant and other industries in a bind. At a time like this, fiscal spending on benefits and other assistance is necessary.
It is vital that the economic growth strategy, the third Abenomics “arrow” after the monetary and fiscal policies, continues to evolve.
Japan’s potential growth rate, which indicates the economy’s true strength, is stuck at about 1%. The growth strategy has produced scant results. The strategy’s shortcomings need to be reexamined and solutions to the current sluggishness put into place.
Suga plans to strongly promote increased digitization of government services. He also has suggested establishing a “digital agency” that would be tasked with removing barriers between various government offices. Kishida has called for setting up a “data agency” that would make practical use of big data.
However, many details of these plans remain to be fleshed out. The nation has been making efforts to increase the digitization of society as a whole for about 20 years, but this drive has plateaued. The candidates should explain clearly to the public how they will turn their plans into reality.
Each candidate also has advocated plans to vitalize the economy via regional revitalization. Ishiba has made decentralizing the Tokyo-centric economy a key policy plank. He pledged to use budget and tax system support to entice about 3 million people to move from urban centers to regional areas by about the middle of the 21st century.
Kishida has touted a plan for a “digital garden city national initiative” centered on cutting-edge technology, creating an environment in which it is possible even for residents in regional areas to use the internet to do their job, receive medical care and access education services.
Suga stressed accomplishments such as the furusato nozei (hometown tax payment) system, which allows taxpayers to pay part of their local taxes to a local government of their choice and receive gifts in return, and increasing exports of Japanese agricultural products. He plans to accelerate these efforts further.
The problem lies in the effectiveness of these policies. The Abe administration also poured considerable time and resources into revitalizing regional areas, but the gap is widening between the greater number of people moving to the Tokyo metropolitan area and the smaller number leaving the area. The candidates should demonstrate that they have the ability to implement policies that will change this trend.
Alleviating the public’s anxieties about the future will be essential for mid- and long-term economic growth.
The three candidates should be applauded for rejecting the idea of cutting the rate of the consumption tax, which supports the social security system. However, the lack of debate on ensuring Japan has sustainable pension and medical care systems is disconcerting. The nation’s ballooning social security expenditures will make it even harder for the government to conduct fiscal management.
The candidates must not shirk discussions on reforms that will bring pain to the public, such as a review of benefits and the burdens residents will shoulder.
— The original Japanese article appeared in The Yomiuri Shimbun on Sept. 10, 2020.