Sweet Lies of Populists

After all, it was economy that came to the center of campaign policies for the election of the House on Councillors next month. The Liberal Democratic Party on Thursday released a package of policies for the election. It says that the party will boldly cut corporate tax to encourage the activities of industries. It however avoided including some policies negative for voters. Those are, for example, dealing with consumption tax, direction of Trans-Pacific Partnership, and the future of nuclear power plants. In short, the policies are nothing but a reflection of populism.

It is fair to say that Prime Minister, Shinzo Abe, listed up a number of ambitious economic policies. The package includes a target of the growth of gross domestic products for next decade as 3% for nominal growth and 2% for real growth. For industries, it promises to raise annual capital investment to ¥70 trillion, which can be paralleled with pre-Lehman Shock level. The party also encourages foreign investment with a plan for doubling foreign direct investment to ¥35 trillion. It unequivocally declares that the dark circumstances of Japan have been changed.

But, it does not mention that the LDP administration will raise the consumption tax rate in April 2014, the schedule which was determined by former administration of the Democratic Party of Japan. Although it emphasizes the target of neutralizing fiscal primary balance by 2020, the campaign promises does not explain how to do that. While it asserts that the party will seek the best way to preserve national interests in the negotiation for Trans-Pacific Partnership, it promises the expansion of the amount of exporting agricultural products from ¥450 billion to ¥1 trillion by 2020. Anyway, what is the strategy for enhancing competitiveness of agriculture in Japan?

Securing the energy resource is one of the big issues in Japan. LDP upholds the policy of resuming nuclear reactors for power generation, while about 310 thousand displaced people are looking for the place to live. LDP policies are always soft for the strong, and hard for the weak.

As market has shown, Abenomics has been suffered from radical move of hedge funds. It should be overestimation for Abe to recognize Japan economy as has been drastically revived in such a short period as half a year or so. Petit bubble economy created by him may soon be burst. It is voters who are examined whether they can distinguish what Japan is really in need form sweet lies of populists.