Discretionary Distribution

The government of Japan made a decision for new package for economic stimulus on Saturday. Targets are low-income people, small business, reconstruction from earthquake and local community. To bring his economic policy to success, Prime Minister Shinzo Abe began to support the weakest part of economy in Japan with the budget of ¥3.5 trillion. But, nobody knows whether this medicine work appropriately.

Policy that Abe mostly wanted to appeal was subsidy for urgent support for life, which would be funded as much as ¥420 billion. The support was consisted with two kinds of support for local government. One was with some choices for local governments to use the subsidy for their various needs, which included commodity voucher, support for purchasing kerosene or raising children. Another support was to reward local governments that would exercise actual measures dealing with demographic decline.

Those policies did not go beyond an traditional concept of regulative governance. “We have money, you have idea.” That is the way bureaucrats look down on local governments. While policy for demographic decline is firstly responsibility of national government, bureaucrats in Tokyo require local people to find ways. Nevertheless, they never allow local government to use national budget other than for promoting Abenomics.

Support for small business is nothing new. There were various stimuli such as low-rate loan for small and mid-size business, subsidy for introducing environmentally conscious measures or urgent support for rice farmers in low rate rice price. But, increasing hydrogen station for fuel cell vehicle would not be a policy for economic growth, but a support for Toyota, the top runner on this field.

For the region where suffered from great earthquake and nuclear accident, the government would subsidize for innovation of public schools with earthquake-proof construction or local community that would accept intermediate processing facility of nuclear-contaminated soil. Those supports for reconstruction strongly indicated national government’s selective distribution of public wealth. In Okinawa, Abe administration had been supportive on local development as long as the governor was supportive for relocation plan of U.S. Marine base. But, soon after new governor, negative against the plan, was elected, the government started reducing subsidy to Okinawa.

This discretional distribution of national budget is suspected to be appropriate. Biased subsidy may violate the principle of equality under law. Before that, spreading money without principle will not work for economic growth. Voucher distribution in 1999 contributed for consumption as limited as thirty percent of the amount of whole value of distributed vouchers. Abe believes that doing something will keep people’s expectation to his administration.