Editorial: PM Kishida's 'new capitalism' backpedaling toward Abenomics
The full picture of the "new capitalism" that Prime Minister Fumio Kishida held up as his signature policy had been released. What has happened to the "emphasis on redistribution" that he initially advocated? Worsening economic disparity amid the coronavirus crisis has triggered the current situation.
As a result of the neoliberal Abenomics fiscal policy named after former Prime Minister Shinzo Abe, which prioritized growth and efficiency, nonregular workers came to account for nearly 40% of the nation's workforce. They were treated as adjustment valves for companies, and many of them lost their jobs during the pandemic.
Correction of distortions in the Japanese economy were sought. And when he announced his candidacy for the presidency of the ruling Liberal Democratic Party last autumn, Kishida called for a shift away from neoliberalism, stating "there is no growth without redistribution."
However, what Kishida's plan now emphasizes is active investment in the digital sector and in science and technology in the name of "thoroughly pursuing growth."
The policy describes redistribution as "investment in people" and lays out plans to enhance workplace training to boost the digital skills of nonregular workers. It appears that its main emphasis has deviated from salving the worries of those in weak positions to promoting growth strategies.
The plan's proposals for how to handle income from assets such as stocks leaves a further impression of retreat.
Excessive liquidity worldwide resulting in high stock prices has boosted the asset income of the wealthier classes. Normally it would make sense to ask those with financial leeway to shoulder a burden, and try to redistribute income. The prime minister, however, has shelved the heavier taxes he initially expressed willingness to introduce on asset income, and instead announced a policy that will double asset income. People who can't afford to own stocks may be left behind.
With commodity prices rising due to the war in Ukraine, there is an increasing need to fix Japan's economic divide. Many of the items getting more expensive are daily necessities, and the lower a person's income is, the heavier the burden they face.
The government has decided on measures to address commodity prices, but the Bank of Japan's so-called "easing of another dimension" -- an Abenomics holdover -- has accelerated the yen's depreciation, spurring higher prices. The contradiction is obvious.
In spite of this, Prime Minister Kishida has repeatedly expressed his intention to adhere to Abenomics, stating, "We will advance bold money policies, flexible fiscal policies and growth strategies." Is he being mindful of the influence of Abe, who leads the largest faction in the LDP?
This is no change of policy, but rather a policy reversal.
If the only action taken is to restore the economy to a pre-pandemic state, then the structure that produced disparity may harden in place. Setting up a redistribution mechanism to ease the concerns of working people is what will spur consumption and form the foundations for economic revitalization.