100 trillion yen flew in 4 months
The government has set forth four pillars of “People,” “Science and Technology,” “Startups,” and “GX (Green Transformation Information) and DX (Digital Transformation Information),” and has proposed reforms to encourage households to shift their assets from savings to investments.
New Capitalism” is the signature policy of Prime Minister Fumio Kishida. The action plan is a concrete measure of this policy, but it has been immediately derided on social networking sites as “nothing new” and “how is it different from Abenomics?
I want you to invest in Japan with peace of mind. Invest in Kishida.”
Prime Minister Fumio Kishida said this in a speech at the City of London’s financial district on May 5, but investors remain sternly opposed, and Japan’s stock market has not stabilized.
In September of last year, just prior to the inauguration of his administration, the market capitalization of the First Section of the Tokyo Stock Exchange was 778 trillion yen. However, it fell to 679 trillion yen at the end of January when it became clear that Prime Minister Kishida was not going to ease regulations drastically, with his two main proposals of “strengthening the taxation of financial income” and “restricting share buybacks.
Did you know that the ¥100 trillion jump in four months has given rise to the term “kishiribito” on social networking sites?
The term “Kishiribito” has been coined to refer to investors who have seen their assets drastically reduced since the Kishida administration took office. The term is a play on the term “billionaire,” which was coined to describe investors who have amassed financial assets in the hundreds of millions as a result of Abenomics.
The “new capitalism” that Prime Minister Kishida is promoting is nothing more than a fluffy slogan, a rehash of policies that have been in place since the Abe administration, such as corporate tax cuts and uniform cash transfers to encourage higher wages. The Koizumi administration can criticize Abenomics, saying that its neoliberal policies have widened the gap, but it cannot deny Abenomics in its administration, so it cannot give it an edge. As a result, one cannot deny the impression that the Koizumi administration has merely inherited Abenomics and has no originality at all,” said an economics journalist.
According to an Asahi Shimbun poll conducted in May, 34% of respondents said they “have high expectations” for the Kishida Cabinet’s economic policies, while 56% said they “do not have high expectations. Yet, strangely enough, the approval rating is slowly rising, up 4 points to 59%. Perhaps the slow pace of his speech and his mild-mannered personality, as seen in the way he readily bows his head in response to the opposition’s pursuit of his agenda, are winning him favor.
Nevertheless, the economy is the lifeline of the nation. We have to look at the problems with a strict eye. ……
The Kishida administration is trying to use the reserve fund for a pre-Councilors’ election spending spree, a practice that did not exist in the Abe and Kan administrations.
Former finance bureaucrat and member of the House of Representatives Hiroshi Ogushi of the Constitutional Democratic Party of Japan (DPJ) pointed this out. Mr. Ohgushi, an expert on fiscal issues, explains the problems with the Kishida administration’s management of the Diet.
Two years ago, under the Abe administration, the Corona disaster occurred and the future was unclear, so the opposition parties made the difficult decision to approve a 10 trillion yen reserve fund. The reserve fund was mandated to be reported to the Budget Committee in order to allow it to be used without deliberation by the Diet. However, the Kishida administration decided that ¥1.5 trillion of the ¥2.7 trillion supplementary budget passed by the House of Representatives on May 27 could be used ‘to make up for the reserve fund used to counter the high prices.
The government has removed the limitation of the “corona countermeasures,” and has made it possible to expand the use of the budget to any amount by adding the phrase “in the wake of the corona disaster,” as in “comprehensive emergency measures for oil price and price hikes in the wake of the corona disaster. To put it simply, this is a budget for the Upper House election. It is only natural that some are concerned about tax increases after the election.
To cite just one example of the “bramaki,” the gasoline subsidy went from 5 yen to 25 yen, and then to 35 yen in May. In terms of a month, more than 300 billion yen has been spent to address high gasoline prices. It has been decided to continue this subsidy from May to September, and the gasoline subsidy alone is expected to total 1.2 trillion yen. The source of this funding is deficit-covering government bonds, and it is inevitable that future burdens will increase.
The aforementioned Mr. Ogushi pointed out, “It should be Prime Minister Kishida’s role to knock down Abenomics,” and went on to say, “The government should not be allowed to continue to subsidize Abenomics.
I have heard from sources close to the prime minister’s office that he does not like to be ridiculed as an economist, as if he were a ‘Kishi Rinjin. In the draft of the action plan for “New Capitalism” and in his recent answers to the Diet, the tone of words such as “strengthening the taxation of financial income” and “distribution” has been completely lowered so as not to be disliked by investors.
June will also bring bonuses and stock dividends, and the ‘revenge consumption’ of the Corona disaster will improve the economy in the short term. However, even relatively comfortable households are forced to react sensitively to price hikes and are becoming more thrifty. Struggling households are already saving to the limit, keenly aware of the decline in real wages.
The current price hikes are just the beginning, and further price hikes will hit people’s lives in the winter. Since wages will not rise, goods will not sell, corporate profits will not rise, and stock prices will slump in tandem. There is a risk of a wave of “kishiri-jin” (people on the brink of bankruptcy).
Prime Minister Kishida has declared that he will promote a shift from savings to investment, but let us hope that this will not lead to the “freezing to death” of the Japanese economy.
Interview and text by： Daisuke Iwasaki