Good question. I will try to provide a quick response. Bureaucrats in Japanese government tend to exert a lot of influence. The Ministry of Finance was dead set against expansion citing growing budget deficits. Also much of the previous (prior 1997) fiscal spending had gone to aid the construction industry (a major contributor to the LDP) with projects located in rural LDP strongholds. This created several scandals with multi lane highways being built in areas without traffic. Starting in 1997 infrastructure spending begins to shrink as then Prime Minister Hashimoto brings in economic reforms. Koizumi comes in on a sound bite program of economic reforms. In reality he has little interest in economics and is concerned with cementing his own political power within the LDP. One way of doing so is to attack those factions of his party that serve the highway and other infrastructure interests. The way to do so is to starve these factions of funds. This can all be done in the name of economic reform which will make Japan more competitive and solve Japan's economic problems. In addition all during this time a number of bureaucrats at the Ministry of Finance and the Bank of Japan had been dead set against any expansion claiming that it would only bail out weak Japanese corporations and perpetuate the dysfunctional Japanese economic system. What Japan supposedly needed was widespread economic reform and restructuring.
Craig Freedman >>> Jim Devine <[email protected]> 02/10/09 1:35 AM >>> but was there a lot of political opposition to expansionary policy? (is that why "afterwards fiscal policy was never expansion"? why monetary policy was "very stop/start?") what forces prevented more expansionary policy? On Sun, Feb 8, 2009 at 8:57 PM, Craig Freedman <[email protected]> wrote: > Not really. The Ministry of Finance pushed fiscal consolidation for 1997 > and afterwards fiscal policy was never expansive. Monetary policy until > the advent of a new head of the Bank of Japan in 2002 was very > stop/start. Expansionary policy would be followed by credit tightening, > ostensibly to prevent potential inflation. Only in the immediate > aftermath of the bubble collapsing was there anything like expansionary > policy. It wasn't a case of the policy elite's economists not having > political clout. > > Craig Freedman >>>> Jim Devine <[email protected]> 02/09/09 3:10 PM >>> > maybe this is what happened in Japan. The policy elite's economists > knew what to do when _their_ bubble economy popped, but they didn't > have the political clout to pull it off. > > On Sun, Feb 8, 2009 at 6:22 AM, Louis Proyect <[email protected]> wrote: >> Paul Krugman - New York Times Blog >> February 7, 2009, 5:36 pm >> What the centrists have wrought >> >> I'm still working on the numbers, but I've gotten a fair number of > requests >> for comment on the Senate version of the stimulus. >> >> The short answer: to appease the centrists, a plan that was already > too >> small and too focused on ineffective tax cuts has been made > significantly >> smaller, and even more focused on tax cuts. >> >> According to the CBO's estimates, we're facing an output shortfall of > almost >> 14% of GDP over the next two years, or around $2 trillion. Others, > such as >> Goldman Sachs, are even more pessimistic. So the original $800 billion > plan >> was too small, especially because a substantial share consisted of tax > cuts >> that probably would have added little to demand. The plan should have > been >> at least 50% larger. >> >> Now the centrists have shaved off $86 billion in spending — much of it > among >> the most effective and most needed parts of the plan. In particular, > aid to >> state governments, which are in desperate straits, is both fast — > because it >> prevents spending cuts rather than having to start up new projects — > and >> effective, because it would in fact be spent; plus state and local >> governments are cutting back on essentials, so the s> billion of >> that aid has been cut out. >> >> My first cut says that the changes to the Senate bill will ensure that > we >> have at least 600,000 fewer Americans employed over the next two > years. >> >> The real question now is whether Obama will be able to come back for > more >> once it's clear that the plan is way inadequate. My guess is no. This > is >> really, really bad. >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l >> > > > > -- > Jim Devine / "Disbelief in magic can force a poor soul into believing > in government and business." -- Tom Robbins > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Jim Devine / "Disbelief in magic can force a poor soul into believing in government and business." -- Tom Robbins _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
