In this edition of TPR News: In a week light on political but big on business news, we wonder: What makes a beautiful country? Keidanren announces its projections for Japan’s economic growth as well as suggestions for tax policy. An effective income tax rate goes into effect, the Emperor addresses the nation, and much more. With a Final Word commentary on Prime Minister Shinzo Abe’s “Beautiful Country” initiative.

Politics

After Prime Minister Shinzo Abe announced in October that his policy cornerstone would revolve around the idea of building, “A Beautiful Country, Japan,” the Japanese government has announced that it will seek public opinion on just what does make a beautiful country. According to the government’s draft on the project, there will be a ‘beautiful country contest’ which will allow the public to submit essays, paintings and photos that illustrate the concept. In addition, a list of ‘100 quintessential elements of Japan’ will be drafted by polling the public on what makes Japan beautiful. According to the Yomiuri Shimbun:

Among the items expected to be selected by the “100 quintessential elements” project are kimono and geta shoes, as well as traditional cultural practices, New Year’s shrine visits, osechi traditional New Year’s dishes, the Hina Matsuri doll festival and the Shichigosan festival for children aged 7, 5 and 3…

The government also hopes the public will pick high-tech items, such as the Shinkansen bullet trains and energy-saving technology, as well as examples of Japanese virtue and modesty…

Meetings on “a beautiful country” are planned to be held across the nation. The government also is considering a plan to publicly seek young people, housewives and foreign residents as government “supporters” for these activities.

In his released New Year’s statement, Prime Minister Abe also said, “I plan to build forward-looking relations based on trust” with China and South Korea. He is also hoping to engage other nations in the region in order to put an end to North Korea’s nuclear standoff.

In an effort to promote trade with other asian nations, the government plans to simplify customs clearance procedures by introducing quantitative targets and cutting cargo handling fees at the nation’s seaports. The program, under the slogan, “Distribution Big Bang,” will allow importers to begin the customs procedure while their goods are still in transit, and is hoped to lead to quicker distribution of imported goods.

Japanese and Chinese scholars are set to meet and begin their discussions on the ancient and modern histories of both nations this week in Beijing. The goal of the project is to promote mutual understanding between the nations by establishing an objective approach to history.

And finally, the Yomiuri shows us how to set up a classic red herring argument by implying that those who want no discussion over Japan’s development or possession of nuclear weapons must want to live next to a rogue state who has such weapons. This observer agrees with the sentiment of the Yomiuri’s editorial - that there should be no items ‘taboo’ from the national political dialogue, but wishes it could have been presented in a more mature fashion.

Business and the Economy

On January 1, the Japan Business Federation, known as Keidanren in Japanese, posted its economic forecast for Japan’s next ten years on its website. The nation’s largest business lobby expects to see 1.9% growth in 2007, 2% growth in 2008 and an average of 2.2% growth over the next ten years. In the same report Keidanren called for the government to increase the sales tax from its current 5% to 7%. According to Keidanren, the increase in consumption tax will be necessary in order to keep Japan’s public pension system afloat.

Despite slow economic growth, Japan’s households will face an effective hike in income taxes in 2007. In 1999, the government introduced income tax cuts in order to spur economic growth; those cuts were rolled halfway back in January of 2006 and on January 1st of this year, the second half of the cuts was rolled back. The government estimates that the rollback in tax cuts will generate an additional 1.65 trillion yen in tax revenue.

From January to November of 2006, gasoline sales in Japan declined for the first time in 32 years, according to a preliminary report released by the Economy, Trade and Industry Ministry released on December 28.

On the other hand, the Construction and Transport Ministry plans to keep its eye on rising land prices in Tokyo and Nagoya, where land prices have soared due to redevelopment, creating what some observers are calling a “mini bubble” in the market.

The Yomiuri is reporting that the Bank of Japan is itching to increase the nation’s interest rates at its policy meeting on January 17 or 18. The bank, however, will make its decision, “depending on the outcome of … discussions with the government and ruling coalition parties.”

A recent Reuters piece concerning Japan’s seniors in the workforce has been picked up by several foreign news outlets. The piece talks about what the Japanese media is calling the “2007 Problem” - the fact that a large portion of Japan’s approximately 6 million baby boomers will be retiring this year. The article quotes a company president as maintaining that Japanese companies “are realizing that hiring the elderly is the only way to retain high levels of skills and expertise.” In the article, a 33 year old factory supervisor was quoted as saying that elderly workers, “have more energy than younger workers.”

The foreign intern trainee program has been hit with new allegations that firms are exploiting the interns as a source of cheap labor. The program, which is not covered by the nation’s labor regulations, is currently under review. As the Ministry of Economy, Trade and Industry calls to expand the program, Hiroshi Komai, a professor at Chukyo Women’s University, stated, “It is unjustifiable to expand a fraudulent system that preys on young foreigners.”

Eric Prideaux at the Japan Times has written a piece focusing on changes in the workforce that Japan will face over the coming year. Entitled Labor Dynamics, Prideaux’s piece stresses that the nation’s 6.8 million baby boomer-aged workers will begin to retire en masse over the coming year and that slack will have to be picked up somewhere else in the economy, either by young workers, older workers, women or by allowing more foreign workers to come to Japan.

Also at the Japan Times, a new piece by Setsuko Kamiya illustrates some of the impact that foreign permanent residents are having in Japan. According to the article, the number of foreigners legally living in Japan increased from 1.36 million to 2.01 million in the decade ending in 2005. With the number of permanent residents, especially those from China, also on the rise, the Times interviewed Chinese entrepreneur Ma Eika, who currently serves as president of the Tokyo Elevator Co.

Society

On New Year’s Day, Emperor Akihito (known as the Heisei Emperor in Japan) made his traditional address to the people of Japan from the Imperial Palace in Tokyo. The Emperor read a traditional waka style poem in celebration of his grandson, Hisahito, who is now third in line to the throne, after his uncle and father. The Imperial Household Agency provided the following English translation of the Emperor’s poem:

Rejoicing with us
on the birth of our grandson
The voices of the people -
I am happy hearing them

Empress Michiko read the following poem:

Looking
as if carrying a baby
for the first time
she tells me of the fetal movement
while the moon shines in the window

Crown Princess Masako, who is still recovering from a stress-induced illness, appeared with the family on three of their seven appearances.

For the first time since 1999, it appears that the number of births in Japan increased in 2006 by 23,000. However, despite the increase in 2006, the annual total would still be the second smallest following the all-time low of 1,062,000 in 2005. The low-birthrate trend does not seem to be broken just yet.

And that brings us to the Final Word…

As the year of the boar starts here in Japan, the nation is certainly at a crossroads; it seems ready to either charge ahead, nose down, like a wild boar honing in on its prey, or it stands to be carved up into bacon and enjoyed on the regional breakfast plate. We see a Japan with a low birthrate, family planning its way out of a next generation of workers - not so much because people don’t want children or families, but because it has become too difficult to have them and maintain a decent standard of living. At the same time, the number of births increased last year, which seems a sign for hope until one notices that 2006 will still have the second lowest number of births on historical record, after 2005.

The population, it seems safe to say, does not find Japan a beautiful place to raise a family. Over the holiday season, in conversations with mixed American/Japanese couples at airports and other places, I discovered that each and every family I ran into had decided to raise their children in America. I wondered why. The same two reasons came up: quality of life and education.

As we noted in the news above, the prime minister has decided to ask the nation’s citizens what they think makes a beautiful country. We should remember that not only has Mr Abe already written a book entitled To a Beautiful Country, but that he based his entire incoming policy speech on the idea of building a beautiful Japan. Mr Abe, however, has seen his popularity plummet since coming into office. Part of this is due to the readmission of the postal rebels to the Liberal Democratic Party. Some foreign news outlets are reporting that a series of scandals are eroding the prime minister’s approval ratings. But, much of the problem has stemmed from the cabinet’s inability to clearly express its policy to the people of Japan.

Is it too little too late? Or too much too late? This observer feels it is too much too late. It is too late because, as the Los Angeles Times has put it:

The danger for new Japanese Prime Minster Shinzo Abe is not just that his popularity is sliding three months into the job. It’s that he’s already being mocked.

The Times has a strong point without clearly stating it: the course of any premiership or presidency is very clearly defined in the first 100 days. And Mr Abe has not done well. His tone has been set by the mishandling of two crises by the Education Minister, the forcing through of a misguided law to reform Japan’s education, the ‘town hall’ meetings scandals, an ability to get along with the press, and most significantly: the prime minister’s stubborn inability to communicate his intentions to the public he serves.

It is important to note that the Prime Minister’s troubles are not entirely self caused. While he has spoken of the importance of, and made attempts to repair damage done to Japan’s relations with its neighbors by the Koizumi administration, we see that some LDP members want to repeal apologies that were made with regards to some of Japan’s actions during the second world war. The message being sent is unclear - is the government attempting to build relations while rubbing salt into old wounds? At the same time, the decision to readmit the postal rebels was made under pressure from upper house diet members, the very people who may suffer the negative consequences of that decision.

One message, however, is clear: Mr Abe has been unable to build a consensus in his party or within the cabinet itself. He has thus retreated to his “Beautiful Country, Japan” idea and seems to be trying to build support by calling for citizens to engage in vain self-indulgence of their own cultural characteristics. However, as we noted above, the government has already made it clear what sort of responses it expects from the public. Once again, they seem to be using the public as a crutch to prop up their own policy and ideas.

The LA Times piece mentioned above stresses that Abe seems out of touch. Another excerpt:

“Right now what the entire world is crazy about is cool Japan,” [a recent Brutus] magazine cover line told Abe, referring to the elements of Japanese culture, from anime to architecture, that are now part of global chic.

The Brutus view sums up a developing perception here: that Japan’s youngest postwar prime minister may be an out-of-touch young fogey, more nostalgic for an old Japan than eager to usher in a new one.

I can vouch for this. Having just returned from New York City, I can attest that there is a huge market for all things Japanese - well, not quite the things Mr Abe has been pushing, but the point is t his: Japan is popular. Restaurants with their names written in kanji - no English - and with menus written entirely in Japanese - no English - are packed with Americans and Japanese dining together in the city. This is part of what Mr Abe needs to leverage, and what I’m not sure the young fogey will be able to pick up on.

Listen Now:

 TPR News: January 3, 2007: Play Now | Play in Popup | Download