In this edition of TPR News: The government attempts to lay the smack down on sanction-violators; Japan gets set to meet with Russia; free trade with Switzerland is on the horizon; more political fund scandals; sales are slumping; and why birth subsidies are stupid.

Politics

If Prime Minister Abe is able to deliver on his vow, the upcoming ordinary Diet session will see the passage of a bill calling for the referendum necessary to the revision of the Constitution, as mentioned in the previous edition of TPR News. Undeterred by his failure to explain the white collar overtime exemption bill well enough to garner public support for it, Abe believes he can do it this time, saying,

“I will fight in a straightforward manner. If we explain our achievements to the people in a way that they can easily understand, I believe we will definitely win.”

Ota Akihiro, the head of the New Komeito, the ruling coalition partner of Abe’s LDP, supported the Prime Minister’s other stated goal of extending economic growth to the average Joe, saying,

“I want the LDP to consider ordinary people and small and medium-sized companies, which is our party’s standpoint.”

Want to trade with North Korea? Better decide how much it’s worth to you. The government is seeking to increase the maximum penalties for violating its sanctions against the Kingdom of Kim from a 500,000 yen fine to a year in prison, which would allow the thorough inspection of cargo. Thinking about lying on your Customs declaration? It could get you a fine of five million yen or five years in prison. Want to bring drugs or guns into the country? Seven years.

The tougher Customs Law would be applied to all export and import activities, but would especially stringent in trade with North Korea.

Japan needs oil and gas. To secure it and to try to warm relations chilled by disputes over fishing rights and the possession of the Kuril Islands north of Hokkaido, Japan will enter high-level discussions with Russia.

Vice Foreign Minister Yachi Shotaro, who is credited with improving ties with South Korea and China, will meet tomorrow with his Russian counterpart, First Deputy Minister for Foreign Affairs Andrey Denisov, marking the first occasion on which a senior Russian Minister has met with his Japanese counterpart face to face.

The two will seek a breakthrough on the decades-old dispute over the Northern Territories and an improvement in relations in general by engaging in a dialogue based on the action plan agreed to by former Prime Minister Koizumi Junichiro and Russian President Vladimir Putin.

On January 24th, the day after Yachi and Denisov’s meeting, Natural Resources and Energy Agency Head Mochizuki Harufumi will head to Moscow to meet with officials from Gazprom, Russia’s state-run behemoth. Given Japan’s dependence on imported oil and natural gas, Ministry of Economy, Trade, and Industry officials hope Mochizuki’s meeting will be the first of many between Russian and Japanese officials.

Although it hasn’t drawn as much ink as similar scandals involving high-ranking LDP members, the DPJ’s policy chief, Matsumoto Takeaki, claimed 18.7 million yen for office expenses in 2005 despite basing his political fund in the Diet office building. DPJ head Ozawa Ichiro says he’ll explain the 415 million yen he claimed for similar purposes in 2005, ten times the 2004 level, in the Diet. Ozawa’s fund purchased a building in Setagaya, so crying foul with regards to him would be premature.

To recap, that makes eight lawmakers, seven of whom are LDP members, accused of similar falsehoods. Five Cabinet Ministers: Ibuki Bunmei, Minister of Education; Matsuoka Toshikatsu, Minister of Agriculture; Suga Yoshihide, Minister of Internal Affairs and Communications; Omi Koji, Minister of Finance; and administrative minister Watanabe Yoshimi. Two senior LDP executives: Niwa Yuya, Chairman of the LDP Executive Council and Nakagawa Shoichi, Chairman of the LDP Policy Research Council, who is the current money leader with approximately 286 million yen in false office expenses claimed. Finally, the aforementioned Mr. Matsumoto of the DPJ.

This lineup of cheaters, combined with other fine events of late, such as Foreign Minister Aso Taro’s refusal to allow a lack of support or skill prevent him from becoming Prime Minister, as shown in his recently revealed display of gumption in attempting to strike a backroom deal that would have seen him splitting terms with Tanigaki Sadaharu, doesn’t necessarily mean dark days for Japan’s body politic, rather, it shows business as usual going on, which is bad news for those, like The Economist, who were inexplicably bully about Abe’s nonexistent reformist credentials, and those who’d like to see a little more transparency and honesty in government.

Business

It’s not just Southeast Asia with which Japan seeks free trade. In a telephone conference on Friday, Abe Shinzo and Swiss President Micheline Calmy-Rey agreed to begin negotiations on a bilateral economic agreement centered on a free trade pact. Switzerland is the first country with which Japan has had such an agreement.

From Japan Economy News & Blog comes an indication that all is not well in Japan’s economic recovery. Consumer spending, which accounts for nearly half of Japan’s GDP, appears not to be picking up.

Department store sales figures for December 2006 fell in every listed category, when compared to December 2005. The falling sales could indicate a lack of consumer confidence in general, a shift in retail spending away from large department stores, or both.

Corporate bakruptcies also fell year-on-year in December, with 3.5% fewer corporations declaring bankruptcy. However, the number of corporate bankruptcies rose by 1.6% in toto for 2006 versus 2005. Nearly 62% of the companies declaring bakruptcy had fewer than five employees, though.

Society

Brazil, for the first time, indicted a Brazilian citizen for a crime committed in Japan. Milton Noboru Higaki, who is accused of killing 16-year-old Ochiai Mayumi in a hit-and-run on July 26, 1999, then fleeing to Brazil, was summoned to trial in Sao Paulo. Miss Ochiai’s father said he would have liked to have seen Higaki tried in Japan, but Japan has no extradition treaty with Brazil.

The town of Yubari, Hokkaido, whose weeping 20-year-old girls popped up on TV incessantly at the start of the month as they bemoaned the single ten-thousand yen note they were given to spend on Coming-of-Age festivities (normally a 600,000 yen event in the town), remains bankrupt, but is set to receive a loan of 36 billion yen at 0.5 percent interest to pay off the same amount in debts.

As if high school seniors hadn’t had it rough enough with having to spend valuable entrance exam preparation time and the precious weeks before entering college making up mandatory classes their schools decided to omit, at least 381 students who took the Unified Entrance Examination are going to have to redo the newly-added English listening comprehension portion of the test due to malfunctioning IC players. This is one of those times when we are all reminded that it wouldn’t necessarily be better to be eighteen again.

Speaking of kids, Osaka has raised it’s per-child one-time subsidy for expectant mothers from 350,000 to 400,000 yen per child, starting with a mother’s third. The government estimates the costs of prenatal care and delivery at 500,000 yen. While the policy is designed to encourage women to have more children and thus bolster Japan’s falling birth rate, Sugiyama Chika, a Tokyo-based advocate for improved child-rearing conditions astutely points out that an extra 50,000 yen is highly unlikely to cause any mother to decide to go ahead and have a third child if she hadn’t intended to do so anyway, which brings us to. . .

The Last Word

Birth subsidies are a stupid idea. Not only are they ineffective, they would be counterproductive if they worked.

The falling birthrate is an issue in which a growing number of policy-makers can’t see the forest for the trees. Let’s back up and take in the panorama. First, what is the problem?

While I am loath to make generalizations about any people, I think it is fair to say that broad trends in a society can be assumed to be related to characteristics of broad swathes of the populace that makes up that society. Thus, it would be fair to say that, most people in Japan being Japanese, the Japanese are generally hard-working, fiscally responsible, law-abiding, peaceful, and studious in comparison to the populaces of other industrialized societies. That said, it is fair to say that the Japanese are a fine people of whom it would be fine to have more. So, if the problem is that there are not enough Japanese people, subsidizing births makes sense.

But the problem is not that there aren’t enough Japanese people, but, supposedly, that there aren’t enough people in Japan. Which is not, although it may surprise some members of the Diet, the same thing. We often hear that Japan needs more people to support the pyramid-scheme that is a pension system. This creates the oft-repeated perception that the country is faced with a choice between having more children or allowing more immigration. (I’ll leave issues of race to the side today in the interests of making a clearer point.)

But does Japan need more people? Not really. Japan needs more workers. This opens the door to a much wider array of possibilities - encouraging women to work after getting married or having children, encouraging freeters, NEETs, and leeching adult children to work in the first place, raising retirement ages or at least eliminating mandatory retirement ages, thus allowing aging, but capable workers to continue working if they so choose. Taking steps to eliminate discrimination against elderly and middle-aged people, women, the handicapped, and minorities (yes, they do exist) and, of course, increasing immigration and/or the birth-rate. Just under 40% of Japan’s population works. While a large section of that 60% that is not working may be off the books or incapable of working, it surely also includes a lot of people who are housewives or who exist largely to give nagging mothers something to do or bacteria a place to grow. Some of those people could work. Maybe some of them would even like to work, but find it difficult because of the aforementioned discrimination.

But why are more workers needed in the first place? To pay the pensions and social benefits of the retired. To pay. It’s a financial problem at heart, not necessarily a population problem. The government and most commentators largely fail to mention any of the points just made, much less consider alternatives to incessant population growth into eternity.

That pensions systems as they exist in most of the countries that have them are inherently untenable, is obvious. They work only if the country’s population keeps growing at a decent clip. This is not the case in Japan, which is overcrowded to begin with.

Back to birth subsidies, though. There are as many reasons a parent might have a child as there are parents, but judging the validity of birth subsidies requires that we ignore all but the financial reasons and assume parents are rational actors, which is the assumption on which birth subsidies are based. The fact that exceedingly few people decide to have children for financial reasons is but one problem with birth subsidies.

If parents are rational actors, birth subsidies would presumably be effective if they were either so generous as to equal or exceed the costs of having a child or were generous enough to offset the difference between what it would cost to raise a child and what potential parents would be willing to spend. Considering that no subsidy being offered even fully covers the cost of bringing a healthy child into the world, it is safe to say that the only people persuaded to have children by the incentive of a birth subsidy are people of low enough intelligence that it may be unethical to allow them to raise children.

18,000 children who qualified for the subsidy offered in Osaka were born last year. Not many, really. And it’s safe to say none of their mothers bore them as an economic decision. Although they were probably happy to have the money, it wouldn’t even begin to cover the expenses they will surely incur in the first year of the children’s lives alone, even if nothing goes wrong. Just imagine if the children have health problems or want toys or go to school.

Should sufficiently generous birth subsidies be offered to entice women to do the nation proud, it would instantly become an untenably expensive proposition.

Which brings us back to the root problem. The more successful birth subsidies become, the more expensive they become, the more strain they put on the strained treasury, which is the actual problem to begin with.

Hence, birth subsidies are a stupid idea.

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