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  • Fun Facts #14: JK provides budgetary stats to show why current immigration-resistant regime is unsustainable

    Posted by Dr. ARUDOU, Debito on April 2nd, 2010

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    Hi Blog. Frequent commenter and contributor to Debito.org JK offers a follow-up about a recent article featured here on Debito.org, about the NJ nurse import program (one that as of this time is doomed to become yet another revolving-door visa program). He offers some “Fun Facts”, as in budgetary statistics, about why the current visa regime discouraging labor imports but not immigration is unsustainable. Read on. Arudou Debito in Tokyo, not quitting activism.

    /////////////////////////////////////

    March 27, 2010
    Hi Debito:
    Another immigration-related thread for you. From the article, you can tell that a comprehensive immigration policy is needed:

    1st foreign nurses pass national exam
    http://www.debito.org/?p=6322

    On a different topic, the legislature just approved a record 92.3 trillion yen budget for fiscal year 2010 (which, BTW is 4.2% larger than the budget for fiscal year 2009). In my opinion, it is unlikely that the budget will stimulate the economy because of the huge shortfall in taxes which only amount to 37.4 trillion yen. This is an 8.7 trillion yen / 18.9% decrease from fiscal year 2009. Because of the drop, the government had to issue a record 44.3 trillion yen in bonds, which is an 11 trillion yen increase from fiscal year 2009.

    To my knowledge, this is the first budget in which bond issuance is greater than tax revenue.

    All of this raises more questions about the nation’s fiscal health — government debt reached 189% of its gross domestic product in 2009 (the highest among industrialized countries) and I expect it to reach 200% in 2010.

    What does this have to do with debito.org? Well, a shrinking tax base (read: population) is directly related to the country’s fiscal / economic condition. If for no other reason, a comprehensive immigration policy is needed to bring in more taxpayers in order shore up the GOJ’s increasingly unsustainable economic situation.

    Here are the various sources:

    Japan’s parliament passes record trillion-dollar budget
    http://www.mysinchew.com/node/36798

    Japan’s ruling DPJ has record budget passed through Diet
    http://news.xinhuanet.com/english2010/business/2010-03/24/c_13223166.htm

    Japan parliament passes record $1 trillion budget
    http://beta.thehindu.com/news/international/article299882.ece

    Regards, -JK

    ENDS

    7 Responses to “Fun Facts #14: JK provides budgetary stats to show why current immigration-resistant regime is unsustainable”

    1. debito Says:

      Japan’s parliament passes record trillion-dollar budget
      Foreign 2010-03-24 17:11
      TOKYO, March 24 (AFP) – Japan’s parliament Wednesday passed a record trillion-dollar budget for the coming year, adding to the country’s bulging public debt burden as Tokyo tries to stimulate a sluggish economy.

      The 92.3 trillion yen budget includes new child-care allowances, free public high school tuition and other measures promised by the centre-left government that took power in September, ending a half century of conservative rule.

      To finance the budget, the government will issue new bonds worth a record 44.3 trillion yen, adding to Japan’s huge public debt burden.

      The Organisation for Economic Cooperation and Development has warned that Japan’s public debt, bloated by repeat bouts of stimulus spending, will soar to double the country’s gross domestic product by 2011.

      Japan, the world’s number two economy, last year emerged from its worst post-war recession, growing in the second and third quarters due to government stimulus measures and rebounding exports, mostly to China.

      The budget became law on Wednesday as expected after its passage the same day through the upper house, where the governing coalition has a majority, following approval by the more powerful lower house earlier this month.

      The conservative opposition has slammed the budget as a massive handout ahead of upper house elections slated for July.
      END

    2. debito Says:

      Japan’s ruling DPJ has record budget passed through Diet
      English.news.cn 2010-03-24 16:29:39

      TOKYO, March 24 (Xinhua) — The Democratic Party of Japan’s ( DPJ) fiscal 2010 budget worth a record 92.30 trillion yen (1.03 trillion U.S. dollars) cleared Japanese Diet on Wednesday.

      The budget for the new fiscal year starting from April was passed at the House of Councillors at a plenary session on Wednesday afternoon. It cleared the more powerful House of Representatives early this month with the approval of the DPJ and its two junior coalition partners.

      Following passage of the budget, the ruling coalition of the DPJ, the Social Democratic Party (SDP) and the People’s New Party (PNP) will ratify a number of key statutes by the end of March, including those to make provisions for family allowances and dispensing with fees for senior high schools.

      Fresh government bonds worth a record 44.3 trillion yen (495.80 billion U.S. dollars) will be issued to fund the 2010 budget in light of tax revenues plummeting to levels not seen since 1984.

      As tax revenues fall, the cost of social welfare will rise 9.8 percent, from initial forecasts for fiscal 2009, to 27.27 trillion yen (305.30 billion U.S. dollars), sources close to the matter said, adding that expenditure for public works projects will drop 18.3 percent to an allocation of 5.77 trillion yen (64.57 billion U.S. dollars), the lowest apportionment for such projects in more than 30 years.
      END

    3. debito Says:

      Japan parliament passes record $1 trillion budget
      Japan’s parliament passed a record 92.3 trillion yen ($1 trillion) budget on Wednesday for the next fiscal year, seeking to underpin a fragile recovery in the world’s No. 2 economy.

      It was the first budget for Prime Minister Yukio Hatoyama, who came to power in September 2009 after a historic electoral victory.

      The record budget reflected Mr. Hatoyama’s promise to cut wasteful spending on public works and boost funding for social welfare. The budget – for the fiscal year beginning April – was enacted after the upper house of parliament passed it, parliament spokesman Yoshinori Taoka, said.

      But it has raised concern over Japan’s already tattered finances as the government will issue a record 44 trillion yen in bonds to fund the budget.

      Japan shoulders the biggest public debt among industrialized nations. Its debt stood at 218.6 percent of its gross domestic product in 2009, according to the International Monetary Fund.

      Japan’s economy emerged last year from its worst recession since World War II but remains threatened by prolonged deflation, weak domestic demand, and a strong yen, which hurts exports.

      Amid a fragile recovery, Japan expects tax revenues in the next fiscal year to fall 18.9 percent from the initial budget of the current fiscal year to 37.4 trillion yen, a finance ministry official said.

      Under the budget, spending on social welfare, which includes expenditures of monthly child allowances – one of Mr. Hatoyama’s key pledges – will jump 10 percent from the 2009 initial budget to 27.3 trillion yen, the ministry official said.

      In April, the government will start giving families 13,000 yen a month per child to help ease child—rearing costs and encourage women to have more babies.

      Japan has the lowest percentage of children among 31 major countries, trailing Germany and Italy, according to a government report. In contrast, the nation’s elderly population is swelling.

      The budget shows spending on public works projects will drop a record 18.3 percent to 5.8 trillion yen – the lowest level in 32 years.
      END

    4. Luke Says:

      Debito, to talk about these economic issues without examining the economic policies in general. The Keynesian School of Economics is known for it’s lack of accuracy in predicting and prescribing economic conditions in an economy. But rather, I will let this article explain the Austrian School of Economics’ view point on the stagflation in Japan.
      http://mises.org/daily/1099
      Please read it when you have time it is a good article with an academic focus, but seeks to explain the situation in a way many of us never hear from mainstream Keynesian Economists. A huge focus of the school being that central banks printing money is the main cause of inflation, not some arbitrary concept like “natural rising prices”. PLEASE READ ON, DEBITO SAN!

    5. The Yebisu Post » Japan’s declining population and massive debt shows need for immigration policy Says:

      […] Read full story… var addthis_language = 'en'; […]

    6. Doug Says:

      Luke – Very good article. This topic and immigration are things that really interest me.

      I agree with the laissez-faire approach (Austrian point of view) as well. Japan and the United States are good examples of systems that are being toyed with. I believe both countries are spending themselves to death.

      (Not to get off subject/I try to tie it together in the end so please bear with me.)

      My simplistic view is that in the United States some of our most prosperous times in recent times were under Reagan and Clinton. What these times had in common were a balance of power. During the Reagan era the Democratic party were the majority in the Congress and Senate, providing balance to the Republican executive branch. During much of the Clinton era the Republican party were the majority in the Congress and Senate, balancing the Democratic executive branch.

      During both of these periods no huge policy changes were made (Reagan did propose major revisions to the tax system, which the Congress and Senate approved)and the Glass Stiegel Act was repealed at the end of the Clinton presidency, but during both presidencies there was not a constant radical change.

      In the U.S. I do not think the above indicates that one party is better than the other (they both stink) but I do think the above provides some evidence to support the Austrian point of view as the approach was not totally laissez-faire but changes were gradual and generally not radical in nature.

      In Japan’s Parliamentary system, I believe the LDP had unanimous control during most of the so called “lost decade” and the idea of one party ruled.

      In the case of Japan I think it would be better to let things work themselves out as well. I agree that Japan has not tried the hands off approach and it might be the best long term solution. It is interesting to talk to older folks that lived during and after the depression and their philopsphy that sacrifices and very hard work were necessary to provide a better life for future generations. I am not sure the U.S. (with the instant gratification culture) and Japan (with the evolving instant gratification culture) have the intestinal fortitude to take this path, although I would certainly give Japan the upper edge (a better chance of being willing to make sacrafices) than the U.S.

      Now, the subject of immigration. In the U.S. both political parties are proponents of allowing amnesty for those in the country illegally. Bush and McCain are extremely liberal on immigration issues (especially related to Latin America) and Obama is proposing immigration reform as well. Whether they are doing this for cheap labor or to establish a large permanent voter base is a matter of debate, but I believe the U.S. has been on the path to a second amnesty program (the first one was in 1986) and it will happen soon. The economic impact of recent illegal immigration into the U.S. is generally cheaper labor >>> depression of wages >>>artificially low prices on certain goods >>> and finally a reduction of the middle class. It works great for the very wealthy (and I mean multi millionaires here) but not so well for the lower and middle class.

      HOWEVER the impact of LEGAL immigration into the U.S. has been new ideas, different ways of looking at things, stimulus and growth of the economy, and policies that made the U.S. better. A lot of smart and productive folks have immigrated to the U.S., legally and the U.S. (in spite of all of the problems) has made great efforts to make it comfortable for folks to stay.

      On the other hand Japan’s issues with immigration are different in nature. Although there has certainly been exploitation of cheap labor in Japan (allowing Japan to be more competitive on the global market) the distribution of Japan’s population is shifting to the right on the population curve (I mean the x-axis, not politically) and it seems alot of folks in Japan are starting to realize this. After all, who will support that pension fund when they get older? Government is necessary to administer and provide certain services and provide protection for the country, but Government cannot create revenue or funds out of thin air (unless you are into major devaluation of your currency and inflation). A strong private sector is needed and people are needed to fill those jobs.

      Japan needs immigrants to accomplish this. A sensible immigration policy is in order as well as policies that will make the country comfortable for immigrants that are trying their best and producing economically to stay. I think the economic impact of immigration into Japan would be similar to that of legal immigration to the United States. Stimulus to the economy, new ideas, etc. and as an entrepeneur, I think some very bright and innovative people would come to Japan (provided that it is made comfortable for them to stay).

      I do think Japan is going this direction.

      For example an acuaintance of mine is from Southeast Asia. She has been working in Japan as a maid/nanny for 14 years, has not paid alot of taxes (but pays), and is not wealthy (nearly destitute actually). She is not married to a Japanese. She was granted Permanent Residency within the last few months. I do not wish to comment as to whether this is good or bad but this (and other recent cases I have heard of) shows that Japan is starting to loosen up on immgration.

      Maybe I am naive but I think the Japanese Government does recognize the need for immigration and is heading in the direction of a more “liberal” immigration policy.

      I think the issue now is not how to “loosen up” the system, but the focus should be more on how do you keep people here once they arrive. I do not thing the Japanese Government recognizes the need for this and probably does not really know how to tackle this task. How do you make Japan more comfortable and welcoming for immigrants? It is websites/communities such as this, organizations like FRANCA, and the Free Choice Foundation (check out their new website – they are listing issues that Debito-san has been discussing for years) that could help make this a reality and of they are allowed to work together with the GOJ can make this a reality.

    7. Rick Says:

      Japan parliament passes record $1 trillion budget
      Japan’s parliament passed a record 92.3 trillion yen ($1 trillion) budget on Wednesday for the next fiscal year, seeking to underpin a fragile recovery in the world’s No. 2 economy.

      It was the first budget for Prime Minister Yukio Hatoyama, who came to power in September 2009 after a historic electoral victory.

      The record budget reflected Mr. Hatoyama’s promise to cut wasteful spending on public works and boost funding for social welfare. The budget – for the fiscal year beginning April – was enacted after the upper house of parliament passed it, parliament spokesman Yoshinori Taoka, said.

      But it has raised concern over Japan’s already tattered finances as the government will issue a record 44 trillion yen in bonds to fund the budget.

      Japan shoulders the biggest public debt among industrialized nations. Its debt stood at 218.6 percent of its gross domestic product in 2009, according to the International Monetary Fund.

      Japan’s economy emerged last year from its worst recession since World War II but remains threatened by prolonged deflation, weak domestic demand, and a strong yen, which hurts exports.

      Amid a fragile recovery, Japan expects tax revenues in the next fiscal year to fall 18.9 percent from the initial budget of the current fiscal year to 37.4 trillion yen, a finance ministry official said.

      Under the budget, spending on social welfare, which includes expenditures of monthly child allowances – one of Mr. Hatoyama’s key pledges – will jump 10 percent from the 2009 initial budget to 27.3 trillion yen, the ministry official said.

      In April, the government will start giving families 13,000 yen a month per child to help ease child—rearing costs and encourage women to have more babies.

      Japan has the lowest percentage of children among 31 major countries, trailing Germany and Italy, according to a government report. In contrast, the nation’s elderly population is swelling.

      The budget shows spending on public works projects will drop a record 18.3 percent to 5.8 trillion yen – the lowest level in 32 years.
      END

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