Government outlook for the economy is just fantasy -- Akahata editorial, January 21, 2002

The government Council on Economic and Fiscal Policy has approved a report on the outlook for the structural reform policies and the nation's economic and financial activities for the next five years.

The report says: If the Koizumi Cabinet's "structural reform" plans are fully carried out, the economy will achieve a steady annual growth of 1.5 percent in real terms after fiscal 2004, and the basic fiscal balance except for national bond revenue and redemption costs will be in the black by fiscal 2010.

Reality proves otherwise

This scenario was designed to illustrate Koizumi's motto, "No growth without reform." But what is actually happening in relation to the people's living conditions and the nation's economy is contrary to the council's optimistic forecast.

The government "structural reform" policy calls for write-offs of bad loans held by major banks and for large corporations to push ahead with restructuring and worker dismissals. This policy has caused the deep economic recession in which the unemployment rate and other economic indicators are breaking records every time they are calculated. As a result, tax revenues are destined to decline sharply.

The panel presents a rosy picture of the economic and fiscal future, but, sorry, it's only fantasy.

The Koizumi Cabinet has plans to change the tax system to the disadvantage of ordinary people, lowering the minimum taxable income and increasing the consumption tax rate. It's an assault on working people. An immediate tax revenue increase may take place, but the economy can collapse.

The present deep economic recession is being exacerbated by the decline in domestic demand, in particular household consumption. The Koizumi "structural reform" which weakens household spending convinces us that this is not the way to help to get the economy moving again.

The advisory council views the present situation in the following way: The slow write-off of bad loans, the severe unemployment situation, the increased fiscal deficits, and the apprehension about the sustainability of social services caused private consumption to decline, which in turn caused a deflationary spiral.
The process of writing off bad loans, which entail business failures, has only helped increase bad loans, rather than decreasing them as intended. The increased medical charge insured patients have to pay discouraged them from visiting hospitals. The worsened health condition of the people means that the nation's total medical cost will increase. In all these aspects, the "Koizumi" reform makes matters worse.

This boils down to one thing: Under the panel's perception of the situation, private consumption will not recover and the deflationary situation will not improve.

The panel report puts emphasis on people and humanity. That's deceptive because it gives a false impression that humanity is respected in "structural reform." The hallmark of the Koizumi "reform" is its view of people as being no different from industrial funds and equipment. Its inhumanity is typically shown in Koizumi's statement that increases in unemployment and bankruptcy should be taken as signs of progress in structural reform.

The advisory panel's rosy picture based on the government scenario can by no means erase the people's anxiety and questions concerning what lies ahead.

The other way

The report forecasts that zero economic growth will continue if "reform" is not carried out. It calls on the people to believe that there is no alternative to the Koizumi "reform." Obviously, this course will end up in a total economic and fiscal failure.

Departure from the Koizumi "reform" and the conventional policy is necessary. The Japanese Communist Party proposes measures to secure and create jobs and improve social services to boost household consumption, which accounts for 60 percent of the domestic economy. This is the change that the people need as a way for economic reconstruction that gives priority to the betterment of working people's livelihoods and genuine respect for human dignity. (end)