Solving Japan's Problems May Save the World
In an exclusive interview, Japan's Minister of State for Economic Revitalization summarizes his country's plan for putting "Abenomics" into action.
Solving Japan's Problems May Save the WorldBy Sara Wu, Elaine Huang, Sydney Peng
From CommonWealth Magazine (vol. 530 )
Akira Amari from Kanagawa Prefecture near Tokyo is a soft-spoken man of rather small stature. The 64-year-old veteran career politician has held a seat in the House of Representatives for the Liberal Democratic Party (LDP) for 30 consecutive years. Amari has served in the cabinets of different prime ministers, as labor minister, economics minister, and minister of state for administrative reform and civil service reform.
Last December, Amari assumed his current cabinet post, concurrently serving as minister of state in charge of economic revitalization, minister in charge of total reform of social security and tax, and minister of state for economic and fiscal policy. Amari himself describes his job as "minister in charge of Abenomics," the economic stimulus policy championed by Prime Minister Shinzo Abe.
Amari was instrumental in helping Abe win the election for the LDP presidency in September 2012, which paved the way for Abe's comeback as prime minister in December 2012.
If Deputy Prime Minister Taro Aso is the brains behind Abenomics, Amari is its executive manager. Amari is a skilled communicator and negotiator and has the assertiveness and discipline to get things done. Whether the "third arrow" of Abenomics – creating wealth through growth – will hit its target as well as the first two ones largely depends on how well Amari implements relevant policies.
The Bank of Japan shot the first arrow by adopting an ultra-loose money policy, while the second arrow was a 10 trillion yen fiscal stimuli package.
As if Amari doesn't have enough on his plate already as the linchpin of Abenomics, he was also named minister in charge of the Trans-Pacific Partnership free trade pact in March this year.
Amari commands a task force of 100 officials from the Foreign Ministry, the Ministry of Economy, Trade and Industry (METI), the Ministry of Agriculture, Forestry and Fishery, and other relevant cabinet agencies. He has instructed his team to hammer out a strategy for the upcoming TPP negotiations.
How does Amari plan to tackle the formidable task of restarting Japan's growth engine?
Q: As minister in charge of economic and fiscal policy, what are your policy goals?
A: My mission is to do whatever it takes to let the Japanese economy succeed. By creating a virtuous cycle between economic growth and fiscal consolidation, we want to ensure the stable functioning of Japan's social welfare system.
Q: Observers are generally doubtful that the third arrow of Abenomics will have its intended effects. The Japanese government has adopted various stimulus measures in the past, but eventually they all failed. How do you make sure that the third arrow yields economic effects?
A: There are several major reasons why the growth strategies of the past failed to be successful.
Four Aspects to Make Third Arrow a Success
First, measures to boost private investment are doomed to fail unless the problem of deflation is solved first. This time we first devised counter measures to address deflation.
Second, this time we have drawn up dozens of policy implementation projects, setting short-term and long-term targets of one, three, five and ten years. To reach these targets ahead of the specified deadline, we have created a road map as well as a framework, which allow us to promote and implement them as planned.
Third, the policy task forces for the numerous projects that are part of our growth strategy are individually pinpointing the budgetary, taxation and deregulatory measures needed to solve their respective problems. After proposals on these three fronts have been closely integrated, we will draw up possible solutions and set up organizations.
Fourth, from amid the problems that need to be addressed, we are diagnosing the social issues Japan faces, and promoting various reforms, developing new technologies and creating new products.
A Growth Strategy for Solving Japan's Problems
Q: You mentioned that Japan could serve as a showcase with regard to solving social problems, developing solutions and hammering out a growth strategy. Could the problem of population aging be included in that list?
A: As Japan's population ages, the vitality of its economic growth is gradually diminishing. That is to say, as the Japanese population shrinks and our society gradually ages in the future, roads, bridges, tunnels and other infrastructure across the nation will also reach the end of their life cycles. They will become outdated and lose their value.
So what should we do to help Japanese society recover its vitality amid such an environment? We should identify the key problems that Japanese society faces and hammer out solutions that get to the root of the problems. If Japan can take the lead in finding solutions to these problems, then these might eventually become solutions for saving the world.
If the government does not intervene in the coming 50 years, the elderly will account for 40 percent of the population in Japan. Aside from integrating reforms of the social welfare and employment systems, what's even more important is narrowing the gap between average life expectancy and healthy life expectancy.
If the average life expectancy stands at 85 years of age and healthy life expectancy is 75, that makes a gap of ten years spent bedridden with long illnesses. Healthy life expectancy must be brought closer up to average life expectancy. Only then will people be healthy enough to keep working. They won't be forced to retire at 65.
In order to let people live healthy, active lives, innovation and development in medical and health care, pharmaceutics and medical equipment are very important. Therefore, we encourage the government and the private sector to cooperate in R&D so that we become the No. 1 in the world.
Presently we are also planning to set up an institution similar to the National Institutes of Health (NIH) in the United States. All responsibilities regarding medicine, from basic research to product development, as well as clinical research, could be transferred to Japan's NIH.
Q: Minister Amari, you also know Taiwan very well. What kind of opportunities would Japan's revitalization create for exchanges between Taiwan and Japan?
A: During the war, the Koza Navy Factory was located in my electoral district of Kanagawa Prefecture. In that factory young people from Taiwan and Japan worked together to produce military aircraft. Our relationship with Taiwan is very deep and longstanding.
[Back then] the young workers from Taiwan called Japan their "home away from home." They still hold "Koza reunions" in Japan every year. I also participated in this year's meeting in May. But because the members are all far into their eighties now, this year was probably the last reunion.
It is a pity that there aren't many official exchanges between the Taiwanese and Japanese governments. Still, there is an abundance of private contacts. After the great Tohoku earthquake hit Japan, Taiwan cared about Japan more than anyone else and gave us a lot of donations and assistance. Virtually every single Japanese knows this fact. As for future people-to-people exchanges, I think these are bound to gradually thrive.
Translated from the Chinese by Susanne Ganz