New But Traditional Capitalism

According to the top leader of Japan, the country is going to lead the world with a concept of “new capitalism.” In his annual policy speech to the National Diet on Monday, Prime Minister Fumio Kishida required the people to join his challenge for economic and social change, to which he believed the world to be stepping forward. However, his challenge looks to be relatively leaning on traditional growth-oriented policies, lacking strong momentum for wealth distribution to every corner of Japanese society.

    Kishida tried to sell his new capitalism as the key to economic revitalization. He listed various hazards the world was encountering; wider gap and poverty brought by dependence on market economy without fair distribution, shortage of mid- or long-term investment caused by putting priority on efficiency of competitive market, losing sustainability, arial gap between the urban and the rural, serious climate change with pressure on the nature, and crisis of healthy democracy brought by decline of thick middle class. His answer was positive circulation of growth and distribution.

    Firstly, Kishida raised a growth strategy to salvage Japanese economy. One key is taking advantage of digital technology for addressing local problems. He insisted on building more infrastructure, including 5th generation mobile communication system, data center or optical fiber, for online medical services, online education or smart agriculture, which is expected to support local communities suffering from aging and depopulation. But most of those policies have been adopted by former administrations, if not typically directed to local development.

    For deregulation, which has been a persistent agenda facing bureaucratic resistance, Kishida proposed making new rules for introducing unmanned automatic driving car, automatic delivery robot, or use of drone or artificial intelligence. To enhance economic security, new legislation for reinforcing supply chain, advanced safety check for essential infrastructure in power generation, communication or monetary system, and secrecy of important patent in delicate invention for national security can be expected.

    On the other hand, distribution policies were less impactive, highly dependent on the effort of employers for raising worker’s wage. Actual measures presented were taxational support for the employers with salary hike, raising price for public services such as medical or nursery. It is still not clear whether those distribution policies can overcome decades-long deflation sticking around.

    In the prevalence of COVID-19, each government in the world is struggling in between the needs for helping public health and seeking economic growth. There is no reason only for Japan to be successful in getting both. Top priority in pandemic world seems to be securing people’s life and economic recovery will follow it. Kishida’s new capitalism looks like a justification of poor policymaking in the time of no economic solution.

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