Updated: October 16, 2021 12:32:35 pm
Pressing on with his campaign promise of redistributing wealth and reducing inequality, Japan’s new prime minister Fumio Kishida on Friday unveiled a flagship council, which will be responsible for strategizing how to tackle wealth disparities and redistribute wealth to households.
But Kishida’s talk of what he called a “new form of Japanese capitalism” in his maiden policy speech since assuming office, made some Japanese investors nervous, and prompted markets to plunge earlier this week.
Addressing lawmakers on Friday, he quoted an African proverb, first popularised by former US Vice President Al Gore — “If you want to go fast, go alone. If you want to go far, go together”. His aim is to combine former Japanese premier Shinzo Abe’s pro-growth policies, also dubbed ‘Abenomics’, with heightened efforts to move wealth from companies to households.
His announcement came around the same time he dissolved parliament, setting the stage for an election slated to take place on October 31, which is likely to focus mainly on the coronavirus pandemic and economic recovery.
Who will be part of Kishido’s proposed wealth redistribution council?
The panel, headed by Kishida, will comprise a mix of ministers and representatives from the private sector. Some of the members include Masakazu Tokura, the chairman of the country’s most prominent business lobby, Japan Business Federation (Keidanren), as well as Tomoko Yoshino, president of the Japanese Trade Union Confederation, or Rengo. Kentaro Kawabe, president of Z Holdings Corp., the parent of internet portal Yahoo Japan Corp., will also be part of the council, according to Japan Times.
At least seven private-sector members are women. According to Economic revitalisation minister Daishiro Yamagiwa, deputy head of the panel, it will consist of both veterans and newer faces with varied backgrounds. The panel is expected to hold its first meeting on October 26.
What is the purpose of the council?
The panel will focus on the creation of a “virtuous cycle of growth and distribution” of wealth, which was also the pillar of his election campaign. In his campaign for the Liberal Democratic Party presidential election, Kishida proposed income redistribution to rebuild a broader middle class. This can be accomplished, he said, through an updated version of the 1960 “income-doubling plan” behind Japan’s rise as an economic power.
“In order to achieve strong economic growth, it’s not enough to rely just on market competition. That won’t deliver the fruits of growth to the broader population,” Kishida said in a recent press briefing.
One of the main focuses of the panel’s discussions will be post-covid economic recovery. The measures proposed by the panel will then shape Kishida’s policies if the ruling bloc, led by his Liberal Democratic Party, emerges as the victor of the upcoming polls. The panel is expected to draw up specific measures by spring next year.
Kishida’s council will replace an older growth strategy council, which was set up last year by his predecessor Yoshihide Suga, who stepped down from his post after his approval ratings plummeted to an all-time low, within his first year in office.
Filling Suga’s shoes will be no easy feat, as Kishida will be inheriting a stagnant economy battered by the coronavirus pandemic, the remnants of an unprecedented public health crisis, and increased political manoeuvring by China.
What is Kishida’s plan for Japan’s economy?
Kishida has vowed to help ordinary households — families with children, women, workers without full-time status and students. This was the rationale behind the ambitious 30 trillion yen spending package he proposed to aid economic recovery. Apart from this, he has also been a proponent of a flat 20 per cent tax on financial income, which will primarily apply to the wealthy.
Despite appropriating some of Abe’s pro-growth strategies, on the whole his economic policy stands in sharp contrast to Abeonomics, which focused on boosting corporate profits.
To address the issue of stagnant incomes, Kishida proposed an “income-doubling plan, similar to an initiative launched by former Prime Minister Hayato Ikeda in 1960. “Fiscal reform is the direction we need to head for eventually, though we won’t try to fill Japan’s deficit with immediate tax hikes,” he said after he was elected premier.
Newsletter | Click to get the day’s best explainers in your inbox
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.