11 Comments

thanks for the summary of the issues- I think the most compelling change to help people recover from the covid slowdown is the minimum wage hike as it covers a lot of folks who are living on the poverty line and below. I found it interesting that your analysis would also help people above the minimum wage level too. If you would be interested in talking about these issues on my Seek Sustainable Japan live talkshow sometime in July I think it would be an interesting discussion.

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Jun 15, 2022Liked by Richard Katz

Very illuminating and well argued. Thank you. I'll be returning to Japan next week for the first time in several years because of Covid. I look forward to testing your analysis in person.

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How would your ideas sit with (foreign) shareholders who are hoping finally to unlock some returns from Japan Inc.?

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It appears that you are looking for more command and control from the Japanese government. Exactly what you don't want. The issue continues to be the banking system. Japan has a very weak banking system. Banks are not allowed to earn enough profits. Japan has "protected" depositors from charges and not allowed banks to maximize profits. If banks were much more profitable they would be able to take on more risk and companies would not feel the need to protect themselves by holding cash.

Fix the legal system. The system does not allow for financial innovation -- this is also why Tokyo will never be a financial center. You can only release a financial product after it has been OK'd by the government. By that time it is no longer an "innovation." With better access to the bond market and the ability to do a Chapter 11 type bankruptcy there would be less need for SMEs to hoard cash.

Forcing higher wages does not help. Promoting liquidity in the human resources market would make a bid difference. Focus on getting people out of companies that don't need their skills and into companies that need them... You are then forced to pay for an employees ability -- they are not locked into their employer.

There are so many things Japan needs to do. You are focusing on ones that are very short term and do little to build a system for the future.

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