Both Japanese companies and foreign shareholders would benefit from steps taken to have the economy grow faster. One of the steps I'd recommend is to make taxes on dividends lower than taxes on capital gains to promote high-dividend stocks and investment trusts and get fallow cash out of the electronic vaults of corporations. This would hopefully induce more middle-class people, including those in the 25-45 age range, to become long-term investors. This would simultaneously improve household incomes and improve the allocation of capital.
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.
What creates poor asset allocation of capital is not low bank profits, but the fact that banks don't train their people in competent credit assessment because they depend so much on collateral, personal guarantees, and government guarantees.
I agree that all kinds of changes in regulation and tax policy would be needed to improve the financial system.
Higher wages and better labor mobility go hand in hand. Countries do not grow well when workers cannot afford to buy the products that they make, making consumer demand weak. This is a longstanding proposition of standard macroeconomics. Japan has the OECD's biggest gap between growth in output per work hour and growth in real wages per hour.
I still go back to poor banking regulation and poor legal system that create poor banking profits. Banks would train people better if it were profitable -- and earning profits were the focus of the banking system.
Higher wages are an end-game. Pay senior executives more. Promote the acceptance of being wealthy. A low COFI coefficient is not always a good thing. Raising pay for all only increases inflation -- it does not solve anything. Minimum wage is a starting or training wage - it is not a living wage.
Promoting equity ownership would also help. The more people that own shares the more they will profit from corporate behavior. Too many unions and no personal stock ownership create an us against them mentality when it comes to wages.
JJ, from looking at the link, it feels as if people are more interested in environmental issues than economic ones like the minimum wage. I'll be doing some work on the poltics of Japan's stance on climate change and that might be a more appropriate target for your audience.
How would your ideas sit with (foreign) shareholders who are hoping finally to unlock some returns from Japan Inc.?
Both Japanese companies and foreign shareholders would benefit from steps taken to have the economy grow faster. One of the steps I'd recommend is to make taxes on dividends lower than taxes on capital gains to promote high-dividend stocks and investment trusts and get fallow cash out of the electronic vaults of corporations. This would hopefully induce more middle-class people, including those in the 25-45 age range, to become long-term investors. This would simultaneously improve household incomes and improve the allocation of capital.
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.
What creates poor asset allocation of capital is not low bank profits, but the fact that banks don't train their people in competent credit assessment because they depend so much on collateral, personal guarantees, and government guarantees.
I agree that all kinds of changes in regulation and tax policy would be needed to improve the financial system.
Higher wages and better labor mobility go hand in hand. Countries do not grow well when workers cannot afford to buy the products that they make, making consumer demand weak. This is a longstanding proposition of standard macroeconomics. Japan has the OECD's biggest gap between growth in output per work hour and growth in real wages per hour.
I still go back to poor banking regulation and poor legal system that create poor banking profits. Banks would train people better if it were profitable -- and earning profits were the focus of the banking system.
Higher wages are an end-game. Pay senior executives more. Promote the acceptance of being wealthy. A low COFI coefficient is not always a good thing. Raising pay for all only increases inflation -- it does not solve anything. Minimum wage is a starting or training wage - it is not a living wage.
Promoting equity ownership would also help. The more people that own shares the more they will profit from corporate behavior. Too many unions and no personal stock ownership create an us against them mentality when it comes to wages.
Tell me more about your show or send me a URL
JJ, from looking at the link, it feels as if people are more interested in environmental issues than economic ones like the minimum wage. I'll be doing some work on the poltics of Japan's stance on climate change and that might be a more appropriate target for your audience.