December 17, 2017

Economy as an weapon

Recently I read "武器としの経済学" by kenichi ohmae and some articles are intersting.

1. About japanese national pension status
(1) 60 % of japanese people pay national pension, that means 40% people didn't pay. He said that this pension plan has already been over.(yukio noguchi also say same thing)
  • Ratio of age over 65 year was 23% at year 2010, 26.6% at year 2015, and will be 38.4% at year 2065, that means 2 of 5 people are over 65 years old at year 2065 so 1.3 people support one person over 65 years old.
  • Current pension plan was made when population was growing year by year and now this premise is broken so this pension plan is over.

(2) He propose 2 plan.
  • One is to promote accepting emigration. for example, about 30% of population of California are emigration. On the other hand, ratio of foreiner in japan is only 2%. But this plan might be difficult to introduce in current japan.
  • Second plan is to change the national pension plan. He pointed out reaganomics. President Reagan did two things. one is to postphone pensionable age to 67 years old. second is to change defined benefits pension plan to 401k. He also did big tax reduction so it succeeded.
  • He said the latter plan is also diffcult in abe cabinet because abenomics only see 2 years future despite reaganomics see 40 years future. He thinks that japanese goverment might plan to postpone pensionable age to 75 years old and this is very sad future, he said. He also said japanese goverment always tell a lie, for example in world war 2 goverment said that japan won very much hiding midway defeat so he concluded goverment's saying are always disillusion.

2. About tax
  • His opinion is that  such argue like "if tax is reduced, there will be economic collapse", " is is necessary for fiscal soundness to rise tax?" are nonsense. Because these arguing are lack of viewpoint of for what we use tax.
  • If country support their welfare like childcare, nursing,unemployment compensation, they don't care such thing and don't have to store money for such situation and spend money. On the contrary in Japan, they have to store money for such situation. So they didn't spend money if abenomics try to do many economic plan.
  • Does corporation tax reduction effect ? His answer is No, because japanese corporation tax is 29.74 (before 37% and reduced to 29.7% then 29.74% at fiscal 2018) but average corporation tax in europe is 25%, so such little reduction is meaningless, he says.
SingapoleKoreavietnam, thai
17%10-22%20%
  • He proposes new tax plan. His plan is abolish personal income tax, corporation tax, inheritance tax, donation tax and introduces estate tax. Because japan is now matured country, not growing country, so the former tax is not increasing in such country. So if estate tax is introduced, people especially wealthy people try to spend money because they don't want to pay estate tax and there will be movement like "from stock to investment". He also proposes value added tax which is taxed for production and services and abolish consumption tax. Japanese GDP is 50 billion yen so 10% of GDP (=5 billion yen) is born.
  • I can agree his logic because our family live modestly for our retirement and for our son's education. There is a risk if we loose job, and our income will decrease in near future so we can't spend much money. I also think that japanse people like me tend to have a virtue not waste money, save money. Especially I was grown up like such circumstance so it is a little doubtful if we spend much money under such new tax circumstance. But nice idea, I think.