Gregory Clark (Vice President, Akita International University)
Professor Sawa (http://www.glocom.org/debates/20040608_sawa_recovery/) is quite right to point out the need for new sources of
demand to sustain Japan's current recovery.
The current demand sources - expanded export markets, replacement demand
after a prolonged slump and the digital products boom - may not last for
But like many others he in effect calls on Japanese industry to come up
with a never-ending supply of technological marvels and gadgets to keep
the economy moving forward. This is simply not possible. There is a
limit to the inventiveness of even Japanese firms.
Japan's chronic lack of domestic demand is due to the unwillingness of
Japan's large middle and wealthy classes to emulate the massive spending
on leisure and lifestyle found in all the other advanced economies. The
extraordinarily high level of savings, especially among the elderly and
the rich, is proof.
In this situation there are only two possibilities. One is to find ways to
change the attitudes to leisure and lifestyle. This may be difficult
since deep-rooted cultural values are involved.
If it is believed that government borrowing has reached a limit (a topic
that can be debated) then the other alternative is to change the taxation
regime to allow increased government spending.
This spending should focus on improved education, infrastructure,
environment etc, to provide an improved public lifestyle as an alternative
to the extravagant private lifestyles that the Japanese consumers to date
have not sought after.