It is a financial nihilism that does not have the belief or idea of breaking away from the postwar regime. Those who interpret such a law sophistically and have the idea of trying to obtain results that are convenient for them = have caused Japan to decline.
They are law abusers = one who takes advantage of legal loopholes.
January 06, 2023
The original Japanese text of this chapter posted under the title above was found guilty of obstructing searches.
Repost in English.
By the way, the evaluation of this English text is equivalent to that of the New York Times.
The following is from Hideo Tamura's serial column in the February issue of the monthly magazine "Hanada."
Most Japanese economists, economic commentators, and newspaper reporters only write about secondhand knowledge from the Ministry of Finance.
He, however, is one of the few who do not.
I have already mentioned that Yoichi Takahashi is one of those who, like him, write the truth about the economy.
It is a must-read not only for the Japanese people but for people worldwide.
Defense Bonds" to Break Free from Postwar Regime
A few months before his death, former Prime Minister Shinzo Abe proposed issuing national defense bonds.
He decided that defense bonds should be treated like "construction bonds," which are issued to finance public works projects for the nation's future security.
However, what stands in the way is the "Finance Law'' that came into effect in 1947, which is the postwar regime itself.
Article 4 of the Law was combined with Article 9 of the Constitution, which renounced war. It was in line with the instructions of the General Headquarters of the Supreme Commander of the Allied Powers (GHQ).
The bureaucrats at the Ministry of Finance who drafted the Fiscal Law declared that government bonds would be a source of funds to provoke war. Instead, they arranged to keep the government's expenditures within the limits of tax and other revenues.
The Ministry of Finance restricts the issuance of deficit-covering government bonds, justifying tax increases and austerity measures.
Nevertheless, Article 4 has a provision allowing the issuance of government bonds to finance public works spending.
Mr. Abe advocated "breaking away from the postwar regime" during his first administration, but during his second administration, and even after he left the prime minister's office, he kept it in mind but remained a realist.
In April 2022, when the issue of increasing defense spending emerged as a pressing issue, Mr. Abe recognized that Article 4 of the Fiscal Law was legislation from the occupation era. Still, he did not take steps to amend it.
Former Cabinet Counselor Etsuro Honda, a member of the second Abe administration, testified that "Mr. Abe thought that if he enacted the Special Public Debt Law for multiple years at once, rather than enacting it every year, there would be no inconvenience during that period since special government bonds could be issued if the budget was passed.
The defense buildup is tinged with the urgency of the Taiwan contingency that could erupt within the next five years of the third term of China's Xi Jinping regime.
During the 1982 Falklands War between Britain and Argentina, Prime Minister M. Thatcher removed the finance minister from the wartime cabinet.
The "Iron Lady" explained her reasoning to the British Parliament: "We must not think of the military in terms of how much it will cost."
Even if we cannot simply compare the situation with the emergency in the U.K. at that time, the response of the tax hike-oriented Finance Minister and Prime Minister Kishida, whose ears are the first to listen to the "experts" conference's tax hike proposal, seems to remain in the mindset of normal times.
Some believe that Prime Minister Kishida does not want to be accused of being influenced by the Ministry of Finance, but he lacks a "break from the postwar regime" mindset.
The finance bureaucrats will take advantage of this.
Deputy Chief Cabinet Secretary Seiji Kihara, who is in charge of coordinating with Kishida at the behest of the Ministry of Finance, has begun coordinating with the government and ruling party to put off doing anything that would create a "stable revenue source" in five years, i.e., raising taxes.
It's definitely trickery from a finance bureaucrat.
For the time being, the government will use deficit-covering bonds to cover the shortfall and then raise the consumption tax rate to 15% to pay back the deficit.
It is financial nihilism without the conviction or ideology of breaking away from the postwar regime.
Those who insist on interpreting the letter of the law and do not care about the people have been responsible for Japan's decline.
Issuing "defense bonds" is a strategic financial resource only possible in Japan, the world's largest creditor nation.
It will free Japan from the curse of financial resources to increase its defense capability by drawing on its surplus of money.
Since the beginning of last year, when the yen began its torrent of depreciation, both the external quotas and net foreign assets have increased sharply.
Compared to the end of 2020, the external assets will be more than 34 trillion yen as of September 2020. The government will be able to secure the total 6 trillion yen needed to increase defense spending if it takes advantage of the unrealized gains in external assets.
Net external assets indicate Japan's financial strength.
As of June, it had increased by 94 trillion yen from the end of the previous two years to 448 trillion yen, or 82% of gross domestic product (GDP).
The experts' proposal cites the example of the U.K., where the financial market almost collapsed as soon as the previous Truss administration proposed a significant tax cut, and warns that the same threat could be present in Japan.
The U.K. has a net external debt of approximately 20% of its GDP and is at the mercy of speculative forces overseas.
This self-defeating argument confuses Japan, a major creditor nation, with the U.K., a debtor nation.
Defense-related investment can be a catalyst to restore economic strength.
Just look at the United States.
While U.S. military spending is about 25 times that of Japan, defense-related R&D is more than 60 times that of Japan, amounting to more than 10 trillion yen per year.
Under the U.S. Department of Defense, the Defense Advanced Research Projects Agency (DARPA) is responsible for research and development and has created numerous innovations, including the Internet.
High technology, such as information technology (I.T.), is used for both military and civilian purposes, and the development of military technology directly impacts the economy as a whole.
Japan's ingenuity in manufacturing is remarkable.
Japan's F-2 fighter jet is made of carbon fiber, and its vehicle-mounted anti-collision radar has been developed.
The story of Japan's unique innovation, centered on high-tech, will begin as the government eliminates its financial worries by issuing defense bonds.
An enhanced industrial base will lead to economic growth, which will increase the value added by companies, expand employment, and increase the income of the Japanese people.
The defense bonds should position on par with construction bonds rather than deficit bonds treated as "special exceptions" for badly-behaved children.
It is the way to revitalize Japan by breaking free from the postwar regime.
Sankei Shimbun Special Reporter
2023/5/2, in Kyoto
