Part 2 of excerpt of article from Edward J. Lincoln, Clinical Economics Professor at New York University, Stern School of Business and Director of the Center for Japan-U.S. Business and Economic Studies. ______________________________________________________________
Trade data for December was available, showing that exports were plummeting and in February, 4th quarter GDP data showed a stunning 12% annualized contraction—much worse than the contraction in the United States.
So, just at the point when the economy was entering a gloomy period the likes of which no one under the age of about 70 could remember in their lifetime, the newspapers stopped asking as many questions.
In April, two major newspapers asked only one economics question—"whether people approved or
disapproved of Prime Minister Aso’s proposed stimulus package."
One would think that as the evidence mounted concerning a very serious downturn in the economy, the newspapers would want to ask many questions about public experiences and opinions. One possible explanation may be that casual observation suggests the recession is just not getting as much attention in the media on a daily basis as it is in the United States.
To be an American since the fall of 2008 is to be inundated with gloomy news every day and extensive discussion—pro and con—about government policy.
To be Japanese is to be inundated with news about North Korea’s missile launch, swine flu, winning the world baseball classic, Prime Minister Aso’s inability to read Japanese properly, and other non-economic issues.
Even though the overall inclusion of economic questions has been weak, what about the questions that do get asked?
Back in August of 2008, the Asahi poll had asked if it was acceptable for the government to issue deficit bonds (that is, increase the size of the government deficit) to respond to the economic downturn. An overwhelming majority (67% to 15%) said no. That response was quite a commentary on the lack of public concern about a coming recession at that point in time.
A month later, the Asahi poll asked if economic stimulus was more important than continued efforts to reduce the government deficit, and 73% agreed.
By April of this year, attitudes about fiscal stimulus appeared to be changing. Asahi
asked whether people approved of the newly proposed large stimulus package. A very sizable majority did not approve but there was no specifying reasons why.
Nikkei did ask whether the package was sufficiently large. The majority of poll respondents stated that it was too small. So by April 2009, the public seemed to realize that the economic situation was sufficiently serious that the government needed to respond with a strong dose of fiscal stimulus.
Discussion of fiscal stimulus in Japan is fraught with a number of issues peculiar to Japan.
First, is the strong opposition to spending additional money on public works. By the mid-1990s, high levels of public works spending had resulted in so many scandals about “bridges to nowhere” that public opinion soured. Even the Liberal Democratic Party, for which public works projects had long been a source of rural support, recognized the need for change.
Second,Prime Minister Aso proposed and successfully passed a one-time fixed
amount tax rebate which was deeply unpopular. One-shot rebates tend to be less effective
than longer-term tax cuts because people tend to save more when they know that their
financial benefit is temporary. Nevertheless, the Aso rebate had the advantage of being a
fixed amount—so that very low income people (who presumably have a very low savings
rate) received a much greater benefit relative to their income than those with a high income.
Therefore, an argument could be made that the Aso rebate would have at least some impact
on household consumption.
Third, a final interesting aspect of these polls is the public’s preferences on employment.
One of the major developments over the past decade has been the expansion of part-time
and temporary employees, who do not have the job security of “regular” full-time employees.
From the standpoint of corporations facing a future of slow growth and periodic recessions,
this was a necessary change in order to achieve greater flexibility in labor costs over the
course of the business cycle. But the reduction in the availability of better paying regular
full-time jobs has been a sore point with the public.
Asked whether corporations should respond to the recession by trying to protect their profits or protect the jobs of their workers, an overwhelming majority favored saving jobs.
In order to do so, an equally large majority favored “work sharing” in which all existing employees would be asked to reduce their hours of work, rather than laying off some so that others continue to work full time.
People continue to believe that corporations have a moral obligation to their workers to preserve employment to the maximum extent possible. They do not want the benefits of job stability stripped from regular full-time workers, prefer job sharing over layoffs, and think firms should accept lower profits over cutting employment.
The most surprising aspect of these polls is the lack of attention to questions about the economy, given the devastating blow that the economy is absorbing.
When the newspapers did bother to ask about the economy, people were a bit slow to realize
how serious the problems would be, had little faith in the policies of the Prime Minister,
and clearly wanted to maintain the past social contract on labor practices.
Hopefully, in future months the newspapers will go back to asking more questions so that we can form a more complete view of how the Japanese public is responding to the current serious recession.
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To the full article, "Insouciance Concerning the Worst Recession in 60 Years? Thoughts on Japanese Newspaper Polls" please visit Edward J. Lincoln’s blog at the Center for Japan-U.S. Business and Economic Studies.
"...the reduction in the availability of better paying regular
full-time jobs has been a sore point with the public. .."
This couldn't be more true. I myself have witnessed an ever increasing rate at which the better paying jobs have become available. If they are available, 10000 people apply for them. We need stronger small business policies to free up lending.
Posted by: Stationary | Saturday, July 18, 2009 at 02:33 PM