The latest economic stimulus package, unveiled last Thursday, reinforces the impression that deficit spending in the name of economic recovery has become an annual routine. In fact, almost every year since the economic bubble burst a decade ago, the government has pumped trillions of yen into the system, often putting political expediency before economic rationality.
This has much to do with the realities of postbubble politics here. The end of the Cold War -- which had kept the Liberal Democratic Party solely in power for nearly four decades -- ushered in a period of coalition politics. Amid the shifting political alliances, the struggle for power became the central concern of various parties. That may have been unavoidable. But using an economic package for political gains could endanger the economy itself, particularly at a time of uncertainty.
The series of economic measures taken over the past decade has failed to put the economy back on its feet. Instead, liberal spending has delayed structural reform and led to an inflated budget deficit. Enormous quantities of construction bonds have been issued every year to finance public-works projects, even though the macroeconomic benefits from such infrastructure investment have markedly diminished.