The government's economic and fiscal report released Tuesday focuses on Prime Minister Junichiro Koizumi's program to resuscitate Japan's moribund economy. No wonder its writers -- selected public economists -- have made a great effort to rationalize the prime minister's "no reform, no growth" agenda.
In fact, the authors have done a good job of providing an analytical picture of the Koizumi reforms. In substance, however, there is nothing particularly new about the white paper, though it is the first of its kind to be published since the Economic Planning Agency was integrated into the Cabinet Office in January. What it says is essentially the same as what has been discussed and argued for at the Council on Economic and Fiscal Policy chaired by Mr. Heizo Takenaka, the minister for fiscal and economic policy.
Nevertheless, the report is significant in more ways than one. Perhaps the most significant is its denial of the conventional Keynesian-style policy of public works -- a policy that has been cynically likened to "digging holes only to fill them later." Over the past decade the government has spent a staggering 130 trillion yen trying to stimulate demand, but to little avail. The world's second-largest economy is caught in a double downward spiral of declining prices and output.