Japan's semi-public National Broadcasting Corporation (NHK) recently gave more than three hours of prime time for a round-table discussion on how to save the economy. Predictably, much of the talking revolved around Prime Minister Junichiro Koizumi's claim that "structural reform" is the key to recovery. As to why this "reform" has managed in two years to drag the economy even further into decline and force an almost 50 percent fall in the stock market, all we got from the pro-Koizumi faction was the usual litany of excuses -- unpredictable foreign events, the need for more time, the economy was in fact going up even if it seemed to be going down, etc.

Even those desperately worried about the current deflationary spiral seemed unable to get their arguments right. They felt obliged to endorse structural reform; it is now a "motherhood" issue in Japan. At the same time they were saying they wanted the government to spend more money to pull the economy out of the spiral. But a key element of so-called structural reform is cutting government spending, not increasing it.

Nor did they point out how the other reform elements -- privatization, liberalization and so on -- are only relevant to the economy to the extent they encourage new investment and employment. Since most discourage new investment and cut employment, in the short to medium term at least, then they are a net negative, even if they do cut some corruption and waste.