Digital Cog

What I would do were I to become Prime Minister of Japan

This post is largely unreadable but would make things more awesome.

Assuming the exact same conditions as of today:

1. Change the electoral system to a single transferable vote system with the entire country as one constituency. All voting would be electronic and for convenience it would be possible to also put a party block for any numbered preference. E.g. one could vote for an individual in the DPJ as 1, put second preference as the LDP bloc, third preference the Communist Party bloc, fourth an individual from the Komeitou etc. This would encourage a broader country based mindset, instead of one mired in trivial local lobbying, while still allowing individuals or parties with primary support in narrow geographical areas to be elected. It would also give an extremely proportional outcome. I won’t clog this post up with the detailed mechanics of the system.

2. I would merge the Ministry of Finance and the BoJ and proceed to cease issuing government debt. Outstanding government bonds would be paid as scheduled. Government payments would be made by crediting bank accounts while taxes would be taken by debiting bank accounts. The government would not match the net credits pushed into the private sector (the budget deficit as it is called) by issuing an equal amount of self replicating government liabilities (government bonds), rather it would allow the reserves to pile up in the banking system. The Finance Minister would set the interbank rate (the interest rate at which the government is effectively willing to lend unlimited overnight funds to members of the banking system) though primarily macro economic management would be carried out through adjusting tax rates.

3. The vast majority of exemptions and deductions from income tax would be abolished and rates would be significantly lowered but a highly and steadily progressive structure would remain. Corporate tax would be reduced to a token level, probably around 5% but the separate taxation of dividends and capital gains would be ended and they would be taxed as regular income. As the present rates on dividends and capital gains are flat and relatively low, the changes in the tax code (lowered rates, no exemptions, including dividends and capital gains as regular income) would equalise the burden on equivalent incomes. Thus rich workers and poor capitalists would benefit significantly, poor workers would benefit slightly and rich capitalists as well as those able to exploit present exemptions and deductions would lose significantly. On a net basis there would be a significant fall in tax revenue.

4. To offset large reductions in corporate and income tax rates I would implement a very high land tax, taxing the unimproved assessed value of the land. This would encourage the development of land, as the value of improvements (such as gigantic skyscrapers (…which will probably fall over in a big earthquake…)) would not be included in the calculation of the tax liability incurred from ownership of the land. Zoning rules would be greatly relaxed to encourage massive developments and driving down the cost of rent.

5. Sub-national government entities would be funded directly and banned from issuing their own debt. The level of funding would be determined by the central government as that necessary to implement all the responsibilities and development goals of the government in an efficient but rigorous manner. Local taxes would be abolished. Existing prefectures carrying debt would receive a one off per capita cash infusion equal to the level of debt per capita of the least indebted prefecture. Those prefectures with debt remaining (all but one) would be required to implement a temporary local tax until such time as the remaining debt is paid down. The same system would be applied to cities.

6. The level of government spending would not be used as a macroeconomic tool. Rather, the government would spend whatever necessary funds in order to create or acquire the real resources needed to carry out its obligations to the populace and development goals. Rates of taxation would then be adjusted in a counter-cyclical manner to manage the macroeconomic condition of Japan. Should inflation and supply capacity constraints manifest themselves, the government would raise taxes to extract purchasing power from the private sector. This would reduce the private sector’s ability to command real resources and hence extinguish inflationary pressures and preserve the relative purchasing power of the government liability used by the private sector as a unit of exchange and  account  (the Japanese Yen). Similarly should a chronic shortage of demand cause a slump in activity the government would cut taxes and push large amounts of Yen into the private sector (some people would call this running a large budget deficit, but the important point is that the size of a budget deficit is irrelevant for an entity that issues in its own liabilities and it would be utter foolery to target a specific level of deficit/surplus as the policy goal).

7. Outrageously large incentives would be created to have children. In addition I would formulate a propaganda campaign encouraging people to have children highlighting various different positive aspects from multiple different angles. E.g. some parts of the campaign would emphasise “oh aren’t children so nice”, while others would appeal to young women by showing babies as a glorified fashion accessory, while yet more would play to the patriotic duty of continuing the existence of Japan etc. etc.. Also, though it would not be a practical measure and may indeed be somewhat reckless, as a sort of publicity stunt/effort to sear into the minds of the populace the need to reproduce, I would implement a special tax on condoms.

8. Measures would be implemented to consolidate Japanese farms into super-large argri-businesses in an effort to raise efficiency to the level found in other developed countries. Tariffs on food imports, including that of rice, would be gradually cut as the consolidation process progressed in order to maintain strong competitive pressure and a feeling of momentum behind the reforms.

9. Related to this, the population is declining and urbanisation continues relentlessly. In such a situation it is foolish and hopeless to attempt to maintain rural populations at the present level. I would take an “organised retreat” mentality towards this process and actually plan and encourage migration away from unsustainably small villages and towns into cities. High density population results in much greater efficiency and economies of scale as well as positive network effects. Since the agricultural reforms would be improving efficiency and reducing employment in the countryside in any case, such a planned urbanisation makes even more sense. Of course any individuals would be free to remain in their homes in the countryside, but should they wish to join the migration to the technotopian cities, the government would actively assist them.

10. The alliance with the USA would be scrapped and all of their bases would be removed from the country. A defense pact would be pursued with South Korea, Taiwan and possibly Singapore obliging each of the powers to come to the defense of the others. This pact would be primarily based on the threat from North Korea, though unfortunately there is always the possibility that a conflict with China could also arise. While the Chinese have much more in common with the Japanese than the Japanese have with the USA (the society in the USA and the outlook of the American people is the polar opposite of Japan’s), such as a desire to build a harmonious society like Japan and little desire to impose its own cultural preferences on other countries, the Chinese government has unfortunately insisted on holding two absurd positions in regards to the occupation of Tibet and the denial that Taiwan is an independent country, of which it clearly is. Both of these positions have the capability to cause international conflict and in both cases the Chinese government is so clearly in the wrong that they must be opposed should such situations arise. However over time I would hope that the Chinese government will back away from such absurdity so that the whole of East Asia can concentrate on building Japan-like utopias without having to worry about potential military conflict.

11. While homelessness and unemployment are already low compared to other countries, I would not relent until both were annihilated. Jobs would be provided to any that could not find employment in the private sector or in the regular section of the public sector, doing various socially useful work. The wage would be poor but basic accommodation would also be provisioned (similar to how some Japanese companies have company dormitories and such) if necessary. Should an individual be unable to work because of lack of education and training, then such training would be given. Suits would even be provided to give dignity and encourage discipline and a sense of solidarity.

12. Prohibition would be abolished. All drugs would be heavily regulated and heavily taxed. Smoking in public would be banned. Though it is already rampant, prostitution would be legalised, regulated and taxed.

13. Taxes on fuel would be increased to at least the levels found in many European countries. Taxes on cars would be gradually increased in an attempt to tax the majority of people off the road in the long run, similar to what is currently done in Singapore. Public transport is already excellent, but it would be expanded moderately to offset the decline in private vehicle ownership. As Prime Minister I would also appeal to Japanese companies to stop wasting their ingenuity developing cars and to instead expend their efforts on something that does not result in the output of a grossly inefficient murderous death wagon that leaves the nation dependent on fuel imports.

14. Home ownership would be discouraged, as it is more efficient to have a sub-segment of the populace specialise in providing and managing accommodation for the rest of the populace. As previously mentioned in the general comment on tax deductions and exemptions, any properties of the tax code that artificially increase the incentive to own a home would be removed.

Sun, May 29 2011 @ 16:05 » Economics, Japan, Solidarity

One Response

  1. currybadger December 22 2012 @ 10:18

    A beautiful translation!