Extreme Austerity Measures Invite a Hatoyama Depression

We have entered a political age where policies run over the people in the name of financial reconstruction and only the Finance Ministry prospers. To put it more accurately, it's the age where we're governed by Democratic Party of Japan chief Ichiro Ozawa and the Finance Ministry. The ministry has decided to run full-speed ahead with its fiscal reconstruction uber alles principle.

History is repeating itself. In 1993, when the Hosokawa-led anti-LDP coalition came to power, the ones holding the reins were Ichiro Ozawa, then head of the New Frontier Party, and Jiro Saito, vice minister of the Finance Ministry. At the time, the ministry and Ozawa were pushing for a national welfare tax of 7%. In the end, this resulted in the Hosokawa cabinet's demise.

This time, Ozawa and the ministry are drawn together in their "search for waste" as they rush to slash budgets. As the government trumpets its search for waste and budget cuts, the recession and unemployment are likely to worsen, and it becomes more likely that we're headed toward a Hatoyama Depression.

The most important thing right now is to stem the downward spiral of job losses and the recession and return to economic growth. To do this, we need to increase public spending and expand the money supply.

However Hatoyama (and Ozawa and the Finance Ministry) are setting off to do the exact opposite thing. Their policy will deepen the recession. At an Oct. 22 administrative reform conference, Inamori, a main member of the group and the honorary chairman of Kyocera, said, "Even if the recession gets worse now, growth in the future is what's important." In other words, as long as we're thinking about the future, it's OK that the current recession gets worse. Really? That's madness. I wish people would give these issues some real thought.

At this rate, the good ship Japan is headed for the bottom of the ocean. I listened to Prime Minister Hatoyama's policy speech on Oct. 26 and felt that he lacked a sense of urgency concerning the current economic situation. The prime minister doesn't seem to have noticed that his country is sinking. This is not the time for carefree talk about cleaning up government. There's no reason for a government to exist if it's out to destroy the people's economy.