Prime Minister Abe's Radical Plan for Japan's Constitution

Here is a notice of an upcoming talk at the Foreign Correspondents Club of Japan that I found to be of interest.

I am sure there is some political hyperbole here, and there are also some big 'ifs.'  But this sort of thing does seem to be the general trend amongst the developed nations. 

Democracy was an innovation imposed on Japan in the aftermath of the second World War.  Most westerners do not realize that for the majority of its political life, the postwar government of Japan has been a government dominated by a single party, the LDP in partnership with their corporate combinations, or keiretsus.  

And this 'Japan Model' of concentrated political power in a partnership between government and their corporations is responsible for the lack of reform that led to Japan's 'lost decade.'

The Constitution and its integrity takes on an added importance to those devoted to the democractic freedoms and individual protections for this reason.

The Foreign Correspondents Club of Japan
Shinzo Abe's Radical Plan to Change Japan's Constitution

Lawrence Repeta, Professor, Meiji University School of Law
Masako Kamiya, Professor, Gakushuin University Faculty of Law
Yoichi Kitamura, Representative Director, the Japan Civil Liberties Union

12:00-14:00 Thursday, February 21, 2013

Japan's Liberal Democratic Party has made no secret of its plan to comprehensively reform the Constitution, which it says was 'imposed' on the country after World War 2. On April 28, 2012, it revealed what these plans are. The date was chosen to commemorate the sixtieth anniversary of the San Francisco Peace Treaty.

In Diet interpellations on January 30, Prime Minister Shinzo Abe declared that the party would move forward with these plans under his leadership. For many years, debate over constitutional amendment has focused on the war-renouncing Article 9 but the LDP reform plan is far more radical.

If successful, the party would delete Article 97, the Constitution's most powerful declaration of human rights, and make several other far-reaching changes, including elevating maintenance of "public order" over all individual rights; adding a new requirement that citizens "respect" the kimi ga yo hymn and the hinomaru flag; eliminating free speech protection for activities "with the purpose of damaging the public interest or public order, or associating with others for such purposes"; and reducing parliamentary majorities required for constitutional amendments.

If the party achieves these goals, it will create a Constitution that mandates citizen obligations to the state rather than the other way around. This would effectively mean a rejection of popular sovereignty and a return to Japan's prewar order. The LDP and its allies secured more than two-thirds of the House of Representatives in December elections. If they can achieve the same level in the House of Councilors, the door will be open to a new Constitution to match Mr. Abe's vision.

A panel of experts has agreed to come to the FCCJ and explain the significance of these enormously important proposals. Lawrence Repeta is a professor at Meiji University Faculty of Law. Masako Kamiya is a Professor of Law at Gakushuin University and representative director of the Japan Civil Liberties Union. Yoichi Kitamura is a representative director of the same union and a co-counsel in many noteworthy cases, including litigation that led to the historic 2005 Supreme Court decision that found the Diet in violation of the Constitution for failing to adopt adequate voting procedures for Japanese who reside abroad.

Please reserve in advance, 3211-3161 or on the website (still & TV cameras inclusive). The charge for members/non-members is 1,700/2,600 yen, non-members eligible to attend may pay in cash (menu: braised chicken with rosemary and cream sauce). Reservations canceled less than one hour in advance for working press members, and 24 hours for all others, will be charged in full. Reservations and cancellations are not complete without confirmation. For meal service, please enter the room by 12:25.

How Iceland Restrained the Anglo-American Banks: CBC Interviews Ólafur Grimsson

As you have read here and elsewhere, there is the 'Japanese model' and the 'Swedish model' for dealing with a crisis caused by asset bubbles and fraud from an oversized financial sector and an overly powerful segment of monied interests. 

It is obviously a simplification to slot such a policy issue into two models, but it has some philosophical validity with regard to the resolution of the bad debt that follows such a period of financial recklessness by the Banks.

I should note that I have rarely if ever seen this sort of broader discussion of other policy alternatives in any mainstream US media, and certainly not during the presidential debates which tended to focus on soft issues, distractions, and style.

The Swedish model favors the disposition of the debt failures on the banks, and their management and bond holders.  The Japanese model seeks to sustain the financial status quo and their associated corporate cartels with public debt and social policy adjustments.

Iceland has famously followed the 'Swedish model.' Perhaps so well it may better be called the 'Iceland model.'

If it is not apparent, what made the difference was the resolute manner in which the people of Iceland rejected the deal offered to them by the Banks and their politicians.

Americans made some initial attempts to prevent such bailouts as in TARP, before their politicians caved in to the 'bullet and the bribe.'  But lost their fervor in the co-opting of the Tea Party movement, and even turned against the Occupy Wall Street movement in the face of a determined media campaign to portray them as outsiders, cranks, and radicals.  

As a smaller nation with a stronger sense of community, the Icelanders receive more of their information from diverse and direct personal sources, rather than through interpretation and packaging of the news by a few large media outlets. They also seem less disposed to make a 'war on the weak' amongst their own people than the larger, more impersonalized nations with less homogenous populations.

The US, the UK, and the rest of Europe are currently following the 'Japanese model' of pretend and extend, supporting those who benefited from the bubble, the wealthy elite, with sovereign debt and a policy of austerity for the public. 

The US and the UK seem likely to do so since they are the home ground of the banking cartel and the financial status quo, but the path that Europe is taking is a bit of a surprise considering they are supposed to be progressive and 'socialists.'  It is no wonder that many of the key decision making slots are being 'handled' as they are by the monied interests, and their friends in big media are weaving a campaign of pride and nationalistic divisiveness to harness the darker side of human nature.  It has worked before, at least twice in Germany during the last century, as you may recall.

Neither approach is easy or perfect.  But it does seem that one is more just and effective than the other.

US Tax Brackets Spread For the Past 100 Years and the Concentration of Economic Decision Making

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. Here is a history of the 'brackets spread.'

These are the nominal rates and do not account for tax shelters and deductions. This also does not include non-income taxes such as the federal gasoline tax.

Below this I also include a chart that shows the share of income obtained by the top 1%. I am not necessarily implying that low tax rates on the wealthy leads to a greater share of income for them, in a causal manner.

I think it is a correlation, that low tax rates for the wealthy are an artifact of their increased political power because of wealth obtained by other means, whether it be through monopolies, changes in public policy, cartels, financial fraud, technological change, and quite often corruption.

There should be little doubt from the last chart that the great turning point occurred during the Reagan era, but that it also obtained a 'second life' during the second term of Clinton and the beginning of the twin financial bubbles in tech and housing.

What was damaging in the Reagan philosophy was not so much any change in tax rates, but the promotion of the idea that the rule of unfettered markets was naturally superior to the rule of law, with beneficial effects for everyone. What this ignores is the tendency of unregulated markets to duopoly, monopoly, cartels, frauds and spectacular failures.

I hypothesize that not only does 'supply side economics' not work, but rather, a concentration of wealth and political power in the top one percent actually tends to drag down the overall well-being of the country in terms of robust growth and median standards of living.

This concentration of economic decision making tends to 'starve' the real economy by dampening aggregate demand, and distorting investment from the real to the artificial, particular, and ostentatious, in the manner of many third world oligarchies. It is similar to the concept that decisions made across the broadest number of market participants tend to be the most correct.

This is a somewhat counter-intuitive observation, that a ruling elite tends to 'get it wrong' as compared to a more broadly based decision model in a transparent information model, because their perspective tends more to distortion and group-think as compared to one that includes a reasonably educated and informed middle class. In other words, for all its flaws, democracy works when information flows.

Oligarchies never work, because benevolent dictatorships are mythical for many of the same reasons as the naturally efficient markets model.

Or as Lord Acton put it so succinctly some years ago:

"Where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.

Lord Acton

There are two major models for recovering from such a situation: the Japanese model and the Swedish model, with a number of variations.

The Japanese model attempts to hold the financial structure largely intact, diverting huge amounts of policy action and public funds to supporting 'zombie banks' and interwoven corporate cartels. This led to a protracted period of stagnation.

The Swedish model is to nationalize, reorganize, reregulate and reform the financial sector into a more benign banking system. This has proven to be more successful in several instances, including Iceland more recently.

It will be interesting to see how the next ten years play out in North America and Europe.

h/t Barry Ritholtz

Source: WSJ
Looking Past Fiscal Cliff to Fixing Taxes
By Gerald F. Seib

Let's imagine you just landed from Mars and discovered that America's political system is in gridlock, and its economy is being held hostage. What, you would ask, is the giant problem creating all this trouble?

The big dispute, you would discover, is over whether the top individual marginal tax rate should be 35% (the rate established under George W. Bush) or 39.6% (the rate under Bill Clinton).

That is an oversimplification of the issues that are driving Washington toward the so-called fiscal cliff, of course. Still, that top rate is at the heart of the roaring economic debate.

Read the rest here.

Top 1% Share of the Wealth of the US During the same 100 Year Period

Is Change Coming to Japan?

It will be good news for Japan indeed if the opposition Democratic Party in Japan can win their August 30 elections.

The LDP has been in power since 1955!

Can you imagine what kind of corporatocracy the US would have if the Republicans had won every election since Eisenhower? This is what exists today in Japan.

There is an embedded bureaucracy in the Japanese Ministry of International Trade and Industry that is formidable, and that will resist policy change. So there is room for pessimism.

And the election is far from won. Do they use voting machines in Japan?


Bloomberg
Aso Dissolves Japan’s Parliament, Admits Failings
By Sachiko Sakamaki and Takashi Hirokawa

July 21 (Bloomberg) -- Prime Minister Taro Aso dissolved Japan’s parliament, clearing the way for an Aug. 30 election that polls indicate will hand power to the opposition Democratic Party of Japan for the first time.

Lower-House Speaker Yohei Kono announced the dissolution in parliament today to a chorus of cheers. Aso’s ruling Liberal Democratic Party, in power for all but 10 months since 1955, will defend a two-thirds majority in the election.

“The era of one-party dominance is over,” said Gerald Curtis, professor of Japanese politics at Columbia University in New York. “This is the first election since the LDP was formed when just about everybody believes that the chance for a change of the party in power is very real.”

The DPJ plans to encourage consumer spending by providing as much as 5.3 trillion yen ($56 billion) in child support, eliminating road tolls and lowering gasoline taxes. The party also aims to shift tax money from public works spending to strengthen social security, DPJ legislator Tetsuro Fukuyama said in a July 14 interview.

“They are going to increase the purchasing power of the people directly and they are going to fund this by cutting out wasteful spending,” said Jesper Koll, Tokyo-based chief executive officer of hedge fund adviser TRJ Tantallon Research Japan. “That’s a good, sensible economic policy to have.”

Poll Lead

Forty-two percent of respondents in an Asahi newspaper poll published yesterday said they would vote for the DPJ, compared with 19 percent for the LDP. The opposition, which has controlled the less-powerful upper house since 2007, had a public approval rating of 31 percent, compared with 20 percent for the LDP, according to the poll.

Aso, who came to office last September, has resisted calls from within his own party to resign before the election. His administration has been plagued by cabinet scandals and a deepening economic recession.

“I’m sorry my unnecessary remarks damaged credibility in politics,” said Aso in today’s televised press briefing. Since taking power, he has said doctors lack common sense and mothers need discipline more than their children, angering both groups. “I also apologize the LDP’s lack of unity” created public mistrust.

Aso, 68, pledged to revive the world’s second largest economy and improve the financial security of voters with free pre-schools and higher wages for part-time workers....