As ever, politicians fail to face up to the existence of systematic risk, and seem to have absolutely no interest in a future program to reduce public expenditure on the concept of "election measures = economic recovery." Government officials endeavor to obtain a budget by dressing up old projects in order to justify the existence of their own section within a vertical administration that has already descended to "section" level, in the form of currying favor with politicians. Even now there are still a lot of projects "necessary for the promotion of IT." The issues have become so dwarfed that they are almost impossible to understand without knowledge of the disputes over spheres of, influence among Diet members connected to government agencies, such as whether or not to transfer "public works-related costs" to "facility costs."
Public expenditure required now is not massive spending in order to put one "box" of dubious cost-effectiveness on top of an existing "box " but investment in "mechanisms" to produce bodies that will create new markets. As for local government measures, it is not a case of building roads or schools in the provinces, but creating the bodies that will use them effectively. Even if vast sums are spent on improving the "infrastructure," without the bodies to use the infrastructure, it is meaningless. For example, it is worthwhile to spend money on a project that will create the framework for private bodies to digitize documents. If the demand is there, the private sector will meet the supply. Know-how will then be accumulated by the private sector through such projects and this will create new supply and demand.
What the Japanese economy needs now is "ideas," and what is most lacking in current policy is "ideas." There is not much time left and the risks are growing. We must get through this difficult period with economic policies based on new ideas.
