Media Mix, Oct. 18, 2020

Eisaku Ide

Here’s this week’s Media Mix about universal basic income. As pointed out in the column, Heizo Takenaka, who is counterintuitively promoting a basic income plan for Japan, is one of the country’s staunchest neoliberals, and, in a sense, his ¥70,000 monthly payout for every man, woman, and child in Japan is basically another baramaki (helicopter money) scheme. Baramaki is one of the least imaginative moves in the neoliberal playbook, a quick means of stimulating consumption that, in Japan at least, tends to backfire because people whose income is above a certain lever simply sock the money away, thus effectively removing it from circulation. In his own scheme for fortifying basic services, rival economist Eisaku Ide proposes adjusting various tax rates to pay for these services, essentially by raising corporate taxes and income taxes for higher earners, and boosting the consumption tax, which may be the most controversial part of his plan.

Actually, increasing the consumption tax shouldn’t be that controversial. After all, in Europe, where basic services are more available, sales taxes and VATs hover around the 20 percent range. Ide says if you tax income and corporate profits more reasonably, you could pay for free basic services with a consumption tax rate of “only” 16 percent. But raising the consumption tax any further than it is now is anathema politically. In fact, some of the opposition parties are keen on reducing the consumption tax, and all in the name of countering neoliberalism. Yukio Edano, head of the Constitutional Democratic Party of Japan, has announced that he is, essentially, Japan’s main nemesis of neoliberal dogma, but as de facto leader of the opposition he somehow also has to be the standard bearer for reducing the consumption tax, a stance that Ide finds self-defeating. The opposition holds that the consumption tax is broadly discriminatory toward lower income people, since they have to spend money on essential goods and services and are thus taxed accordingly. But if basic services such as health care, old age pensions, education, and childcare are free, much of that burden is already removed from the backs of the poor, and rich people, who spend more money by definition, will contribute more through the consumption tax. Consequently, tax revenues are more evenly redistributed. In Ide’s eyes, Edano should not be advocating for lower consumption tax, and he knows his stance contradicts his rejection of neoliberalism, but he sees that stance as central to his political survival. Partly, this is the media’s fault, which has never bothered to explain to the public what neoliberalism really means and how the consumption tax works. The real problem with Japan’s so-called welfare system is that welfare is grossly mismanaged. In accordance with Prime Minister Yoshihide Suga’s determination to bolster “self-reliance,” social services will become even more stigmatized. As it is, only 20 percent of people eligible for unemployment benefits apply for them, not because they don’t need them, but because it’s too much trouble and/or they feel guilty about it. The same goes for government assistance, which is given out so grudgingly that some people would seem to rather starve than ask for help. For sure, universal basic income could solve these two problems immediately, but as envisioned by Takenaka, it would also force people to take any job they could in order to cover the basic services they might lose as a result. Ide’s means-based approach only sounds difficult. Compared to what we have now, it would probably be a piece of cake. 

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