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Monday, Aug. 4, 2003

JAPANESE PERSPECTIVES

Seasonal thoughts on Japan's sweltering summer troubles


Summer is as much the silly season in Japan as well as elsewhere. Nothing much moves forward and the papers struggle to find suitable topics to comment on. So do economists. Here are some thoughts for the season.

There are people who think Alan Greenspan is another name for "Almighty God." Some others have said that the European Monetary Union is "Even More Unemployment" in disguise. Prime minister J.K., that is to say Junichiro Koizumi, enjoys no such following among seekers of alternative meanings in the names of distinguished people and important things. In a moment of inspiration, however, he has been known to refer to himself as "Pure Ichiro." Indeed the kanji for the "Jun" bit of his first name does actually mean pure.

The beauty of being Pure Ichiro, as the prime minister presumably meant to imply, is that he is an even more exalted version of Ichiro, that super-cool Japanese baseball hero who casually performs miracles with his bat and glove in the U.S. major leagues.

Alan Greenspan may not deserve deification. Yet right or wrong, his judgments have gained the power to move markets. In this respect at least, he is not that far removed from being all-powerful in the world of global finance. As for Even More Unemployment, the Germans must certainly be feeling that way about life in the euro zone at this moment. Thus the alternative interpretation is not without some justification.

Mr. Koizumi's case is another story altogether. If the prime minister thinks being Pure Ichiro makes him even more of a hero than the genuine article, he would be very purely mistaken. Ichiro Suzuki of the Seattle Mariners earns his place in the batting race by virtue of his own performance. The burden of proof is persistently on his shoulders. Pure Ichiro may go round saying Saddam Hussein's elusiveness is no proof of his nonexistence and expect to defy his parliamentary opponents over the issue of the equally elusive Weapons of Mass Destruction. In the "World of Mass Delusion" that is the political arena, this sort of thing can gain people points. The real Ichiro enjoys no such semantic luxury.

On the economic front, Pure Ichiro has stated that what the private sector can do on its own, it should be left alone to do. There is no quarrel to be picked with that statement.

Yet things start to get a little confusing when the same prime minister who so unequivocally states his preference for a private-sector-based solution to issues goes ahead and authorizes the nationalization of a very large and very inefficient bank. A private sector that was truly left to its own devices would not have chosen to recapitalize the effectively defunct Resona banking group.

Other banks that have received public fund injections in the past continue to stay in financial trouble. So much so that the FSA has had to issue stern warnings to them to get their act together or face further involvement by regulators in their activity. This state of affairs is as much an indictment of the regulators' failure to improve the situation as the banks' inability to change. The government's business is not business. It is the business of business to find its own answers.

As things stand, economic recovery seems to hinge on nothing else but yet another baseball-related phenomenon. That is the continuing, remarkable performance of the Hanshin Tigers. Their invincibility seems to inject the feel-good factor into the economy in a way that no government-sponsored bailout possibly can. For Hanshin, read "Hallelujah."

Noriko Hama is an economist and a professor at Doshisha University School of Management.


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