~The market has crashed since the beginning of the year. A vote of no confidence was cast against the government's budget proposal, but the government...~
In the January issue, I mentioned how terrible the government's budget proposal was, but it seems I wasn't the only one who felt that way. The stock market crashed at the beginning of the year, and it was a clear-cut vote of no confidence in the Hashimoto administration.
However, the government's response to this was so poor that it was hard to criticize it. They said that we should not be fooled by the current market trends. It seems that the government leaders are fundamentally mistaken.
When the market crashes, the current government seems to think of policies to support stock prices, but what the market is demanding is of course not such short-term, superficial measures. The current market decline is in line with the weakening of the yen, which is essentially a sell-off of Japan. In other words, the market has decided that in the long run, if the current management style continues, Japan will fail.
The market's judgment is probably largely correct. Japan is approaching the point where it needs to fundamentally change the way it operates.
So how do we change the way we operate? It is the introduction of market principles into the public sector. Specifically, it is similar to the recently introduced "local tax allocation." Tax revenue from the region belongs to the region. Using these financial resources, the region runs the city as if it were a company. Naturally, if the management is poor, the city will lose population and businesses, and go bankrupt. The goal of the city is, of course, to maximize profits (tax revenues) in the long term. Obviously, if the tax rate is raised too much, businesses and population will leave, and tax revenues will fall. On the other hand, if the tax rate is lowered too much, the financial resources will disappear and urban services will decline, and the population will leave. In English, the term for implementing city administration is "Incorporate into City," and the city's management sense as a corporation is truly being questioned.
Opinions will differ as to what level of local government should be treated as an independent "business," but I think the "city" level is best. When considering it as a human living area, I think the "city" level is appropriate. At the "town/village" level, the population is too small and financial resources will be insolvent, and management efficiency will also be poor, so these should be treated collectively as "prefectures." In other words, the current hierarchy of "country-prefecture-city/town/village" will collapse, and prefectures (towns/villages) and cities will be on an equal footing.
On the other hand, under such a framework, the role of the national government would be much more limited than it is now, limited to more macro issues such as foreign and monetary policy, and the adjustment of externalities that involve a wide range of areas. Furthermore, national financial resources would be contributed by these local governments, rather than the national government collecting taxes and distributing them to local governments, as is the case now. This would eliminate the current bad situation in which the national government effectively controls local governments.
Today's Japan is like a giant corporation whose headquarters has become bloated and slow to operate. Companies like this will collapse sooner or later. To save them, it is necessary to boldly restructure the headquarters and transfer authority to the field (in this case, local governments). If this is not done, Japan will have no choice but to become a sinking twilight country clinging to the glory of the past.