The key to a better-balanced economy in Japan is taking the vast surplus profits away from a corporate oligopoly that has proved unable to use them. Corporate financial surpluses that end up in vast fiscal liabilities must be trimmed. Let the public enjoy the income, instead.

Financial Times columnist Martin Wolf

  • 0

    volland

    Ha ! Always these foreigeners telling the Japanese to go against their most sacred traditions!

  • -3

    Vast Right-Wing Conspirator

    What socialist pablum. If the public wants to "enjoy the income", the public can make the choice to invest in the corporation. There is no such thing as surplus profits.

  • 5

    herefornow

    There is no such thing as surplus profits

    Yo, Vast, there is so, and Japan is proof of that. Look at Japan's average ROI compared to the other top economies, it is pitiful. Due to all the inter-holdings, or "corporate oligopoly" as Wolf refers to it, Japanese companies are just propping each other up, rather than investing in new technology. And that is why they are getting their brains beat in. If Japan were more of a true free-market economy, and the public/individual shareholders owned the stock, then I would agree 100% with your sentiment. But since it is NOT, and capital that should be flowing to higher-return businesses/start-ups is simply sitting in the coffers of these huge conglomorates -- I mean how many companies really need to own golf courses? -- Wolf is spot on. And, volland, luckily some foreigners still care enough about Japan to offer advice/criticism. Left to their own devices, Japan would be nothing but companies like Olympus.

  • 0

    ChibaChick

    Volland don't worry - it was subtle but I spotted your sarcasm!

  • 0

    tkoind2

    That would be nice. Imagine rich fat cats deciding to pay working people more. The only way I have ever seen that happen in history is when the people were on the brink of burning the rich at the stake. Maybe that is where we need to be leaning today. "Hey Fat Cats!" "Yes, you!" "Pay us fairly, share the wealth or we will box the lot of you in a container and ship you to China."

    Might get their attention.

  • -2

    sangetsu03

    There are no "corporate surpluses" which are hidden away in a secret account somewhere. The proftis, surpluses, and losses belong to the shareholders, and as these are public companies, anyone can buy a share in them. The problem with the Japanese economy is that, like the culture itself, it discourages independence and entrepreneurship. The dream of Japanese students is to get a safe job in a famous company, and then spend the next 30-odd years toiling behind a desk for ten hours a day. Young Japanese, like Japanese of all ages, are terrified of public embarrassment or failure, so few are willing to take the risks necessary to start a business or venture of their own. Americans are five times more likely to start a small business than Japanese are, and small business is the backbone of the American economy. As there are little in the way of anti-trust laws in Japan, large conglomerates make up the greater part of the economy. These conglomerates have excess power over the economy, for better or worse. The better part is that when things are going well, these conglomerates are resonably efficient at fulfilling what the market requires. But when things re not going so well, these conglomerates are very slow to adapt or change. Things could be done better, but the quote of the day is nonsense, and displays a lack of understanding of Japnese companies, or the Japanese economy in general. I don't know of any Japanese company which has generated "vast surplus profits" in the last five years. Many have eaten through most or all of the capital which they have acquired over a generation.

  • 1

    tkoind2

    sangetsu03. Japan has massive wealth tied up in private and corporate hands. Money that should be circulating. No the money is not hidden. It is paid out in excessive wages to the elite, something relatively new in Japan, as well as to shareholders who are predominantly wealthy.

    Yes, we all bought into the notion that Joe average would have lots of income because he held shares in public companies. But in reality the bulk of shareholder wealth is with the already wealthy and the majority stock holders who own the bulk of most public companies. Joe average had his/her shirt, pants, tie and socks taken in the 2008 crash. But guess what, majority stake holders weathered it a hell of a lot better. Many beneficiaries of public buy outs and support that put money in their pockets and not in the hands of workers. In most cases money went out of the hands of working people.

    Then there is the whole "efficiency" thing. Yes conglomerates are very efficient. Especially efficient at depressing wages, laying people off, buying out viable companies and terminating them to eliminate competition. I have been working in these types of company for nearly three decades and can see how they are efficient at marginalizing labor. At this is all before we talk about globalization and how labor is increasingly becoming commoditized.

    Yes Japanese workers need to step up too. But blaming the workers for declining job security and wages is naive at best and clueless at worst. Middle classes are under attack in most of the developed world and that is having very serious knock on effects in society. It means the smaller companies also cannot survive as their customers, once middle class, now have no money to spend locally. Small companies provide jobs, but when middle class consumers stop consuming, guess which companies die off first.

    So while you are apologizing for the poor big companies, Japanese and otherwise, you need to spend a little more time looking at the very real statistics showing the decline of the middle class and how that is impacting everything else. It is time we stopped apologizing and started diminishing the power and influence of big business over the lives of working people world wide.

  • -5

    gokai_wo_maneku

    The only thing westerners want is to be able to cart all the Japanese wealth back to the US or Europe. Glad we make it so difficult!

  • 0

    Sabrage

    If the public wants to "enjoy the income", the public can make the choice to invest in the corporation.

    The retained earnings of these Japanese companies mean the public don't receive dividend value.

    Less money in the economy, less demand.

    So to find demand part of these savings are spent on foreign investments.

    So, unchanged, the Japanese domestic economy sees less demand, less investment and lower circulation.

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