Wednesday, November 26, 2008

Country Roads on Sunny Sundays

Let us say you were some sleazy, seat-of-your-pants backstreet investment operation, a serial burn unit of invested funds, a boiler room shakedown specialist always browbeating those whom you had conned earlier for ever more money with ever greater claims of the inside scoop.

Let us say somebody, somewhere finally told you that you had to put up some real numbers. When would you leak them, in order minimize exposure?

How would a Sunday in the middle of a three-day weekend do for you?

You know where this is heading, I am sure.

As a part of the numerous disputes over the divvying up of the revenues from the gasoline levy and the necessity for new road construction, the Democratic Party of Japan has been complaining that the Ministry of Infrastructure, Land, Transportation and Tourism (MLIT) uses overoptimistic and dated projections of road usage. The DPJ has been demanding an update of the projections, last made in 2002, using data from more recent years.

Well, on the 23rd, in the inimical akiraka ni shita ("it came to be clear that") style of releasing public information ("As if we would put this stuff out on the ministry website, where just anyone could look at it!") the MLIT informed its kisha club members that the ministry staff should perhaps have been a little more expeditious in providing revised projections and possible more circumspect in their growth claims.

Like when they claimed that road usage would peak in the year 2020 at 870 billion vehicle/kilometers? Well, it turns out that road usage plateaued in the year 2000 at 776 billion vehicle/kilometers and has been sliding ever since. In 2006, the last year for which the statistics are available, usage was at 763 billion vehicle/kilometers.

The online edition of the Asahi Shimbun provided the below somewhat less than adequate graph illustrating the revised projections the MLIT has deigned to release.

Image Courtesy: The Asahi Shimbun

The high blue line is 2002 projection that the MLIT has been using in its estimates of road usage. The red lines are the new projections, with the solid upper line the high growth case and the dotted lower line the low growth case. The upper bound case seems fanciful considering that road usage declined during the 2000-2006 economic expansion. With the likelihood over the next few years of GDP contraction or flat growth, together with the increasing poor demographic profile (older drivers drive less than younger ones) it seems hardly possible that road usage could grow over the trend line.

Now, of course, these new projections, optimistic as they are, throw into confusion the plans of using the gasoline levy as the means of plugging the holes opening up in the social welfare safety net. It also calls into question the magical 10 year, 59 trillion yen budget for "necessary construction" which was the source of so much entertaining fumbling around earlier this year.

Helluva misoverestimation, as George W. Bush might say.

Here is a relevant Nikkei snippet (Nihongo only).

1 comment:

Martin J Frid said...

Hilarious if it wasn't my tax yen you were talking about. OK, hilarious anyway.