Correction - Richard Katz Response To “Urban Harvest Tokyo”

In my post yesterday, I stated Richard Katz wants the micro farms inside Japanese cities abolished. I wrote off the top of my head and did not confirm with Mr. Katz his actual position.

This is his actual position, taken from an email to me:

I never said that these tiny farms should be abolished. What I said was that the property taxes on farmland, particularly urban farmland, should be the same as those on other land, and that the assessments for tax purposes should be the same. What I suspect is that many of these would no longer be commercially viable without the tax break and would go out of business. If so, the farmers should be allowed to sell their land to agribusiness or even nonfarm uses.

I have as much appreciation for nature and fresh garden vegetables as the next guy, but I don’t see why the rest of taxpayers should subsidize the old farmer in your neighborhood or your food budget. If you want him to survive, pay him the price it takes to cover his costs, without getting help from other taxpayers. When I left the speech at Temple University where you heard my comments, one man came up to me and told me that, on weekends, he went out to the nearby countryside to do gardening on land owned by someone else who had become too old to use it. It was his hobby. His hobby is subsidized by other taxpayers. My dad had a vegetable garden in our backyard every year, as did many people in my small town. But none of them required the rest of the taxpayers in the town and state to subsidize his hobby.

What I also said was that, all over Japan, land use laws that make it difficult for farmers to sell their land for nonfarm purposes. They should be abolished. That way, farmers who survive only because of huge subsidies, and most of whom are part-timers anyway, could make some money by selling their land for other purposes, if they chose. As of 2010--the latest figures I have readily at hand—the ratio of abandoned farmland as of 2010 stood at 14% IN URBAN AREAS, 6% in flat farming areas, 14% in hilly farming areas, and 16% in mountainous farming areas. All of these figures are about double their levels in 1995 and will only increase as farmers age and pass away. Land that could be used for better purposes lies useless.

How does it benefit anyone to have 14% of urban farmland lying around useless, even with the tax breaks. One wonders how much would be abandoned without the tax breaks.

My apologies to Rick Katz for misrepresenting his position.

Image: Man hoeing marginal urban farmland plot. Setagaya City, Tokyo Metropolitan District on July 18. 2014.
Image courtesy: MTC

The Courts Try Reason

In most industrialized democracies, the above title is something of a non sequitur. However, in this blessed land, where the courts have long shown deference to the executive and legislative branches, the sudden irruption of reasonable and reasoned decisions against the government is a surprise -- and a cause for celebration.

Last year Philip Brasor and Masako Tsukubu posted on their Yen for Living blog about the case of a former Osaka salaryman and father of two small children. The man had found a way to beat the odds, putting together a program that, when applied in a brute force manner, could net a tiny profit out of betting on horse races. Relying on databases of race results, the man placed massive, repetitive, automated bets on multiple horses, resulting with each iteration in a tiny, but compounding, return.

After letting his computer run these bets for three years, the man learned, to his horror, that under existing interpretations of tax law, his tax bill would be calculated not based upon his net winnings but upon the blunt, arithmetic total of his gross winnings, minus the cost of the winning tickets. This meant that when the dust cleared the man owed the National Tax Bureau 570 million yen in back taxes on transactions that had netted him only 140 million yen in income. (Link)

The man filed suit for relief from the Osaka District Court, arguing that the tax office's method of calculating income was insane.

Incredibly, at least for those of us who have been around these parts for a while, Osaka District Court Justice Nishida Masaki this morning handed down a judment in the man's favor (Link - J). He released the man from the immense tax penalty he had incurred, ordering him to pay taxes only upon the amount he had actually earned from his successful, fractional trading betting strategy.

Justice Nishida is of the 34th graduating class of lawyers, so he is near, if not exactly on the cusp of, retirement.

So?

So for those looking for the story of Japan being saved despite itself, perhaps talking with hot young entrepreneurial types or reformist politicians and bureaucrats is a misleading waste of time. Perhaps the real vanguard of change for the better is a posse of old guys and gals in long black robes.

Is That What We Have Decided To Call It?

A few weeks ago, in comments to my post on my unhappiness with the Kurokawa Report and its farcical release problems, I was mocked for asserting:

The rule of thumb is when katakana eigo is used for a new term, it is with the goal of letting elites to speak to other elites, excluding the common run of humanity. This is doubly so in this case where the transliterated English term is used to purportedly explain the kanji+kana term.

This was in reference of the report's usage of the English word "mindset," transliterated into Japanese (maindosetto) and then used as the explanation of a perfectly good Japanese term (omoikomi).

A commenter replied:

As a native Japanese speaker I don't think Kurokawa is "talking to elites" by using katakana. (Where did you get this idea after all? It's sooooo outdated a notion, like in the 1980s.)

It is true I am not a native speaker. As a consequence I do not get an automatic pass on the validity/dubiousness of my ideas. I have to present evidence.

Such as the Prime Minister's testimony in the Diet yesterday:

「さっきもちょっと議論があったマイナンバーであるとか、さまざまな関連するものもあります。あるいは国民会議を早急に設置させなければならない等々あります。一体改革の関連でも。そのほかに、この国会では一体改革の法案以外にも、特例公債等々さまざまな大きな法案も残っております。そうしたものをしっかりやり遂げるというのが私の責任だというふうに思っています」

"There are, as we had in our little debate earlier regarding the mai namba, many different related points. Or, that we have to quickly set up of the People's Consultative Body and such things -- these too exist. Yes, the fundamental reforms of the pension and social welfare systems, but aside from those, bills other than the fundamental reforms, various other big bills are left, such as the special bond issuance bill. For this and bills like it, I believe it my responsibility to see them through."

What caught my attention here, aside from the bald inference "You think I am going to call a snap election after the passage of fundamental reforms of the pension and social welfare system? Keep dreaming...." was the mai namba.

Now I am a native speaker of English, so I know that mai namba is a transliteration of "my number." Since I am not always on top of the latest euphemism, I confess I had a moment's confusion. Then I thought, "Oh wait, if I wanted to keep folks from getting riled up about their being assigned a tax identification number (zeikin kanren mibun shomei bango) and were not confident enough even to semi-cloak it in a social welfare gauze (shakai hosho -- zei bango*), would refer to it with friendly, personal-sounding and foreign-language moniker. 'It's My Number. Mine. Just for me! Yippee!'"

So, perhaps mine is not a sooooo oudated notion after all...

As for what the assignment of a mai namba will do to improve the government's ability to claw taxes from out of the populace, contact Richard Katz.


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* The current technical term for the number.

Excuse Me, But What The [Expletive Deleted] Does That Mean?

We were talking about Liberal Democratic Party President Tanigaki Sadakazu and his huge problem: that in 2 and 1/2 years as LDP president, he has taken the party virtually nowhere in terms of its popularity.*

It seems that certain members of the party have been aware of this problem for some time now. Indeed, in the fall of last year, the party established an advisory committee to help Tanigaki develop a more appropriately conservative doctrine and image for the LDP.

The members of this council of advisors?

Former Prime Minister Mori Yoshiro
Former Prime Minister Abe Shinzo
Former Prime Minister Fukuda Yasuo
Former Prime Minister Aso Taro

I know what you are thinking: "Wise men...and winners...each and every one."

Put aside for a moment the comedic possibilities of having these four elder statespersons offering adobaisu (just quoting the Japanese text here) on how to make the LDP a more vital party and Tanigaki a more inspiring leader.

You're right, I can't do it either.

Be it as it may, the first public meeting of the group took place on Monday. Well, actually, not. There was a meeting but only Abe and Aso showed up. Mori and Fukuda had better other things to do.

At the meeting the pair representing the collective wisdom of the foursome presented nine proposals. These nine proposals were so salient and pertinent that not a single news organization has published them in their entirety. They furthermore cannot be found on the LDP's, Abe's, Aso's or Mori's websites. It is possible Fukuda would post them on his website, if he had one.

The Tokyo Shimbun, whether out of duty or pity, reproduced two of these proposals in its article on the meeting. (J)

The first suggestion is that rather than focusing on improving the efficiency of fiscal policies and reforms of the tax system, the party should emphasize fiscal reconstruction and not passing on a burden to future generations.

If you can tell how those two ideas are different in a significant way, or how doing the one precludes doing the other, please send me an email.

[Ed. - See Comment #Alex]

The second suggestion is even better than the first. It is -- and I am not making this up:

"Reform of the Constitution and the establishment of a Japan that is more like Japan."

Now this particular suggestion has Abe Shinzo's paw prints all over it. It was Abe who declared that one of the primary goals of his term in office (which turned out to be far briefer than he imagined it would be) would be the promulgation of a constitution "written by our own hands." It seems that the current constitution, drafted in English and in haste by an ad hoc team of SCAP staff members in 1946, suffers from a lack of legitimacy and sensitivity to Japan's spiritual identity.

Tossing away the context -- the faith in Japan's right wing that the U.S. Occupation Forces-drafted Constitution condemns Japanese to an eternal self-flagelatory inferiority complex and domination by left-wing teachers unions -- just what exactly, in an absolute sense, is "a Japan that is more like Japan?" I do not think that the four former prime ministers could come up with a single answer, much less 126 million Japanese citizens. I do not think that Abe and Aso, who managed to both agree to make time in their schedules to show up at this meeting, could come up with a single answer.

To whit, a huge cartoon of a grinning Aso overlooks the maid cafes, electronics bazaars, game figurine emporia and various shrines to AKB 48 and its spin offs in Akihabara. The image of the manga-fan former PM declares his love of all he surveys, the epicenter of Japan's post-post modernist otaku cultural earthquake.

Would Aso classify the seething, transmogrifying mass of Akihabara's simultaneously infantilist, hypersexualized, exhibitionist and alienated sub-cultures as part of Japan that is truly Japan? Judging from what is written in his book, you bet.

By contrast, I do not for one second believe Abe Shinzo has ever spent any amount of time in Akihabara...and if he were ever to spend any time there, I am sure, from what it is in his book, he would not like it.

Not one little bit.

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* The very most recent polls have had some encouraging news for Tanigaki. When subjects were asked which party they would likely vote for on the proportional ballot in the next House of Representatives election, around 23% have said they would vote for the LDP and only around 14% have said they would vote for the ruling Democratic Party of Japan (one example - J).

These figures are far more promising for the party than the absolute party support numbers, which have the LDP and the DPJ in a near statistical tie in their unpopularity.

Take That, Perfidious Sea Slug!

On Christmas Eve I likened Prime Minister Noda Yoshihiko to a marine invertebrate, disgusted at his floopy defenses of awful, divisive decisions made by his government last week.

Well, it seems that an onslaught of feelings of disgust and dismay are washing about the prime minister right now, so much so it is hard for him to keep his head above the froth. How lucky that he spent the weekend in China and this evening hopped aboard a plane to India.

Where to begin?

- The F-35 decision - Liberal Democratic Party defense policy wonk Ishiba Shigeru, who has never been known to oppose any military acquisition before, promises in an interview with the Tokyo Shimbun (J) that his party will grill the government in Diet Budget Committee session. Ishiba quite clearly believes that the decision was a political one, to please the government of the United States when the Democratic Party of Japan has made such a hash of handling the Futenma Replacement Facility controversy. He is also convinced that the F-35 is simply the wrong plane to purchase at this time.

When you have lost a confessed military otaku as Ishiba over an order for a cutting-edge weapons system of primarily U.S. manufacture, you have really messed up.

- The Yamba Dam decision - DPJ Policy Research Council Chairman Maehara Seiji told the prime minister and the chief cabinet minister that a decision to restart the cancelled Yamba Dam project would not garner party support. DPJ Secretary-General Koshiishi Azuma echoed Maehara view. Acting Secretary General Tarutoko Shinji said the party will not support the decision. To this, Chief Cabinet Secretary Fujimura Osamu seems to have responded something on the lines of "What we have here is a failure to communicate." The three party officials threw up their hands and deferred to the government's wishes to restart the miserable project.

Well, what has happened, aside from every media outlet pointing out that the restart of the dam project represents a final turning away from the promises set out in the party's 2009 electoral manifesto? Nakajima Masaki, a proportional seat holder from the Northern Kanto Bloc has announced his intention to leave the DPJ, with support for his decision from the DPJ's district seatholders (J). In addition, Ishizeki Takashi, the party's Representative for Gunma District #2, is resigning from all of his party posts. In the party's Tax Committee meeting on Monday, which was supposed to discuss the government's various tax proposals including a rise in the consumption tax, two of the three hours of the meeting was taken up by opponents of the Yamba Dam airing their complaints about the decision.

- The Budget and Tax Proposals - The prime minister wants to have all discussions of the budget and tax rise proposals finished by the end of the year. A budget put together seemingly without rhyme or reason was approved on Saturday, with provisos to set in motion a rise of the consumption tax. The rush to push through all the decisions on these proposals before the end of the year has result in severe party discord. Three DPJ Representatives have announced they are leaving the party in a protest against the precipitous raising of the consumption tax. They hope to lead another seven to eight Representatives out with them and form a new political party (J). In another move, 89 first term members of the House of Representatives have sent a joint message to the party leadership that before the government can consider imposing a rise in the consumption tax on the citizens, the DPJ must follow through on its promise to cut the number of Diet members -- this even though the most of the seats to be cut would come from amongts those held by the first-termers.

Seems like some folks still have some spine and revolutionary spirit in the DPJ after all.

To be sure, the multiple rebellions and threats seems to be taking their toll on the heretofore unflappable PM. On the news tonight, his right eyelid was drooping, making the man look as though he needed a shave, a shower and a full night's rest.

Maybe he will get some sleep on the plane.

The People's Prime Minister

It was a small item, but it looms large in my imagination.

On October 14, Prime Minister Noda Yoshihiko visited a day care center in Yokohama, joining the children for lunch. Here is the photo of the PM saying "Itadakimasu" seated at table with what look like the five year olds.

Considering how small the chair he must be sitting on, the PM's placid, almost beatific composure is remarkable. He looks utterly at ease and in his element.

It is hard to imagine Noda's predecessor Kan Naoto, an incorrigible adult, being able to pull this off. It is flat out impossible to imagine Hatoyama Yukio in this pose, nor any of the trio of Liberal Democratic Party prime ministers who preceded Hatoyama.

Could Koizumi have pulled it off? With teenagers, maybe. But with small children, probably not. Koizumi was cool, not child-like.

In the coming months and quite possibly years, we will have keep a sharp eye on the low key, accommodating style of this prime minister. His common touch -- arising from his literally being from nowhere, or as close to nowhere as one can get (both his parents being the youngest child of a large family -- i.e., the inheritors of nothing -- and his father's being a Ground Self Defense Forces member, meaning that the family had no town to call its home) and his necessary reliance on the national safety net (of all prime ministers in history, he is the one with the fewest assets) is linked to an inspiring, if sometimes overwhelming, desire to get things done. The economist and former minister Takenaka Heizo has warned the Noda Administration that it is tackling too many issues at once, that it should concentrate on two or three main issues, so as to guarantee they receive the attention necessary for success.

Noda and his advisors are ignoring this sound advice, tackling issues both pressing like Japan's galloping demographic imbalance and ancillary, like the recent blowup over participation in the Trans-Pacific Partnership. The PM and the Democratic Party of Japan's policy makers have proposed tax rise after tax rise, even grasping the third rail of Japanese politics -- the raising of the consumption tax to 10% -- and survived. To be sure, the prime minister's poll ratings are down from his initial numbers -- NHK's most recent poll (J) finding support for his cabinet at 45%. Considering how many different sacred cows the PM and his people have gored during his first two months in office, 45% is a very respectable number.

The Noda administration's success will depend on how well it can continue to impress with the themes of humility and sacrifice. Noda has already received a thumbs up review from a very hard-to-please senior figure as regards his low-key demeanor. His response to the provocative Obuchi Yuko speech in the Diet was admirable for its restraint. As for sacrifice, Noda, unlike his predecessor, seems to derive only benefits from calling attention to the needs of those displaced by the triple disaster of 3/11 (he also seems more than willing to wield the suffering caused by 3/11 to batter his opponents senseless). "Sacrifices have to made," has been his motto since his second speech at the DPJ congress that elected him party leader, and not even sacrifice-be-damned stalwarts like Kamei Shizuka, Hatoyama Yukio and Haraguchi Kazuhiro have been able to say much in response.

I would be pushing the envelope to call Noda "better even than Koizumi" -- the other prime minister who was able to call for painful national sacrifice with the populace backing him up -- but from what I have seen these first two months, Noda is certainly "the best since Koizumi."

Image credit: Tokyo Shimbun

Taxes, taxes, taxes

One may wonder why I have not weighed in on the numerous tax proposals currently floating around the halls of the Democratic Party of Japan. This is because everyone else is talking about it.

Why add to the noise?

Economists are already claiming that the retail consumption figures are reflecting a drawback in spending in anticipation of higher taxes, as good rational choice theory would predict.

The Bloomberg piece also asks what seems to be an eternal question: do title writers at the major media outlets ever read the texts to which they are afixing their titles?

(Hat tip to The Tokyo Times)

Don't Count On the Dead

I was talking with an investment professional a while back about capital accumulation. At one point in the conversation, the investment professional insisted that Japan's inheritance laws prevented the accumulation of family wealth, with serious adverse consequences on the rate of new company formation -- the assumption being that you need a wealthy class of risk takers, either family members or angel investors, to provide the capital entrepreneurs need to start new businesses. I cannot remember whether the investment professional was criticizing the requirement of equal division of the property of the deceased (surviving spouses get 50% - otherwise legitimate heirs get equal portions of the property) or whether he was complaining that the level of the inheritance tax was too high.

Anyway, the purported stupidity of the inheritance laws was a big deal.

The memory of this conversation got me to thinking about inheritance taxes and what effect they might be having on the state's fiscal balances. The number of persons is increasing, surpassing the number of those being born first in 2005 and unstoppably from 2007 on. In between 1984 and 2009, the number of those dying annually has increased by 54%. It seemed to stand to reason that the state's total take from the estates of Japan's deceased must be increasing year-by-year, largely line with the increases in the number of deaths.

Data source: http://www.mhlw.go.jp/toukei/saikin/hw/jinkou/suikei09/index.html

"Surely," thought I, "though the total take from personal income has been decreasing from lower bonuses, less overtime, greater use of lower-temporary workers and a decreasing workforce -- at least the ever increasing cohort of those running down the curtain in a given year will be doing their share to make up for losses elsewhere. Yes, the fall in the values of most classes of assets post-Bubble and in the Lost Two Decades since will have seriously eroded the inheritance take...but with the increasing number of the deceased, the state should be enjoying at least a mild, if ghastly, increase in revenues from the dearly departed."

Not so. Not by a long shot.


Source: http://www.mof.go.jp/jouhou/syuzei/siryou/141.htm

The light blue bars are the total inheritance tax collected by the state, according to the Ministry of Finance. Inheritance revenues peaked in Heisei 5 (1993) at a little under 2.94 trillion yen. They have fallen precipitously and consistently since then.　Last year (2009 - Heisei 21 - not on the graph) the state collected 1.52 trillion yen in inheritance taxes. Revenues have thus fallen 48% since 1993 even as the numbers of those "paying into the system" have risen 30%.

So despite their rapidly increasing ranks, not even the dead have been of much help in the Japanese state's search for a way to put its fiscal house in order. At some point the downward trend in inheritance revenues should reverse itself, probably sharply, as the immediate postwar generation begins passing into the Great Beyond, leaving behind their hoards, or whatever may be left of such after the postwar generation's having lived for so very long, for the state to plunder tax.

It ain't happened yet, though.