A year has passed since the bankruptcy of Lehman Brothers. Japan’s GDP growth rate, which had once plunged to more than -10%, turned upwards to 2.3% in this April-June fiscal period. Also the Nikkei Index has recovered from its lowest value of 7,054 yen to the 10,000 yen level. Yet the situation remains uncertain, with concerns of a double-dip recession.
According to the announcement by the Cabinet Office, private capital investment in July declined by 9.3% from the previous month to the worst level ever since records had begun in 1987, showing no sign of stopping. Unemployment rates have also been historically high: 9.7% in the U.S., 9.5% in Europe and 5.7% in Japan. These figures are forecast to be even worse if the latent unemployed are included. In its monthly economic report, the government deferred the overall economic assessment for two months and added the comment that “the unemployment rate would be at a record high.” The Japanese economy is becoming increasingly unpredictable with a severe employment situation as a backdrop to sluggish consumer spending and stagnant production.
The current economic lull is resulting from fiscal stimulus by the government to compensate the decline in consumption. Japan’s self-sustaining economic recovery will largely depend on if the Japanese people have a positive outlook of the future. In this current economic state, the Hatoyama Cabinet is highly expected to perform at is best.
Going back in time a little, in his posthumous work the Japanese novelist Shuhei Fujisawa wrote about the restoration in the Yonezawa domain conducted by its ruler Harunori Uesugi (later, Yozan Uesugi, 1751-1822). Yozan was appointed as the ruler of Yonezawa, which was on the brink of financial collapse with its income depleted to 150,000 koku, with 6,000 subjects to feed (equivalent to 1.2 million koku in total). Immediately upon assuming his post, Yozan halved fiscal spending by issuing a law for frugality. At the same time, he promoted the cultivation of new fields, the plantation of three commercial plants (mulberries, Japanese lacquers and paper mulberries), local brocade fabrication and other industries. He also restored local schools to nurture human resources and public willingness so as to revitalize his moribund domain. Remaining faithful to his belief of being a “father of the local people,” Yozan devoted himself to the restoration of his domain to regain hopes for its future and lead it towards an autonomous growth cycle. As described in the novel, some parts of the restoration process were quite challenging and required a degree of struggle by Yozan to achieve success.
Reforming the whole domain involved a great deal of time, but Yozan’s selfless dedication gradually moved the hearts of the people, restored the duties of the domain and repaid all of its debts. These are the reasons for his fame and title as the best governor in the Edo period. Since then, Yozan has been affectionately called the “Father of Restoration” in his home town of Yonezawa, and has also earned esteem even from those abroad such as the 26th President of the United States, Theodore Roosevelt.
As the times change, so too do politics and economics. Yet Japan is still facing problems, such as an increasingly aging society with fewer children and the worst budget deficit among developed countries. Not a few people must be feeling dark clouds cast over Japan’s future.
In such tumultuous times, strong leadership is called for; but at the same time, I believe that individuals should also remain courageous and determined to promote innovations on their own without shirking from change. By sharing our knowledge and wisdom together, we will find a way to a brighter future.
To this end, I have reconfirmed the necessity of remaining faithful to our original precepts of “do not act rashly or carelessly in pursuit of easy gains” with the far-reaching perspective of “long-term planning” and concerting our efforts.