Proposal for a Press Conference at the Foreign Correspondents’ Club of Japan(No. 418)
We urgently propose that the Japanese Government provide the Basic Income of 200,000 yen to every Japanese person.
In view of various factors including the new coronavirus problem, US-China trade friction, and the consumption tax increase enforced last year, there is a rising concern that the Japanese economy might be rapidly going into a severe recession. Most schools, libraries, theme parks, zoos, etc. have been closed, and most major social, business, academic, cultural, entertainment and other events have been cancelled or postponed. Many of non-fulltime workers have been forced to lose their jobs and are facing financial difficulties.
As an emergency measure, we urgently propose that the Japanese government provide the basic income of 200,000 yen respectively to every Japanese person.
As one recent example, Hong Kong provided equivalent of about 140 thousand yen to every adult resident.
In 2009, Diet Members including Shinzo Abe and Yoshihide Suga voluntarily established “the Diet Member League to Consider the Issuance of Government Notes and Interest-Free Government Bonds”. On February 1, 2009, Mr. Suga presented the idea to give 200,000 yen to every Japanese person by issuing government notes. This idea has never been realized, but we believe the time has come to carry out a similar measure. Issuance of government notes and interest-free government bonds might not be necessary, because issuance of usual long term national bonds of about 26 trillion yen may be sufficient. The financial institutions will be happy to buy them, knowing that the BOJ will buy them in any place and thus interest rates are not likely to rise. Therefore, the effect will be similar to issuance of government notes and interest-free government bonds; this will not become a burden on future generations
We imagine that the idea presented in 2009 was never realized because some people strongly opposed to that idea. The most common opposition may be the fear of hyperinflation, the resulting loss of confidence in the yen and collapse of national bonds. Will it actually happen? We have calculated the economic effects of such measure by using a Nikkei macro-econometric model called NEEDS MACRO79. It turned out that provision of 200,000 yen to every Japanese person will generate very favorable effects on the Japanese economy.
Our simulation showed that the distribution of 200,000 yen will have the following effects:
Nominal GDP: Up 2.2%
Real GDP: Up 2.0%
Real private final consumption: Up 3.8%
Real housing investment: Up 9.8%
Real private capital investment: Up 1.4%
Exports: Down 0.06%
Imports: Up 4.4%
Consumer prices: Up 0.07% PT
Employees Compensation: Up 0.48%
Ordinary profits of corporations: Up 15.4%
Current account balance: Down 20.1%
Long-term interest rates: Up 0.03%PT
Nikkei Stock Average: Up 4.5%
Urban land price index: Up 2.4%
Ratio of job openings to job applicants: Up11.2%
Not only that the people will receive 200,000 yen each (e.g., 1 million yen for a family of 5), their wages will also rise. The stocks and real estates they own will also go up, and the companies will increase their profits. The increase of Japanese imports will please US and other major trading partners. GDP will be pushed up by about 2%, thus the economic growth rate will reach the level which has never been experienced for many years. Mass issuance of government bonds hardly influences the interest rates since the BOJ buys them on a massive scale. The effects on the inflation rates will be very limited. We strongly urge the government to implement such a large-scale fiscal policy to save the sharply deteriorating Japanese economy.
