Paul Sracic, good friend of Japan since his Tokyo sojourn as a Fulbright Lecturer, shot me this link to a Financial Times op-ed by Peter Tasker. Tasker argues that the result of raising the consumption tax “is likely to be politically and economically disastrous” and instead suggests “more radical measures.” He says that “central bank could go beyond merely increasing its holdings of government bonds and cancel them, too. The target for tax hikes could shift from household spending to corporate savings.”
Broadly speaking, Tasker lines up on the Keynesian side of the never-ending debate between the Keynesian and the institutional, historical [and] behavioral perspectives pitting reputable economists on both sides, though fiscal and monetary authorities in advanced economies mostly line up on the latter. I’m not suggesting that I can settle this debate, but I do know that he is looking to the wrong political figure in Toru Hashimoto as the populist to carry out his proposals. Hashimoto may oppose the consumption tax hike deal between the DPJ, (PNP,) LDP and Komeito, but he’s a small-government neoliberal supported by similarly-minded policy advisers steeped in the Koizumi-Takenaka reforms.