An Open Door, Yet Not Unwatched

Day 673, 23:58 • Published in Japan Japan • by Sophia Forrester

I have given thought recently to the debates in which I often find myself at odds with my fellow members of the National Diet. Although the most contentious debate in my political career was the stir around the lease of Kyushu to Indonesia, I was not a member of the Diet at the time, having left that chamber in search of peace. Yet, before and after that stormy calm, the most contentious debates have been economic. And so as I prepare to run for Congress for another term, my third since I returned to politics after my home island was leased away, I wish to say a bit about my economic philosophy, and why it perhaps differs from that of many members of the Diet. I favor free markets and open trade, but not as an ideology or an absolute. The door of free trade ought to be left open, yet in the pursuit of our national interest, it would be foolhardy to leave that door unwatched.

Shortly after I joined the Diet, the import tax on food was raised to 50% to a whopping 99%. The import tax on grain was already 99%, but the feeling of the Diet (or Congress, as it was then more often called) was that as our main raw material was grain, Japanese food production had to be encouraged in order to boost demand for our domestic grain. The result of this was a tax on imported food that, when VAT was added to the import tax, was even higher than the astronomical tax on grain, with most of the price of an imported meal going to the government. Naturally, few foreign companies cared to offer food for our market. With the exception of the occasional joke offer retailing at somewhere around 500 Yen, stocking the shelves of Japanese grocers remained the exclusive privilege of our own businesses. And yet, because of this stubborn insistence on domestic food's exclusivity, we had none of the highest Quality food on the market -- because at that time, there were no premium-quality food companies operating in Japan.

In the name of liberalization, I called for lowering our import taxes, after being one of two to vote against the original tax proposal. It passed by such a wide margin -- why did I not consider, that the rest of the Diet must know something I did not? I was confident, that if that were indeed the case, they would be able to match my reasoning with their own.

When months later, I presented my proposal to the Diet, the debate was heated. The same voices called for "protection" of our markets from the dangers of the outside! I maintained then and I maintain now that Japanese businesses are not children to be protected -- they are youth entering their prime and ready to enter the markets of the world as fierce contenders. If we insisted that our children stay indoors even into adulthood, they would grow up pale and unhealthy. Japan's still growing industry deserved better, as it deserves better even now.

After a close vote, the import tax was reduced to 48%. I chose this number for my proposal as, together with the VAT tax paid by all goods (then 2😵, we would be charging foreign companies 50% of their shipments' prices, still a high amount but one which some might be willing to pay. And soon after, Q5 food returned to Japan, and it was only after that that the first Japanese companies began selling Q5 food. Far from endangering our markets, allowing foreign goods in created a demand for premium goods, a niche within which our own industry then managed to fit.

And yet, our open door is not a limitless guarantee of passage, nor should it be. Our Cabinet continues to watch over the health of our economy, and our National Bank gives out new currency at a constant price, ensuring that our Yen does not gain too much value relative to gold, and by allowing a measured expansion of the money supply, decreasing the risk of too many Yen in the market leading to inflation. Since the beginning of the National Bank system, we have seen that when this system was adhered to closely, our economy prospered -- yet when the system was administered only erratically, new companies fought with old to obtain the Yen then in circulation, and the value of the Yen began rising until it was finally stabilized, by renewed government action, at 1 Yen for .035 Gold.

And yet, this system of open yet measured growth in the supply of our currency could be endangered by too much of it. If, as some members of the Diet have suggested, we were to fund new government programs by printing Yen and spending them, it could undermine the foundation of confidence on which our recent prosperity is based. We should best leave our door open -- yet leave that door, and the wall of which is a part, securely in place. The rainy season isn't all that far off after all.