An Open Door, Yet Not Unwatched
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.
Comments
Sophia, why don't u run for president?
she was proposed to once to run but didnt not take it up she had RL events that caused her not toit would be great to see her run but i do like the protection of japanese markets on other products that are not as in high demand as others but i did like it when food tax was at 99% but i dont mind either way since your running in congress again can you propose to stop the idiotic law proposals there annoying and not truly necessary for the country it makes us seem like we are a country of morons not ones of civilized people with the idea that talking is a better idea than just acting
I think that the best way to stop them is to replace them with genuine proposals... however, I've typically been too cautious since I don't want to waste proposals.
I hope to try another tack next term.
Some of what you say is ok-ish Sophia but you need to edit it a little as it is an enormous wall of text that will put people off reading it.
Anon, those proposals you mock are a way to utilise game mechanics to enable each and every member of congress get an extra 110XP per term. Other countries aren't laughing at eJapan for doing this, they were laughing at eJapan before for NOT doing it!
The Japanese economy is only good for citizens with a steady Gold supply.
Rock bottom wages gives Gold earning citizens a steady supply of cheap labor and cheap goods.
The price for this is the strangulation of population growth as new citizens without a gold supply move to other countries for double wages.
So while you and me may be having a great time, our population is falling and we cannot defend ourselves.
Sensible printing of more money and investing more in the economy can only make Japan more prosperous. We aren't suggesting flooding the money market, only a gradual devaluation to a sensible level.
You are deluded if you think that Japan is doing well.
We have the total opposite attitude to tax, currency valuation and social programs compared to the top nations - are we a top nation? No.
A good read. If you and Goku Jones sit down with one or two active contributors to the Chamber of Commerce forum I think it will be a positive development for this country.
Keep up the discussions!
We should be willing to learn from the great nations, yes. But we will not be "top ten" until we have a larger population. What works for huge enations such as Indonesia, may not be the right choice for eJapan's ~1500 citizens.
Allowing a currency devaluation will not actually increase the buying power of gold -- it will just decrease the buying power of currency. The ratio of gold to marketed goods will be exactly the same as before.
It would, however, make it easier to keep low-skill wages at rock bottom -- something of which the novice workers now in training should be aware. Since the minimum wage is required to be at least 1 JPY, wages for those workers who are still learning have not been allowed to hit rock bottom.
Actually wages for low skill workers are too high!
It's the mid and high range skill levels which are suffering.
There is no reason to pay low skill workers a lot of money before they hit lv5 as they can't use it.
A smoother pay curve from low to high level may help boost those crucial mid skill wages.
Go Sophie! /me huggles Sophia
Unfortunately, there are a few systemic problems that will prevent eJapan from ever being a "top nation," in my opinion. Most notably is the lack of natural resources. Grain is by far the most abundant "high" resource worldwide, so the fact that we have it does not mean much. When our manufacturers purchase oil, diamonds, or iron at market rates, most of the profit goes to foreign businessmen charging "gouge-level" prices, diminishing the employer's ability to pass some of the profit to the workers in the form of good wages.
Some well-run companies get around this, like Akki's conglomerate, because they run their own land companies in foreign high resource regions and direct donate the raw materials to their own manufacturing companies, or companies like Dragonforce Steel, which mostly employs eJapanese, received a government subsidy to purchase an export license to sell cheaply on the eJapanese market.
But the bottom line is wages will always be higher where resources are more abundant--they have an inherent competitive advantage.
Well written, on par in quality with your diplomatic reports I've been reading. Keep up the good work!
@Watanbe Jun - the other ecountries are laughing at us for not doing this i dont think so eJapan was always for discusssion and sensibility a beacon that emerging nations could look at for hope and guidence when the much larger nations are trying to PTO them constantly and screwing up there nation with stupid laws that can be harmful to the market and want people to leave the stupididty for the stronger nations that have more sense and security
I'm sorry Sophia for making an argument in your news comments i really hate arguing with others it is in truth pointless and leads to many places but a desired destination
"You are deluded if you think that Japan is doing well."
Have to agree with Goku on this one point. ^
When I logged in the MM was at 1JPY = 1G. The markets are tough. There is no way we are doing 'well', compared to other countries we are doing terrible, compared to our past we are doing bellow average.
Well written Sophia. :3
A higher skill Land worker has no hope in this country. I recently hit skill 6 Land and was met with a nice little pay *CUT* to my already pathetic wage. Now I've got to restart in Manufacturing making newbie wages (which aren't much lower than skill 6 Land wages anyway) just to hope to have a future for myself in this island economy. Interestingly, in a few days I'll actually be profiting more as a skill 3 Manu Q1 worker than I was at as a skill 6 Q3 Land worker because I'll be able to subsist on cheaper food thanks in large part to my Q5 house. And even this was only really able to be bought from my previous economic successes in North Korea. In fact, my investments that actually ARE making money are my shares in the North Korean DFI, lol. It's all completely borked here in Japan.
@AngryGerbil There are a number of eJapanese land companies operating in foreign countries. I believe Dragonforce Imperial is one of them, but also Mugen Corp and Black Dragon Mining, too. They probably pay higher wages and all of them sell back to eJapanese companies to help increase their profits and in turn increase the wages.
Those taxes don't goto Japan's treasury though. We need people working in Japan not going abroad. We lose out on income taxes plus all taxes on food/guns/other that the person purchases abroad. Obviously they won't bother to come to japan just to buy our stuff if they are living over in Russia.
As far as I know, the Black Dragon Mining and Mugen Corporation don't pay much more than minimum wage anyway--you receive the payment in weapons. This is specifically to avoid paying taxes in the host country. Not sure what the wages are like with the Dragonforce Imperial company, but they might consider the same arrangement.
The only things that cannot be avoided are fighting for the local government (unless you quit job and use moving tickets, but that is a huge hassle) and you cannot be in the eJapan congress if you work abroad.
We have some very intelligent and thoughtful people here in eJapan. Our best and brightest have contributed much to these debates in our national forums.
There is no real reason to keep the Yen valued at 0.35 gold, other than the fact that it allows predictable planning. Devaluing the Yen relative to gold will effectively lower the minimum wage, and this may very well be desirable.
All economic changes inflict pain somewhere. I believe we have taken some good steps over the last 30 days though, to strengthen the economy. Clearly, more needs to be done though.
@KITA Ikki
"Some well-run companies get around this"
Actually, all well-run companies get around it by simply parking an org in a country that is consistently near the lowest price on eRepTools. No one should ever buy anything but grain or iron (from the orgs who are part of the iron imports initiative) on the Japanese market. And it's only just recently that our grain is at all competitive in the world market too.
Back to the original topic at hand, I cannot agree with the idea of relaxing import taxes in our manufacturing or grain sectors. Since we cannot compete effectively with land wages, we should continue to protect our manu companies from imports that we do not even need at this time.
good luck sophia
voted!!
good luck 🙂