January 23, 2022
As I have mentioned many times, much of what many people who speak about economics know is merely repeated from the Ministry of Finance.
As I have also mentioned many times, Hideo Tamura is one of the few genuine experts.
This article, too, proves that he is the real thing.
In the present circumstances, this is an extremely useful article.
It must be read not only by the Japanese people but also by people throughout the world.
The emphasis within the text, apart from the headings, and the passages between asterisks are mine.
The Prime Minister Must Free Himself from the Constraints of the Postwar Regime
The Defense Spending Limit of 1% of GDP, Bound Up with Fiscal Austerity
As the Xi Jinping administration in China escalates its military pressure on Taiwan, its external expansion policies such as the vast Belt and Road economic initiative, and its human rights violations in Tibet, the Xinjiang Uyghur Autonomous Region, and Hong Kong, calls are emerging within the Liberal Democratic Party to reconsider the limit on defense spending of 1% of gross domestic product (GDP).
However, defense spending is expected to stand at 0.95% of GDP in the government’s draft budget for fiscal 2022.
Is the Fumio Kishida administration determined to break free of the 1% constraint?
The graph compares trends in the GDP and defense spending of Japan and China in U.S. dollars.
Since 1995, Japan’s GDP and defense spending have both followed a declining trend, in contrast to China’s defense spending and GDP, which have continued to rise in parallel.
Looking closely at China’s data, after gaining momentum in the first half of the 2000s, both defense spending and GDP took off and entered an upward trajectory in the latter half of the decade, accelerating further from 2008 and 2009 like a two-stage rocket.
Moreover, the rate of growth in defense spending far exceeds that of its rapidly growing GDP.
The root causes of the stagnation in Japan’s defense spending are the policies that have tolerated deflation since the latter half of the 1990s and the limit of 1% of GDP.
The affliction of shrinking GDP began with the recession caused by delays in dealing with the collapse of the Heisei-era bubble, was aggravated by fiscal austerity including the consumption tax increase in fiscal 1997, and has become chronic, continuing to this day.
The 1% limit is a product of the so-called “postwar regime.”
General Douglas MacArthur, the Supreme Commander of the General Headquarters of the Allied Powers (GHQ), determined never to allow Japan to wage war again, did more than impose the “peace constitution,” with its renunciation of war and prohibition on maintaining military forces.
In 1947, the Public Finance Act, the basic law governing public finance, came into force alongside the new constitution.
According to the Japanese Communist Party newspaper Shimbun Akahata of April 24, 2008, a commentary published in 1947 by the Ministry of Finance section chief who drafted the Public Finance Bill, titled Article-by-Article Commentary on the Public Finance Act, explained: “It can be asserted that where there are no government bonds, there is no war; therefore, this article [Article 4 of the Public Finance Act] can also be said to endorse and guarantee the constitutional provision renouncing war.”
Based on the same interpretation of the Public Finance Act as Akahata, the Asahi Shimbun warned against expanding government debt through additional bond issuance in an editorial dated August 27, 2020, titled “Do Not Forget the Public Finance Act and Its Historical Significance in the Postwar Era.”

• This proved that the Asahi Shimbun is a newspaper that even now continues to write in accordance with GHQ’s wishes, and that its thinking is nothing other than GHQ’s occupation policy of permanently weakening Japan. Even so, it is no exaggeration to say that the existence of such a newspaper as a representative Japanese newspaper throughout the postwar era is the source of all the weaknesses and problems Japan faces today. *
  GHQ treated Article 9 of the Constitution and fiscal austerity as a single package, and the prevailing current of postwar public opinion was influenced by it, while successive administrations accepted it unquestioningly.
  As the U.S.-Soviet Cold War intensified, the National Police Reserve, the predecessor of the Self-Defense Forces, was established in 1950, and the Japan-U.S. Security Treaty was signed in 1951.
  However, Prime Minister Shigeru Yoshida’s doctrine of keeping defense spending to a minimum and giving priority to economic growth became established within the framework of the Constitution and the Public Finance Act.
  It was the Takeo Miki administration that decided in 1976 on a defense spending limit of 1% of gross national product (GNP).
  Supported by rapid economic growth from the 1960s through the 1970s, the defense budget continued to increase.
  The decision was made amid a situation in which the concerns of Japan’s domestic left were conveyed through the media, fueling voices in China, South Korea, and other Asian countries that feared Japan would become a military power.
• Reality and history are now proving just how foolish the editorial arguments of the Asahi Shimbun and others are. *
  In July 1980, a report titled “Comprehensive Security Strategy” was compiled principally by Kyoto University Professor Masataka Kosaka, based on the wishes of Prime Minister Masayoshi Ohira, who had died suddenly the previous month.
  Ohira sought to stabilize foreign relations through overseas economic cooperation, including yen loans to China.
  While Kosaka broadly followed Ohira’s concept, he placed particular emphasis on military matters.
  He recognized military power as a major factor influencing the foreign policies of countries and argued that it should be developed as a “denial capability” to deter foreign invasion.
  The report proposed that “developing denial capability would not threaten the Soviet Union and could be achieved with approximately 1 to 1.1% of GNP.”
  In other words, defense spending could slightly exceed the 1% limit; it was a moderate position that took Ohira’s views into account, yet Ohira did not clearly indicate a position in favor of increased defense spending.
  As Cold War tensions increased in the 1980s, the Reagan administration in the United States requested that Japan strengthen its defense capabilities, and the Yasuhiro Nakasone administration abolished the 1% ceiling.
  Even so, it stated that it would “respect the spirit of the 1% limit,” meaning that the 1% limit had merely been recast as an unwritten rule.
  In its campaign pledges during the recent House of Representatives election, the Liberal Democratic Party called for defense spending of “2% of GDP.”
  Since last year, Defense Minister Nobuo Kishi has repeatedly said, “Defense spending should not be considered as a percentage of GDP, and we should not be bound by the 1% limit.”
  Yet it is expected to remain below 1% in the fiscal 2022 budget.
  Faced with the inescapable threat from China, Prime Minister Kishida, who belongs to the Kōchikai faction that carries on the Yoshida Doctrine and the policy of fiscal austerity, must decide whether to erase the 1% defense spending gene or preserve it.