In 1992, Prime Minister Kiichi Miyazawa proposed injecting public funds to resolve Japan’s bad loans, a forward-looking solution modeled after U.S. precedent. Bureaucrats, media, and financial institutions crushed it with a chorus of false righteousness, turning “public funds” into taboo. This failure cost Japan 900 trillion yen over 20 years. The real “politics and money” problem lies not with Hatoyama or Ozawa, but with the elites and media who destroyed the nation’s chance at recovery.

From the perspective of August 22, 2010, the author examines the true root of the “politics and money” issue. The piece argues that Kiichi Miyazawa’s 1992 proposal for injecting public funds to deal with bad debts was shot down by opposition from the media and bureaucracy, leading to Japan’s long-term economic stagnation. The author asserts that this media action is the true problem of “politics and money,” and he harshly criticizes the media for shifting the blame to specific politicians while ignoring their own responsibility.

On “Politics and Money”
August 22, 2010

Kiichi Miyazawa, one of the true elites Japan has ever produced—a sitting prime minister at the time, and the most knowledgeable economist in Japanese politics—recognized something crucial in August 1992. We recognized it too. And there was already a precedent in the United States. Before the so-called “bubble” phenomenon named by the Japanese mass media, America had faced a similar situation. The U.S. government injected the necessary public funds and resolved the problem quickly.

During the Karuizawa Seminar of the LDP in August 1992, in the wake of the bubble’s collapse and growing financial anxiety, Miyazawa declared the need for public assistance to financial institutions. He stressed that the sharp drop in asset prices—land and stocks—was fundamentally different from any previous recession, and that public funds should be injected to promptly dispose of bad loans.

But his proposal met fierce opposition from the bureaucracy, the media, business associations, and even from the financial institutions themselves. As a result, Miyazawa was forced to retract his decision. From that moment onward, the idea of using public funds to dispose of non-performing loans became taboo. For years afterward, no Japanese politician dared to raise the issue again. (“Until twenty years ago, there were still true elites in politics”—see my earlier essay.)

It was precisely here that the media, led by second-rate economic reporters from Asahi Shimbun, committed their greatest sin. They suppressed the solution that naturally arose in the minds of true elites, smothering it with their chorus of foolish righteousness. This folly cost the nation 900 trillion yen in losses over the past twenty years. Among those who joined the chorus, there must have been members of the DPJ as well.

This is the real problem of “politics and money.”

And with what face, then, can you label Yukio Hatoyama and Ichirō Ozawa as if “politics and money” will forever cling to them, and declare that such is the will of the people?

Is that not worse than the conduct of kindergartners?