Even when Prime Minister Shinzo Abe was forced to announce a state of emergency on April 7 to contain the spread of novel coronavirus from assuming the proportion of threat never seen in Japan’s history, Barak Kushner, Professor of East Asian History at the University of Cambridge reminded us about Japan’s dark history, when the Japanese government used the declaration of emergency for medical and military ends, but lost power after the War. As the death tolls started ballooning and Tokyo Governor Yuriko Koike warning the impending declaration of emergency in March, Abe was left with no choice than to take actions to stem the surge in mortality rate. The action was more based on self-restraint or as called in Japan, jishuku, rather than on legal compulsion because Abe is aware of legal limitation of Japanese law that such laws cannot be enforced. At the time of writing this, more than 4,570 people have tested positive for the coronavirus with 104 deaths.
The question that needs to be asked is, what groundwork can be made to take legal action after adopting the emergency, as people are not under legal obligation to take their own measures? In the past, Japan did use stringent government regulations to control epidemics. It may be recalled that in the 1850s when Japan was beginning to open to the outside world and preparing for the Meiji Restoration in 1868, port cities were afflicted with cholera outbreaks, killing people in thousands. It occurred at a time when there were no adequate supplies of medicines. After the Tokugawa shogunate or the feudal military government failed and lost public confidence, and was followed by the Meiji Restoration, which returned effective power to the Emperor, some order began to be restored.
Soon, the Meiji government enacted a series of cholera prevention laws in 1877 that gave the police power to test, isolate and sanitise the living areas of people who caught the ailment. Then, the Leprosy Prevention Law was enacted in 1907 mandating the doctors to report leprosy patients and gave police power to force them to live in designated and isolated facilities. In the current context, Abe government was reluctant to introduce a more draconian lockdown. This stemmed in part from bitter memories of civil rights abuses during the days of militarism and the forced isolation of leprosy patients. Innumerable emergency measures before 1945 that curtailed human rights were aimed at meeting the war needs.
All these changed after Japan’s defeat in the Second World War and promulgation of the Constitution that gave primacy to respect for human rights and the rule of law. As was in the past, the government and police could no longer enjoy freedom to intervene directly in the lives of people. Since then, Japanese people have tasted freedom, which is why successive governments are conscious to factor this aspect while enacting law even in an emergency situation. Though the laws were revised in March empowering Abe to announce an emergency, it still did not give the prime minister unbridled power to enforce law. On the contrary, it was left to the people’s conscience and free will on how to cope with the new situation now. The government could make only make appeals to the people to stay indoors, but could not force them, as the law lacked enforcing powers.
Kushner cites the example of Taiwan, how the world has changed and excessive use of force or coercion, even in extreme situations, are not modern day methods of governance. Not long ago, Taiwan had draconian martial laws for more than four decades before 1990s but avoided to impinge on freedoms by taking deliberate and well-aimed medical actions when exigencies arose. The situation in Japan is now similar to that of neighbouring Taiwan, except that the government ought to seek social complicity once laws are invoked in an emergency situation.
In 2015, The Rebuild Japan Initiative Foundation, one of the few private think tanks in Japan and headed by Yoichi Funabashi drew attention of the policy makers how to approach when crisis occur suddenly. It published a book, “Japan in Peril? 9 Crisis Scenarios†and one chapter dealt with pandemics. Making a strong statement, it observed that bureaucrats in silos and out-of-touch leaders impeded effective catastrophe management. Drawing probably some lessons from the book, Prime Minister Abe gauged how to respond given the legal limitations he faces in tackling with the spread of the virus. Having declared an emergency and not a lockdown, it is to be seen how decisive his actions is going to be in the coming days in stemming the virus’ surge.
Economic stimulus package
It is no denying that the outbreak of coronavirus has dented the economy of Japan as also of other countries. It is feared that the world is heading towards a recession. In order to blunt the virus impact, Prime Minister Abe announced his government’s largest-ever economic package worth 108 trillion yen ($990 billion) to help households and businesses suffering from the impact of the novel coronavirus outbreak. This package, equivalent to 20 per cent of the country’s GDP (gross domestic product) eclipses the 56.8 trillion emergency package at the time of the 2008 financial crisis and follows stimulus measures worth 26 trillion yen in December to soften the impact of a consumption tax hike.
The stimulus measures worth about 39 trillion yen to implement steps such as providing a total of 6 trillion yen in cash to struggling households and companies, and tax and social security payment deferments for businesses worth 26 trillion yen. The virus outbreak disrupted supply chains and production, and spurred travel bans across the globe. Consumer spending already depressed following the consumption tax hike in October 2019 from 8 to 10 per cent further dropped sharply amid stay-at-home requests. The country faces a growing risk of plunging into a recession, reeling from the pandemic, aftershocks from the consumption tax hike and the postponement of the Tokyo Olympics and Paralympics. Terming the current situation “the biggest crisis†of the post-War era, Abe resolved to overcome the crisis together with Japanese citizens by mobilising all possible means.
Abe hopes to partially fund the policy package worth 16.81 trillion yen for fiscal 2020 and it is expected to clear parliament by the end of April. The extra budget will be financed by 14.48 trillion yen of deficit-covering bonds. Finance Minister Taro Aso is tasked with prioritising economic revitalisation, which will be needed to achieve fiscal consolidation. Under the latest package, the government plans to distribute 300,000 yen to lower income households that have lost more than half of their income amid the virus outbreak or those whose income has fallen to a level that would exempt them from paying resident tax. Households with children who receive monthly child allowance, which is typically 10,000 to 15,000 yen will receive one-off payments of 10,000 yen per child for June. Subsidies of up to 2 million yen will be provided to small business owners, including freelance workers, and medium-sized companies if their revenues drop significantly to help them continue business and maintain employment.
Private Banks are encouraged to extend loans without interest or collateral. Such loans are given by governmental financial institutions at present. Similarly, small and medium-sized companies suffering from sharp sales declines will be fully exempted from paying taxes such as consumption and property taxes. Some ruling and opposition party lawmakers had demanded a cut in the consumption tax rate. After it was reported that the anti-influenza drug Avigan developed by a group firm of Fujifilm Holdings Corp. was effective in treating COVID-19, the government decided to spend 13.9 billion yen to triple the national stockpile of the drug.
Experts’ opinions
Experts are divided in their opinions on one of the key policies designed to help beleaguered households by providing them with 300,000 yen each. Some economists say the financial aid should be focused on those in serious need while others say proposed measures to be lacking fairness and speed. Experts opine that though safety net is important, the 300,000 yen cash handout to limited households is not that cost-effective. According to Shunsuke Kobayashi, senior economist at the Daiwa Institute of Research, this particular case is likely to stir up controversy in terms of fairness since there will be households whose income has plunged but not enough to be eligible for the cash aid, while there will be people who will take advantage of the policy. It is argued that even though the procedure will be based on self-reporting, the government will have to do some screening, which will take time. Kobayashi says that it would have been more effective to beef up the current safety net, such as boosting the unemployment allowance. It remains to be seen how the municipal officials will handle so many people when they flock to the offices with request to receive the benefit.
The scale of the package, nearly double that of the 56 trillion yen package crafted to counter the global financial crisis in 2009, sends out a solid message that the government is taking the situation seriously. Interestingly, Abe rejected calls from opposition lawmakers to compensate businesses asked to shut down once a state of emergency was declared, terming opposition proposal as unrealistic.
As Tokyo compiles a record stimulus to combat the coronavirus, the government decided to sell a record amount of extra bonds the current fiscal, worth more than $165 billion, straining the industrial world’s heaviest debt burden. The government’s focus has been putting higher priority on trying to revive the economy than restoring public finances. The package included 20 trillion yen of stimulus steps already put in place last December. The 18.2 trillion yen extra bond issuance in the new fiscal year from April beat the previous record of 16.9 trillion yen issued during the 2009 global financial crisis, bringing overall annual market issues to a five-year high of 147 trillion yen. All the maturities, except for 40-year bonds, inflation-linked bonds and liquidity enhancement auctions, will increase. While 40-year bonds and liquidity enhancement auctions remain unchanged from an initial plan, inflation-linked bonds will be cut. Six-month treasury discount bills will be added to the market issuance.
Pressure could build-up
Japan is known for community spirit that it has displayed in innumerable occasions in the past, the latest being in the aftermath of the tsunami disaster of Japan’s north-east coast, nine years ago. That was a difficult time, but Japan overcame it, and this time too it is confident in defeating the virus. The worry is that the number of infected persons continues to surge, though not at the same pace as in Europe. It is a matter of concern if the country’s hospitals will be able to cope with the surge in infections. Though the emergency was declared on April 7, it is not a lockdown in the same sense as in many other countries, including in India. Japan does not have the legal authority to enforce a France-style lockdown with fines and penalties. The government expects the people to apply self-restraint and exercise social distancing. As the measures are expected to hit consumption and production, there is a fear that Japan may slump into recession. Many analysts believe Japan has already slid into recession as supply chain disruptions, travel bans and social distancing policies at home and abroad put more pressure on the slowing economy. The economy which shrank in the final quarter of last year could post two more quarters of contraction.
Gaping holes
People in two sectors – adult entertainment workers, and sex workers – are excluded from the coronavirus package aid package. As regards the first category, the government has hinted that it could reconsider excluding adult entertainment industry workers from the subsidy package. The plan to exclude restaurants and bars that entertain customers as well as adult entertainment businesses from the government's aid offer had drawn criticism for constituting occupational discrimination.
The criteria for the cash payment was that if an employee takes paid leave to take care of children due to nationwide school closures in response to the spread of the novel coronavirus will be paid a maximum of 8,330 yen (about $76) per worker per day. It was argued that in line with other employment-related aid systems, the proposal to exclude workers in the sex industry and in sections of the restaurant industry that entertains customers, such as nightclubs, alongside members of organised crime groups, was unreasonable and discriminatory. After the streets of the Kabukicho entertainment district in Tokyo Shinjuku Ward gave a deserted look, advocacy groups slammed the rules on social media as “discrimination by occupationâ€. Katsunobu Kato, Minister of Health, Labor and Welfare, however, rejected the idea of offering the subsidy to them. It transpires, therefore, that apart from tackling with the issue of controlling the spread of novel coronavirus further, the Abe administration has to address related domestic social issues. Abe is confident that like other problems in the past that it overcame successfully, this current problem will also pass soon. This is no denying the fact that the coronavirus has severely dented the Japanese economy as also of many other countries.