Wage, reform, and wage
Another brilliant commentary by FT’s Martin Wolf, this time on new economic policy set out by Abe administration. “When or can you ever miss, sir?, my candid feeling that is after reading his article.
Daring monetary maneuver supplying abundant money into market is not a bad idea after all. Agree, especially on its effect on JPY’s depreciation while possibly questionable on its caliber against deflationary pressure as a plausible question remains whether new money can actually flow into the “real” market with 15 trillion excess supply capacity. Though adversarial in profitability for importers such as us, complaint if any is not mine on Yen plunge as we simply have to adjust and adopt at the end of the day.
I totally agree on his point on wage, structural reform, and a bit of accounting wiz on depreciation provision. On wage – yes, I was wrong until maybe 2 year ago in my own analysis on the internal cause of deflation, given the monetary policy effects insisted by those macro economists as insufficient conditions, as being mixture of conventional managerial dogma putting market share and revenue size before profit, bandwagon tendency of us Japanease consumer behaviour in which so called fair price segment stays hard to grow, price dumping enabled by unbalanced market consolidation between layers in supply chains such as a case in food and beverage sector with co-existence of already oligopolised downstream retailers and ever fragmented upper stream of manufacturers and producers, and striking tolerance in rate of return orchestrated by low cost of capital possibly with another un-spoken explanation of term bank loans that keeps rolling and rolling, essentially equivalent to quity in disguise.
While each of my point may have a case, now my belief happens to be nothing but I was wrong in positioning them as primary causes of deflation. Biggest factor now I insist is the dramatically reduced ware level in last 20 years in working and consuming population. It is more convincing presumption that big retailers have been rather forced to reduce prices to keep their customers with continuously decreasing disposable income. Workers, espacially young ones(thus excluding us maybe), should have a claim in a portion of mounted 200 trillion yen retained earnings at large companies.
Now back into daily reality, back into my tiny venture. Every minute and every decision seems more critical than ever, no clear clue why but certainly feel so.
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One Response to “Wage, reform, and wage”
Usefull post
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