Japan's Recession Should be a Lesson

By Douglas V. Gibbs

Every time you raise taxes on an activity, it slows down.

Therefore, to get an economy going, the reasonable solution is to lower taxes.

Lower taxes leaves more money in the pockets of entrepreneurs and consumers, enabling businesses to grow and consumer spending to increase. As businesses grow, and product movement increases, more people make more money, and revenue from the taxation increases. This is what happened in the eighties.

Japan tried to spend their way out of a recession, and what resulted was economic collapse.

Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen. In April of 1998, the government unveiled a fiscal stimulus package worth more than 16.7 trillion yen, almost half of which was for public works. In November 1998, another fiscal stimulus package worth 23.9 trillion yen was announced. In November 1999, another fiscal stimulus package of 18 trillion yen was tried. Finally, in October 2000, Japan announced one more fiscal stimulus package of 11 trillion yen. Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen, and each failed to cure the recession. What the spending programs did do, however, is put Japan's government into poor fiscal shape.

Now, the Democrats in the United States of America are trying the same doomed plan, while adding to it the attempt to nationalize a large part of the private sector with their idiotic health care plan, Cap and Trade, and various other socialist programs.

True insanity by the Left. I suppose they believe if they try something that has failed over and over and over, somehow in America it will succeed.

Not likely.

-- Political Pistachio Conservative News and Commentary

Economist Intelligence Unit. 1996. Country Profile Japan. London, U.K.

Economist Intelligence Unit. 2001. Country Profile Japan. London, U.K.