[ccebook.cn]The World in 2010

domestic firms, it will need to break some labour-market and wage rigidities. It risks temporarily pushing
unemployment higher.
That would be unpalatable unless there were a stronger welfare system and retraining subsidies. But the
money for that must compete with government promises of support for families to encourage them to have
more children, and pension support for the old. It is not clear whether, in its 2010 budget, the government
will be able to cut enough waste to pay for such largesse.
What Japan needs is tax reform so that revenues rise. But that is a non-starter in 2010. The highlight of the
political calendar is an upper-house election in the summer in which Mr Hatoyama’s Democratic Party of Japan
hopes for a majority so that it can pass legislation in both houses without coalition partners. To achieve that,
the danger is that the new government will err on the side of timidity and squander its political capital.
If the government cannot right the ship, can business? Its flair for innovation and design is legendary (in
2010 Nissan will bring the all-electric Leaf to the streets of Japan and America, and it will warn pedestrians of
its approach with a futuristic sound reminiscent of the flying cars in “Blade Runner”). There may even be a
chance for fresh thinking in the monolithic Keidanren business chamber, after the election of a new leader in
June.
But business, too, is often a slow-moving gerontocracy, hidebound by a reluctance to let creative individuals
make quick decisions. It ought to pile into China and South Korea in 2010, given the decline of the American
consumer market. But it is likely that the government will make the greater inroads. Mr Hatoyama has
reached out to both countries, and on the 100th anniversary of Japan’s occupation of Korea in 1910 there is
even an invitation for Emperor Akihito to visit Seoul.
What Japan really needs in 2010 is the sort of once-in-a-generation change in business management that
came to politics in 2009; that is, the realisation that those who make mistakes, however senior, can be kicked
out and replaced by fresh thinkers. It is too much to hope it will happen in a year. But it had better start
soon.
Henry Tricks: bureau chief, The Economist
Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.
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