Word: takenaka
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That faith is being placed in a decidedly unusual man. At one level, the Prime Minister's appeal is easy to fathom. "He wants to destroy the things people hate the most," says Heizo Takenaka, an economics professor who last spring joined the Cabinet. At the top of that list: the crusty political barons and their backroom deals, the endless paving of highways that go nowhere, schools that stress conformity over creativity. Yet in any time but the present, Koizumi would never have been trusted. He has a reputation as a lone wolf, a bit of an eccentric...
...With bankruptcies come unemployment, a much dreaded prospect in Japan, where being jobless is regarded as profoundly shameful. Experts say that with Koizumi's reforms, joblessness could soar to double its current rate in no time. Heizo Takenaka?the academic Koizumi appointed to head up economic policy?is well aware that his boss's political life may hinge on unemployment figures: jobless people make angry voters. That is why, he recently told TIME, reforms must not take longer than two to three years; that is how long his administration figures people are willing to endure the suffering. Takenaka says...
...Enter Takenaka, moving fast. In Japan the phrase that dare not speak its name right now is shock therapy, but that's exactly the kind of quick economic fix he has in mind. "How fast can we clean it up?" he asks me as we sit over tea. Five years, I guess. "We think two to three years, but we need to accelerate." The reason for the haste is simple: the reforms are likely to cause unemployment. That puts the reform package into a race with electoral confidence. If voters get fed up before the reforms have time to finish...
...Takenaka is largely keeping his plans from the Japanese press for now, but he tells me he is looking to adopt a three-step approach: scour nonperforming loans from bank books quickly, increase Japanese growth by opening closed industries to competition and cap government spending with a limit that will bulge upward only in an emergency...
...enough. If reform is really going to work, Takenaka and his planners need to build out Japan's social safety net, providing economic padding--and a political bulwark--for the inevitable layoffs and business collapses. Koizumi and Takenaka also need to go into sales mode, a Japanese version of the Bush road show on taxes. And, on a technical note, Japan needs to let its currency slide. A weaker yen--say, 135 to the dollar--would strengthen corporate profits. The danger is that a sliding yen could set off a round of devaluations, as neighboring economies rush to slash their...