The remainder is a net addition to national debt, bringing Japan now into the same league as Italy among the most severly indebted industrialized nations with continuing budget deficits in the 10 percent of GDP range, over three times the percentage specified by the EU's Maastricht criteria. A repeat performance of a spending spree this size is out of the question. But to date, there are precious few indications that this is in the offing. So far, supply side reform in Japan means reducing supply, i.e., downsizing. Investment as a result is continuing to decline.
Consumer demand remains flat at best.
Public spending has protected and is continuing to protect existing, frequently unprofitable businesses, depriving start-ups of credit and opportunities. We've heard little or nothing to encourage a near-term positive outlook on Japan's fortunes. Obuchi has cobbled together a three-way coalition and with the inclusion of New Komeito, the party based on the Soka Gakkai Buddhist lay sect, has comfortable majorities in both houses of parliament and can readily pass any legislation he sees fit as long as all three coalition partners agree. The problem is that all three governing parties have special clienteles to look after and hard decisions on in-depth deregulation of business that hurt any one of those groups will be difficult to come by. It prompted the Nihon Keizai Shimbun to express the fear in a recent editorial that, ''Three parties consulting together make asinine policies'' rather than coming up with combined greater wisdom.