Last time, I explained “Takahashi Korekiyo and Keynes.”
This time, I will explain “Takahashi Korekiyo’s fiscal policies.”
Certainly, milady.
As your dedicated maid, I will now explain it to you.
Regarding Takahashi Korekiyo’s fiscal policies
Milady, today I will explain in detail the fiscal policies of Takahashi Korekiyo from the post-World War I period to the 1930s.
His policies flexibly adapted to the changing times, and their results and impact were profound.
1. Fiscal Policies during the Austerity Period (1913 to early 1920s)
Background
Takahashi Korekiyo faced a difficult economic situation after World War I, with inflation and a decline in currency value due to increased government spending.
As a result, a period of austerity was necessary.
Main Policies
Reduction in Expenditures
Takahashi significantly reduced the government budget.
Unnecessary or non-urgent projects were either halted or postponed, enforcing strict fiscal discipline.
Tax Increase
Income and corporate tax rates were raised, and new taxes (e.g., special profit taxes) were introduced.
This allowed the government to stabilize its finances.
Return to the Gold Standard
To stabilize the currency’s value, Takahashi reintroduced the gold standard in 1930.
This move aimed to ensure economic stability.
Outcome
These measures successfully curbed inflation.
Milady, he was even referred to as the “God of Austerity.”
However, this also resulted in slower economic growth.
2. Fiscal Policies during the Expansionary Period (1931-1936)
Background
In the 1930s, Japan faced a severe recession and deflation due to the global Great Depression.
To overcome this economic crisis, Takahashi Korekiyo implemented expansionary fiscal policies.
Main Policies
Expansion of Government Spending
He actively carried out public works projects and increased government spending to aid rural areas.
This helped to stimulate domestic economic activity.
Withdrawal from the Gold Standard
In December 1931, Takahashi prohibited the export of gold once again and devalued the yen, promoting Japanese exports.
Bank of Japan’s Purchase of Government Bonds
The Bank of Japan underwrote deficit bonds to raise funds, which became the core of what is known as the “Takahashi fiscal policy.”
Low Interest Rate Policy
By lowering the Bank of Japan’s official discount rate, Takahashi encouraged private investment, further revitalizing the economy.
Outcome
Thanks to these expansionary fiscal measures, Japan was one of the first countries in the world to recover from the depression.
Exports increased, and industries were revitalized, but at the same time, this led to a rise in military spending.
3. Characteristics and Evaluation of Takahashi’s Fiscal Policies
Flexible Policy Shifts According to Circumstances
Takahashi boldly shifted from austerity to expansionary policies, responding to the demands of the times.
A Precursor to Keynesian Economics
His proactive fiscal policies during economic downturns were quite similar to Keynesian economics, making him a forerunner of such ideas.
Insights for Modern Times
Balancing fiscal discipline with economic stimulus provides important lessons for modern economic policies.
Additionally, his foresight regarding the role of central banks is highly regarded.
Milady, through these insights, it becomes clear that Takahashi Korekiyo was not just the “God of Austerity,” but also a brilliant policymaker who could flexibly choose appropriate policies based on the situation.
(Note)
This text was generated with the help of AI. The AI’s responses are not always guaranteed to be accurate. Please verify important information.
I have a membership plan called the “Daikichi Plan” (500 yen/month) available on “note” as a way to support me. I would greatly appreciate your support to help maintain my posts and boost my motivation.
#AI #AskedAI #AIillustration #AIart
This time, I explained “Takahashi Korekiyo’s Fiscal Policies.”
