What is worse is that government spending schemes that expand public-sector debt imposes several burdens on future generations. Most obvious is their additional tax burden in having to pay for debts incurred in the present. More diabolically, government attempts to orchestrate jobs by spending beyond their means will undermine or eliminate some employment in the future.
From an operational standpoint, a better method for addressing employment growth is to undertake reforms that change the fundamental nature of economic decision making. New government spending cannot and does change the incentive structures associated with tax codes or regulation, both of which impose limits on entrepreneurial choices.
As always, the choice facing political leaders is between political expediency and economic rationality. In confronting this dilemma, Japan's leaders have taken the wrong path.
This is evident from the fact that Japan's economy remains mired in recession despite a decade of squandered tax funds. It proves that politicians are protecting their own well being instead of undertaking reforms that would benefit their constituents. It is high time that the good of the people be put ahead of the interests of the political class.
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