Ryotaro Takahashi, Tokai University
This study aims to understand the process of forming a small government with income equality through a political analysis of intergovernmental fiscal relations. From the 1960s to the 1990s, Japan enjoyed income equality despite having a low level of social expenditure compared to other countries. However, during the 1970s, the Japanese government attempted to introduce a "high benefit/high cost" policy to establish a Western European-style welfare state with a high level of social expenditure. By focusing on the path not chosen, this study aims to explain Japan’s path to small government with income equality. In the 1960s, the mayors of progressive local governments received support from either one or both of the then progressive parties, the Japan Socialist Party and the Japanese Communist Party. The number of progressive local governments increased, and they began to receive media attention following Ryoichi Minobe’s election as the Governor of Tokyo in 1967. Minobe gained popularity by implementing high welfare policies, such as free medical care for the elderly and increased child allowance. In reaction, the central government initiated the concept of "high benefit/high cost," which was realized in 1973, the first year of the welfare era. This indicates that the policies of progressive local governments influenced the central government. However, because the Japanese government's new approach was strong in maintaining fiscal discipline, after the oil crisis, the government not only lessened their focus on "high benefit/high cost" but also increased financial pressure on progressive local governments. As a result, Japan's small government with income equality was born. This study is based on primary sources such as the "Oral History Records of the Ministry of Finance" which are related to progressive local governments and the Ministry of Local Governments.
No extended abstract or paper available
Presented in Session 216. Governing through Finance