#2-8 Hunting the rich [Sep 24th 2011]

Hunting the rich [Sep 24th 2011]

Oct 2nd 2011 10:00-12:00 Yoyogi Renoir

Ono, Ogawa, Tomozawa, Saito, Nagao, Yamagata, Shimada and

Articles we discussed:

[Leaders] Hunting the rich

[Leaders] Catching up is so very hard to do

[Special report] The game of catch up

[The Americas] [Protectionism in Brazil] A self-made siege

[Economics & Finance][Buttonwood] Pensions, Ponzis and Pyramids

[Leaders][Israel, Palestine and the United Nations] Yes to Palestinian statehood

    Almost a year has passed since I met Ono and Fujisaki in a restaurant in Marunouchi and decided to start reading the newspaper. The first discussion on October was held in Yoyogi, which is famous for Yoyogi cramming school. All the members of this week were male and most of them were strangers each other. Macro economical issues were the main topic of the discussion especially about catching up emerging economies. One article about Palestinian statehood Ogawa picked up raised a different type of discussion on this week.

    The article Ono picked up was “hunting the rich”. It mainly focuses on the hunt for more tax from the wealthy in developed countries. From this week, we changed the style of discussion according to Mr.Goto’s advice. So Ono first presented reasons for picking up the article and showed us his suggestion. He emphasized that it is a basic policy to make economic growth and fiscal reconstruction compatible with each other. He objected to the abolition of taxation on naphtha and the enlargement of base of taxation. We picked up “Buffett rule”: ensuring that no house hold making more than $1m a year pays a lower average tax rate than “middle-class ” families do. We cannot avoid discussing tax reconstruction when we really want to make fiscal reconstruction so we should more focus on this topic in the following discussions.

    “Catching up is very hard to do” and “The game of catch up” are both about the problems of emerging economies. Yamagata said the reason of choosing this article that was to summarize the problems of emerging countries. He also picked up “Middle-income country trap” (tricky middle-income stage of development). Saito asked us an influential map in 2031. Why these articles are interesting is that these are focusing on weakness of emerging economies. We tend to focus on strangeness of these because it is attractive. But there are two sides on things so the balance is important. Tomozawa picked up a related article from Americas section. “A self-made siege“ is focusing on protectionism in Brazil. Brazil is popular as an object country of investment. Investment trusts for Brazil become so popular these days and the currency came to be strong. As investments for the country come to be hot, the government becomes cautious against a bubble. We also looked at rankings of trading and investment.

    Shimada picked up an interesting column, ”Pentions, Ponzis, and Pyramids ” from Bottomwood. This article looks upon Social Security as a Ponzi scheme or as a Pyramid scheme. Shimada asked us where this analogy was correct or not, especially in Japan’s case. He also focuses investment policies of pension-fund in western countries. The article criticizes that these funds invests not in emerging markets but only in their countries’ markets. Social Security system is related to tax issues as we saw at the first article. We should continue to discuss with it either.

    Lastly we followed today’s Israel and Palestine issue. Ogawa picked up the article to make clear the situation. We know there is an international issue on the region but we don’t know so much about who involves and how the problem is complicated. Following the core of international relationship we could understand foreign affairs better than before.

    This week we gathered at Renoir in Yoyogi. I don’t like the café so much because of smoke and old-fashioned interior but it is convenient to stay for a while to discuss or to study. Moreover they have meeting rooms with whiteboards in several café around Tokyo. We are thinking to use them next time.