In the public eye, business leaders and the consultants who advise them are often seen as “economic experts.” They are certainly adept at financial calculation and analyzing the behavior of individual economic actors—a field highly compatible with microeconomics.
However, from a macroeconomic policy standpoint, their arguments tend to be heavily biased toward fiscal discipline and deregulation. I find this bias particularly pronounced in the successive chairmen of the Keizai Doyukai (Japan Association of Corporate Executives). It is crucial to emphasize that while they are professionals in management, they are not professionals in macroeconomic management.
1. Misunderstanding Policy Objectives
The primary goal of macroeconomic policy is to utilize as much labor as possible to generate maximum value-added, and then to distribute that value so that the vulnerable can support themselves.
In contrast, “justice” for a CEO or a management consultant is to crush the competition, minimize costs (including labor), and maximize profit. I do not deny this; it is the essence of market principles. But should we expect people who only know the “logic of the strong” to speak for the broad interests of the public? If you ask them, they will inevitably advocate for a world where the strong can win even bigger through absolute market competition. What is the merit in creating a society where people already earning tens or hundreds of millions of yen win even more?
This misunderstanding is perfectly consistent with the chronic demand shortage Japan has faced. While the incomes of “winning” CEOs and foreign consultants skyrocket, the wages of the majority of citizens—who have a higher propensity to consume—stagnate, causing the overall economy to flounder.
2. Ignoring the Fallacy of Composition and Seigniorage
I have explained the “Fallacy of Composition” before, but it bears repeating. It occurs when individual actors rationally cut spending to repair balance sheets damaged by falling asset prices. While this is rational for a single firm (an area where consultants excel), if every company and financial institution does it simultaneously, the recession becomes endless.
This is precisely why the government must issue bonds and stimulate demand through fiscal policy. If no one else buys those bonds, the Bank of Japan can, via a policy accord. This is effectively the exercise of seigniorage (currency issuance gain), not a debt in the traditional sense. Understanding and utilizing seigniorage is entirely outside the “strike zone” of business leaders and consultants.
Should we worry about government debt or fiscal deficits? The conclusion is that these metrics are meaningless. As I have argued elsewhere, one should first look at the current account and net foreign assets. For a country like Japan to scream for “fiscal discipline” while sitting on a massive current account surplus is nothing short of abnormal.
Conclusion
Viewing the world through a managerial lens only leads to the wrong conclusions in the field of macroeconomics. When the government invites business leaders or consultants to advisory councils, it must carefully consider whether their presence is actually appropriate for the policy goal. And when the media features them, the public must not listen to them as if they were macroeconomic experts. They are playing in a different league entirely.
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