Speaker: Joffre Balce, Assistant Secretary

Rediscovering a Lost Connection

Welcome to the

Association for Good Government

Who Are We?

The Association for

Good Government

Outline

• Meiji Restoration

• Georgist Political Economy

• Policy Applications (?)

• Economic Effects (?)

• Contemporary Implications

Before the Meiji

• 1543. Portuguese first contact between Goa & Nagasaki

• 1639. Rebellion suppression blamed on Christians & isolation under the Tokugawa Shogunate.

• 1844, William II of Holland urged Japan to open

• 1853, Black Ships/Kurofune forced it open.

Bakomatsu: 1863-1868

• 1858. “Treaty of Amity & Commerce”

• 1859-1863. Period of Crisis.

• 1863-1865. Military Interventions

• 1865-1867. Expeditions & Start of

Modernization

• 1869. End of Rebellions & the

Shogunate.

The Meiji Era Cometh

• 1867. Prince Mutsuhito succeeds Emperor Komei as 122nd Emperor

• 1868-1869. Boshin War & Abolition of the Shogunate

• Assurance of treaties with the Bakufu

• Charter Oath and Meiji Constitution

Charter Oath 五箇条の御誓文

By this oath, we set up as our aim the establishment of the national wealth on a broad basis and the framing of a constitution and laws. Deliberative assemblies shall be widely established and all matters decided by open discussion.

All classes, high and low, shall be united in vigorously carrying out the administration of affairs of state.

The common people, no less than the civil and military officials, shall all be allowed to pursue their own calling so that there may be no discontent.

Evil customs of the past shall be broken off and everything based upon the just laws of Nature.

Knowledge shall be sought throughout the world so as to strengthen the foundation of imperial rule

Major Economic Reforms

• Ending Feudalism

• Developing Infrastructure &

Industry

• Competitive International Trade

• Modernize Knowledge and

Technology

• Strengthen Military

What Has George Got to Do With It?

• Land Tax Reform

• Central Banking

• International Trade

• Revolution of Thought

• Yoshisaburo Yamasaki

• “The Influence of Henry George Upon Modern Japan”

• Kokumin Keizai Zasshi

• Regional Development

• Keizeigaku Kenkyu

• The Population Theory of Henry George

• Baron Yoshiro Sakatani (1863-1941)

• Meiji Finance Minister

• Henry George, Jr.

• Eyewitness analysis if Japanese railways

Land Tax Reform 地租改正

• Origins: Taika Reform of 645.

• 1873. (3% of land values)

• Self-assessment; below projections

• 1875. Land Tax Reform Department

• Raised land values to meet targets

• Unrest forced a rate cut to 2.5%

• 1880. Targets eventually met & took full effect

Land Tax Reform Effects

• Stabilised tax revenues by focusing

on land values, not crop yield

• Defined ownership rights to allow

land owners to buy & sell land &

use them as financial assets

• Increased commerce & circulation

of money"Chiken akita face" by Issued by Akita Prefecture. Photo by Mbdnoob. - Scanned by Mbdnoob.

Licensed under Public Domain via Wikimedia Commons -

https://commons.wikimedia.org/wiki/File:Chiken_akita_face.jpg#/media/File:Chiken_akita_f

ace.jpg

Central Banking

• Pre 1871. Feudal fiefs issued their

own currencies -- hansatsu.

• 1871. New Currency Act of Meiji

• Yen: parity with Mexican silver dollar

• Hans became mints as private

chartered banks at first until BoJ

became a monopoly in 1884.

• BoJ joined the gold standard in 1897.

Rise of the Zaibatsu

• Mitsui

• Mitsubishi

• Sumitomo

• Yasuda

Changing Face of the Economy

Changing Face of the Economy

International Trade: Comparative Advantage

• Comparative advantage can be

created

• Import substitution was not

protectionism nor mercantilism

• Economic rent was monetized and

generated comparative advantage

and capital goods for local use

Rapid Industrialisation

Length of train track

YearTrack

(mi) (km)

1872 18 29

1883 240 390

1887 640 1,030

1894 2,100 3,400

1904 4,700 7,600

1914 7,100 11,400

Merchant fleet size

YearNumber of

steamships

1873 26

1894 169

1904 797

1913 1,514

Coal production

Year

Coal production

(millions of

metric tons)

(millions of

long tons)

(millions of

short tons)

1875 0.6 0.59 0.66

1885 1.2 1.2 1.3

1895 5 4.9 5.5

1905 13 13 14

1913 21.3 21.0 23.5

Japanese Railway Development

• Not full privatisation

• High density passenger traffic lines

were kept by the government

• Lower density passenger traffic

lines were privatised

• Franchises had sunset clauses &

buyback conditions.

• Cheaper fares

• No land speculation

• Affordable expansions and more

reliable providers

• No hostile natives

International Trade: Comparative Advantage

Japanese Silk

Year(s)

Production

/exports,

annual

average

(tons)

1868–1872 1026/646

1883 1682/1347

1889–1893 4098/2444

1899–1903 7103/4098

1909–1914 12460/9462

Revolution of Thought

• Hired more than 3,000 Westerners to

teach modern science, mathematics,

technology, foreign languages

• Sent thousands more students to the

United States and Europe

• Import Substitution Driven by Local

Engineers and Technicians

• Attempt to push Site Revenue …

Baron Yoshiro Sakatani Winston Churchill

Abenomics: Meiji, Not Georgist

• Fiscal Stimulus

• Monetary Easing

• Private Sector Investment Driven

• 20 year Sluggish Growth

• Ageing & Shrinking Population

• Chinese Encroachment

Summary & Possibilities

• Henry George was a well-kept secret among the elites that exploited & monetized the economic rent

• The elites, through the zaibatsus, kept the monetized rent within Japan & used it to generate competitive comparative advantages

• Information technology and academic links will enable Henry George to be shared and studied among the Japanese who can employ economic rent in the service of the people consistent with democratic & peaceful aspirations.