Chapter 1. External Diseconomy on Labor Market

Table of Contents

Two Mistakes
Negative Chain
Pigovian Tax on Employment
Voluntary contracts with staffing agencies
Market principles and natural selection
Basic Income, Recurrent Education and Startup Support

Two Mistakes

Heizo Takenaka, who advocated job mobility, has become the chairman of a temporary employment agency called Pasona. Takenaka, who once served as various ministers and is still a member of the Growth Strategy Council in 2021, can influence the government’s economic policies as a beneficiary company. The government and local governments give jobs to big temp agencies through voluntary contracts, wasting taxpayer money that could be used for employment measures. I don’t think Takenaka is incompetent and I don’t think he is mired in corruption. However, there were two blunders during Takenaka’s tenure as Minister that are the source of the problem.

First, his policy went against market forces. No one can resist the providence of nature. The Industrial Revitalization Corporation of Japan (IRCJ) prevented large corporations from going bankrupt when they were on the verge of collapse, but the natural selection of corporations based on market principles did not work, and the market monopolies and oligopolies were maintained like zombies, getting worse and worse, and the buying support of stock prices by the Bank of Japan and the GPIF led to an increase in asset bubbles in the stock market. Fundraising support for persons or venture companies who build new industry, has not progressed.

The second, which is also related to the first, is that he advocated job mobility and took away the rights of workers in weak positions, calling it a revision of the Worker Dispatching Act. As the natural selection of companies progresses, job changes will naturally take place. However, what Mr. Takenaka did was to justify the reduction of regular employees and outsourcing of companies, to impose a burden on the vulnerable, and to give preferential treatment to dispatched labor companies. [1] Not a day goes by when I don't see an advertisement for a temp agency on a TV commercial.