Interview with Kazumasa Iwata today

This morning I interviewed Kazumasa Iwata, head of the Japanese Cabinet Office's Economic and Social Research Institute and former deputy governor of the Bank of Japan. Check out Policy Innovations soon for the audio and iTunes for the podcast. He was between meetings with government authorities and financial institutions, so the interview was a brief 16-minutes but nevertheless very rich in insights.

Apropos of Earth Day today and in response to my question about Tokyo's future role in Asia, he listed several environmental measures he saw desirable for Japan, including striving to build a low-carbon society, reducing emissions, replacing older, higher-emitting automobiles, and increasing research and development in clean energy technology--something that Japan has excelled in for decades (see a piece I co-wrote on Japan as an efficiency superpower here).

As for Japan's response to the financial crisis, he seemed worried about the employment situation and gave the impression that Japan's monetary policy and fiscal stimulus packages were meant to cork the loss of jobs but would not necessarily create new ones--as Japan appears to be creeping up to possibly a 6-8 percent unemployment rate.

What was the biggest issue Mr. Iwata saw for the US-Japan relationship for the long term? I was pleased that his answer was to fight protectionism. He sees a growing threat of trade protectionism through the use of WTO-legal measures. As I have advocated with Sherman Katz and Robert Fauver, Mr. Iwata even suggested that the US and Japan pursue a free trade agreement.