Spending Without Taxation FILP and the Politics of Public Finance in Japan [Hardcover]

Governments confront difficult political choices when they must determine how to balance their spending. But what would happen if a government found a means of spending without taxation? In this book, Gene Park demonstrates how the Japanese government established and mobilized an enormous off-budget spending system, the Fiscal Investment Loan Program (FILP), which drew on postal savings, public pensions, and other funds to pay for its priorities and reduce demands on the budget.

Park's book argues that this system underwrote a distinctive postwar political bargain, one that eschewed the rise of the welfare state and Keynesianism, but that also came with long-term political and economic costs that continue to this day. By drawing attention to FILP, this study resolves key debates in Japanese politics and also makes a larger point about public finance, demonstrating that governments can finance their activities not only through taxes but also through financial mechanisms to allocate credit and investment. Such policy finance is an important but often overlooked form of public finance that can change the political calculus of government fiscal choices.

Gene Park is an assistant professor in the Department of Political Science at Baruch College. He has also been a Shorenstein Fellow at Stanford University's Asia-Pacific Research Center (APARC), and a Visiting Scholar at the Japanese Ministry of Finance's Policy Research Institute. He was also the receipient of a Fulbright IIE fellowship. He has a Ph.D. in Political Science for the University of California, Berkeley. [Gene Park's] book presents the important case of a government financial mechanism in Japan, the FILP, during the last six decades . . . The book provides a much clearer view of the current state of the Japanese political economy by showing how far removed it is from the heyday of Japan's political economy. [P]rovides a compelling rationale for FILP's importance in Japan's postwar political ecl£.