Abstract

This lecture will discuss the sources of the growing reliance on deficits and debt among high-income nations beginning in the 1970s. It does so by examining the history of the fiscal policies of Japan and the United States. The lecture is based on an essay authored by myself and by Professor Eisaku Ide of Keio University. (W. Elliot Brownlee and Eisaku Ide, “ Fiscal policy in Japan and the United States since 1973: Economic Crises, Taxation and Weak Tax Consent,” in Marc Buggeln, Martin Daunton, and Alexander Neutzenadel, eds., The Political Economy of Public Finance : Taxation, State Spending and Debt since the 1970s [Cambridge, UK: Cambridge University Press, forthcoming March 2017] .) In this essay we argue that the high levels of debt in the United States and Japan must be understood in part in terms of a relatively low tax effort and patterns of persistent tax cutting. Among the explanatory factors we consider are the low level of tax consciousness, especially before the 1970s; the impact of economic shocks; the influence of neo-liberal economists and representatives of business both inside and outside of government; and the role of the institutional structure of government. We suggest that to meet current and future demands for major public investments and services, governments in the United States and Japan will have to make the case for an expanded public sector and tax increases simultaneously and in an integrated fashion. In other words, they will have to link fundamental tax reform to the building of tax consciousness, tax consent and, in turn, the enhancement of the modern state in both nations.

*In the context of Sébastien Lechevalier's seminar « Comprendre le changement institutionnel en Asie. Une perspective comparée avec les États-Unis et l’Europe »