Carl Weinberg: A financial crisis is inevitable in Japan

[Puppycow]

After hearing Economist Carl Weinberg discuss Japan on a recent podcast, I'm worried.

Here's what he's saying about Japan:

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Japan faces severe and intractable challenges in its public finances: The debt-to-GDP ratio can never fall! A financial crisis is inevitable, and it may break out soon. Fiscal stimulus will only bring the crisis sooner.

The debt-to-GDP ratio can never fall and interest rates can never rise here, it seems. It's unlikely that the ratio can even be prevented from growing. I don't see any way out other than inflation. But we haven't seen inflation here in ages. Everything is a race to the bottom. Lower wages, lower prices, lower wages, lower prices, rinse and repeat. Meanwhile tax reveunes cover less than half the government's budget. The BoJ can't raise interest rates because the government is too deeply in debt to pay any significant interest rate on its debt. Population is falling. Working age population is falling. Retired population is growing.

Is there any way out?

What would happen in a financial crisis and when will it come?

[drkitten]

Originally Posted by Puppycow

The debt-to-GDP ratio can never fall and interest rates can never rise here, it seems.

I'm deeply suspicious of any statement with "never" in it, and I'm doubly suspicious of this statement. Of course the debt-to-GDP ratio can fall; just cut government spending. Similarly, the national bank can raise interest rates any time it likes as long as it's willing to accept the consequences. These are political questions, not laws of physics. All it would really take is a Japanese PM with the stones to take the appropriate action.

While I agree that testicular fortitude has never been a major strength of Japanese politicians, if the alternative is a complete default on the debt or a total crash, that might change.

[Puppycow]

Originally Posted by drkitten

I'm deeply suspicious of any statement with "never" in it, and I'm doubly suspicious of this statement. Of course the debt-to-GDP ratio can fall; just cut government spending. Similarly, the national bank can raise interest rates any time it likes as long as it's willing to accept the consequences. These are political questions, not laws of physics. All it would really take is a Japanese PM with the stones to take the appropriate action.

While I agree that testicular fortitude has never been a major strength of Japanese politicians, if the alternative is a complete default on the debt or a total crash, that might change.

While in theory it is possible, it's almost unimaginable in practice.
Ever hear of a government slashing spending by 50% or doubling taxes?

I don't know if this is the kind of thing where pressure builds gradually and adjustmenst can be made gradually or if there's a tipping point where suddenly everything goes pear-shaped. The financial crisis in the US took most people by surprise. I'm worried that nothing will be done until there's a major crisis.

[The Don]

Originally Posted by Puppycow

Working age population is falling. Retired population is growing.

Is there any way out?

Raise the retirement age significantly - reduces the retired population - raises the working population

Increase the working population by throwing open the national doors to young immigrants

[shuize]

Originally Posted by Puppycow

Population is falling. Working age population is falling. Retired population is growing ...

I'm worried that nothing will be done until there's a major crisis.

I agree.

With the extremely low interest rates, I've considered buying property here. But then I ask myself, "Is Japan really a good long term investment?"

When I think about the demographics for more than 5 seconds, it's very hard for me to say "Yes."

[drkitten]

Originally Posted by Puppycow

While in theory it is possible, it's almost unimaginable in practice.
Ever hear of a government slashing spending by 50% or doubling taxes?

Yes. I believe, in fact, that the World Bank or some such NGO has enforced those sorts of measures on countries when their economy is otherwise sufficiently messed up that no lesser measure would suffice. Granted, these are usually banana-republic style countries where the entire GDP wouldn't buy a three course dinner in a good Manhattan restaurant, and it's a little more difficult to lean on Japan the way you would on Belize.

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I don't know if this is the kind of thing where pressure builds gradually and adjustmenst can be made gradually or if there's a tipping point where suddenly everything goes pear-shaped.

Both, typically. For example, the government's interest rate will gradually increase as more and more lenders notice the debt-to-GDP ratio. As long as the government can make payments, this will just be gradually increasing pressure. But as soon as the government can't make payments and has to default, things will go pear-shaped.

[Francesca R]

Originally Posted by Puppycow

The debt-to-GDP ratio can never fall and interest rates can never rise here, it seems. It's unlikely that the ratio can even be prevented from growing. I don't see any way out other than inflation.

The less dramatic way out is real economic growth. Japan has failed rather badly in achieving growth since the mid 1990s since its recoveries have been snuffed out by (i) premature tax increases (1997) or (ii) rapid appreciation of the yen (various times) or (iii) global economic slump (2008). However, the comment that there is no way out, ever, save for debt monetisation amounts to a claim that Japan can never get back to lasting income growth. It probably can; there are many precedents of economies "reinventing themselves" without requiring a WW2 Marshall Plan type of event, but growth-augmenting policies are the best, though non-trivial, option for its government.

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The BoJ can't raise interest rates because the government is too deeply in debt to pay any significant interest rate on its debt.

Well it has no reason to raise interest rates as long as it has no inflation, no growth, and no currency collapse.

Quote:

Population is falling. Working age population is falling. Retired population is growing.

All these things depress Japan's growth rate, which is what has resulted in government dis-saving and the increase in government debt, but they also increase its domestic private savings rate. A conuncrum about Japan is that while the government is deeply in debt, the private sector (corporations and households--particularly households--is hugely in surplus, and by a lot more than the government is in debt. This means that, overall, Japan is a big net creditor of the rest of the world, despite its government being a big net debtor. But because most of that government debt is held by Japanese holders, it is the Japanese private sector that the government is in debt to, not so much other countries (and Japan holds far more US governmemt debt than the US holds of Japanese government debt, for example).

There is significantly less danger of a financing crisis (foreigners dumping the yen) due to this than otherwise. Effectively Japan's government is in debt to its own citizens, and they would be the group who would either trigger a yen collapse/bond yield jump (via capital flight), OR who would continue to finance the government because from their point of view it is not nearly so risky to lend to it, particularly since they have such a high appetite to save/lend in the first place.

[NewtonTrino]

Japan has brought itself to this because it refuses to let people immigrate. They either needs to start pumping out kids or open the borders a lot more. I doubt that either will happen and it will be interesting to see where this goes.

[Francesca R]

Originally Posted by drkitten

Yes. I believe, in fact, that the World Bank or some such NGO has enforced those sorts of measures on countries when their economy is otherwise sufficiently messed up that no lesser measure would suffice.

It's the IMF that acts in this way, and it doesn't have the power to "force" a sovereign state to undertake such measures per se--but it can attach them as conditions for a loan of last resort, which a government approaches the Fund to ask for when private lenders have already decided to abandon it. Japan isn't anywhere near that position right now. The IMF and the OECD and others can't do much more than hand-wave about Japan's fiscal problems in the meantime, which they do by the way. But ratings agencies still don't tend to raise a red flag about Japan, just a white one with a red dot on it. Ratings agencies aren't infallible with early warnings, but a sovereign debt crisis occuring in a country rated AA is probably unprecedented.

[Francesca R]

Originally Posted by NewtonTrino

Japan has brought itself to this because it refuses to let people immigrate. They either needs to start pumping out kids or open the borders a lot more. I doubt that either will happen and it will be interesting to see where this goes.

The population density of Japan is already pretty high; about 50% higher than the UK for example, and ten times as high as the US.

[NewtonTrino]

Originally Posted by Francesca R

The population density of Japan is already pretty high; about 50% higher than the UK for example, and ten times as high as the US.

I'm well aware but what choice do they have?

[Francesca R]

See my first post above. They can likely "muddle through" approximately indefinitely, and they will likely return to debt-reducing growth eventually. I don't expect any significant increase in immigration. No real idea on the fertility rate. Raising retirement age is more likely.

[Francesca R]

Originally Posted by Puppycow

What would happen in a financial crisis [ . . . ]?

What would happen would be a widespread "Sell Japan" trade. The yen and the equity market would fall, and bond yields and the credit default swap spread would spike.

For comparison the JGB 5 year CDS is +0.69%. This compares with +0.21% (Germany), +0.23% (US), +0.54% (UK), +0.75% (Italy) and about +1.5% (Ireland and Greece).

[NewtonTrino]

Originally Posted by Francesca R

See my first post above. They can likely "muddle through" approximately indefinitely, and they will likely return to debt-reducing growth eventually. I don't expect any significant increase in immigration. No real idea on the fertility rate. Raising retirement age is more likely.

Ok, I can buy that. Won't the the problem eventually get worse if their demographic trend continues though?

BTW I think the retirement age is going to go up in a lot of places.

[Francesca R]

The dependency ratio will get worse, yes. Unless there is an offsetting productivity increase (which is possible but won't be growing on trees) then income per person will fall, and either (i) people, particularly the retired, will be poorer, or (ii) they will run down private savings more, or (iii) the government will borrow more to support their income. If option (iii) dominates then the debt problem gets worse, but it's probably the less likely option.

[Free Thinkr]

Originally Posted by Puppycow

Is there any way out?

It could shift the basis of taxation back to land, as it did in the Meiji period, and the period following WW2; in both instances it was able to sustain massive gains for prolonged periods of time. But, that doesn't enrich the greedy privileged class of landowners, so it would be a fight. Of course, this solution is common to pretty much all the world; as long as production is taxed and spent on services and infrastructure which act to increase land values, and there is no means in place of recouping that externality, the result is a massive transfer of wealth to idle hands. Obviously, such a scheme isn't sustainable over the long term.

[Puppycow]

Originally Posted by Francesca R

What would happen would be a widespread "Sell Japan" trade. The yen and the equity market would fall, and bond yields and the credit default swap spread would spike.

For comparison the JGB 5 year CDS is +0.69%. This compares with +0.21% (Germany), +0.23% (US), +0.54% (UK), +0.75% (Italy) and about +1.5% (Ireland and Greece).

If they could somehow get the yen back to the 110s or 120s I think it would help.

IIRC, Italy has similar demographics and debt to Japan.

Originally Posted by Francesca R

But ratings agencies still don't tend to raise a red flag about Japan, just a white one with a red dot on it. Ratings agencies aren't infallible with early warnings, but a sovereign debt crisis occuring in a country rated AA is probably unprecedented.

AIG was rated AAA. So were the upper tranches of mortgage-backed securities. Not countries, but rated a better risk that most countries by the same rating agencies. I think that "not infallible" is the understatement of the year. This is one of the things that Weinberg complained about in the podcast, saying that it's "unconscionable" that ratings agencies haven't already downgraded Japan's debt. Of course, he's just one economist, but his argument seems to make sense to me. However, your perspective also seems to make sense and it makes me feel better. Thanks.

Originally Posted by NewtonTrino

Japan has brought itself to this because it refuses to let people immigrate. They either needs to start pumping out kids or open the borders a lot more. I doubt that either will happen and it will be interesting to see where this goes.

Well actually, I'm an immigrant to Japan. They do let people in who are likely to be a net positive for the economy. People have to have certain skills to be useful in the Japanese economy. Such as literacy in the Japanese language. A wide-open-door immigration policy would probably cause more problems than it would solve. For example this sort of thing.

[NewtonTrino]

Originally Posted by Puppycow

Well actually, I'm an immigrant to Japan. They do let people in who are likely to be a net positive for the economy. People have to have certain skills to be useful in the Japanese economy. Such as literacy in the Japanese language. A wide-open-door immigration policy would probably cause more problems than it would solve. For example this sort of thing.

Yeah, I know a few other guys that have made the transition. But their overall rate is very low and they make it tough to get in. I'm sure it would cause cultural issues as you say although immigration generally is a good thing IMHO.

My biz partner is also married to a japanese lady and spends a lot of time over there.

[Puppycow]

Originally Posted by drkitten

Both, typically. For example, the government's interest rate will gradually increase as more and more lenders notice the debt-to-GDP ratio. As long as the government can make payments, this will just be gradually increasing pressure. But as soon as the government can't make payments and has to default, things will go pear-shaped.

If investors were rational individuals acting independently I think the government's interest rate might gradually increase. OTOH, if they behave like they did in the mortgage debt bubble, they will all go merrily along as long as they see that everyone else is doing it and when they see enough people get nervous and pull out then more people will get nervous and pull out and then even rational individuals acting independently will see that a mad rush for the exits is happening and so suddenly everything goes pear-shaped. The investor panic will be the most immediate reason why the government becomes unable to make payments.

[Francesca R]

The government's interest rate--rationally--is made up of (i) an inflation premium (compensation for the expected change in real value, or purchasing power, of principal, (ii) a real risk-free rate (compensation for postponing purchases), (iii) a bond risk premium (compensation for uncertainty about both of the foregoing) and (iv) a default risk premium.

One can make rational assessments of each of (i)-(iv) in order to arrive at a calculation of what the "fair" value bond yield should be, and it is the same principle as is involved in valuing the shares of a business--namely discounted cash-flow--except that there are different parameters involved to be analysed and estimated. Additionally there is a lot more transparency in respect of the available information about the factors that affect (i)-(iv) for a country like Japan than there is/was in respect of mortage credit derivatives. So while collective greed-fear cycles can happen in government bond markets just as they can anywhere, there is less reason to expect them.

An investor panic would not affect the government's ability to make payments; it would increase the cost to the government of issuing more debt. That could ultimately amount to the same thing though.

[Puppycow]

Originally Posted by Free Thinkr

It could shift the basis of taxation back to land, as it did in the Meiji period, and the period following WW2; in both instances it was able to sustain massive gains for prolonged periods of time. But, that doesn't enrich the greedy privileged class of landowners, so it would be a fight. Of course, this solution is common to pretty much all the world; as long as production is taxed and spent on services and infrastructure which act to increase land values, and there is no means in place of recouping that externality, the result is a massive transfer of wealth to idle hands. Obviously, such a scheme isn't sustainable over the long term.

Interesting point. There are property taxes here, although it's just one of many forms of taxation. I paid property taxes of about 0.25% to 0.30% of the value of my property. I suppose that's fairly cheap as far as property taxes go.

[Free Thinkr]

Originally Posted by Puppycow

Interesting point. There are property taxes here, although it's just one of many forms of taxation. I paid property taxes of about 0.25% to 0.30% of the value of my property. I suppose that's fairly cheap as far as property taxes go.

Indeed. Since WW2, privileged interests succeeded in constantly lowering the rate of property taxation, culminating in the a land bubble in the late 80's of such a massive scale that the grounds of the Imperial Palace in Tokyo were said to be worth as much as all the land in California.

Amusingly, California itself succeeded in drastically lowering property taxes in 1978, forever consigning the state to economic problems similar to Japan. The way out should be clear to those who are willing to see.

[egslim]

Originally Posted by Francesca R

A conuncrum about Japan is that while the government is deeply in debt, the private sector (corporations and households--particularly households--is hugely in surplus, and by a lot more than the government is in debt. This means that, overall, Japan is a big net creditor of the rest of the world, despite its government being a big net debtor. But because most of that government debt is held by Japanese holders, it is the Japanese private sector that the government is in debt to, not so much other countries (and Japan holds far more US governmemt debt than the US holds of Japanese government debt, for example).

In the worst case, this allows the possibility for the Japanese government to institute a one-time wealth tax to pay off its debt. After all, the people it is indebted to are the same who fall under its power of taxation.

As long as the Japanese private sector runs a surplus much larger than the public sector's deficit, Japan is safe as houses.

[Francesca R]

Yeah, but the ability to tax isn't really an indicator of credit quality--it's possession of a claim on income that is. So that means the creditworthiness of JGB debt is directly linked to the ability of the economy to grow. A sudden large tax increase, whether on income, consumption* or assets (I am not aware of the latter being mooted at all) would risk damaging that, and may bring on market concern rather than alleviate it.

* The VAT rise in 1997 aborted an economic recovery under way at the time, and arguably did more harm than good to the debt burden.

[egslim]

Originally Posted by Francesca R

Yeah, but the ability to tax isn't really an indicator of credit quality--it's possession of a claim on income that is. So that means the creditworthiness of JGB debt is directly linked to the ability of the economy to grow. A sudden large tax increase, whether on income, consumption* or assets (I am not aware of the latter being mooted at all) would risk damaging that, and may bring on market concern rather than alleviate it.

Income and consumption taxes stiffle economic activity. But in a country with a large savingsglut, like Japan, a wealth tax does not. The money is just sitting there, even barely collecting interest.

Since a wealth tax punishes savers, it may even stimulate economic activity as it induces people to spend their money, instead of having it collected by the government.

Credit quality is simply an entity's ability to pay back or service its debt. As long as your debt is owed to the same people who's assets you have a claim on, it's like being indebted to yourself.

[Francesca R]

Wealth tax, property tax, land-value tax even . . . would very likely depress spending in Japan. The huge household savings pool is deferred consumption for the large fraction of retired / soon to retire people, whose average life expectancy after retirement is pushing three decades.

(Incidentally, since these folks are also a very influential cohort of the electorate in the country, you can conclude that neither Hatoyama nor any successor is going to flirt with these sorts of taxes)

[Free Thinkr]

Originally Posted by Francesca R

Wealth tax, property tax, land-value tax even . . . would very likely depress spending in Japan. The huge household savings pool is deferred consumption for the large fraction of retired / soon to retire people, whose average life expectancy after retirement is pushing three decades.

It's easy enough to work out exemption schemes for those deeply entrenched in the current system (ie, those who are retired or near retiring). For the rest of the population, however, a land value tax would drastically reduce the cost of using land (for both production and living), reduce speculation in land, and facilitate the transfer of land into productive hands. Relieved of the full burden of income taxation, the Japanese would have more to spend on goods that cost less. Production thus stimulated, the debt would cease to be an issue.

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(Incidentally, since these folks are also a very influential cohort of the electorate in the country, you can conclude that neither Hatoyama nor any successor is going to flirt with these sorts of taxes)

That's been the normal course of history: beneficiaries of privilege tend to be myopic, and will cling to their privilege even as it drives the nation into the ground. Japan's die is likely cast.

[egslim]

Originally Posted by Francesca R

The huge household savings pool is deferred consumption for the large fraction of retired / soon to retire people, whose average life expectancy after retirement is pushing three decades.

Maybe. I expect only part of it is deferred concumption, the remainder will be up for inheritance.

Quote:

(Incidentally, since these folks are also a very influential cohort of the electorate in the country, you can conclude that neither Hatoyama nor any successor is going to flirt with these sorts of taxes)

Not while they have a choice. But if they are no longer able to sell government debt at affordable rates there'll be few alternatives.

[Free Thinkr]

Originally Posted by egslim

Not while they have a choice. But if they are no longer able to sell government debt at affordable rates there'll be few alternatives.

And believe me, it will come to that before any change is made.

[Francesca R]

Originally Posted by Free Thinkr

a land value tax would [ . . . ] reduce speculation in land

Doesn't look like there's much of that to be reduced.

(All urban land value index: http://www.stat.go.jp/english/data/nenkan/1431-17.htm )

[Free Thinkr]

Originally Posted by Francesca R

Doesn't look like there's much of that to be reduced.

(All urban land value index: http://www.stat.go.jp/english/data/nenkan/1431-17.htm )

http://forums.randi.org/imagehosting...8718a6946c.jpg

You'd be surprised. Anyhow, the tax would not only reduce outright speculation, but would also compel more intensive development. A slumlord isn't an outright speculator in land, but the effect on the aggregate wealth of the economy is similar. The problem with traditional taxation is that it undermines its own tax base. A land tax avoids this by having the opposite effect: it acts to allocate land to its highest and best use, thereby stimulating production.

[kevinquinnyo]

Originally Posted by Free Thinkr

You'd be surprised. Anyhow, the tax would not only reduce outright speculation, but would also compel more intensive development. A slumlord isn't an outright speculator in land, but the effect on the aggregate wealth of the economy is similar. The problem with traditional taxation is that it undermines its own tax base. A land tax avoids this by having the opposite effect: it acts to allocate land to its highest and best use, thereby stimulating production.

I don't understand how taxing land as opposed to income would change anything. Wouldn't taxing land have a wage reducing effect to the point that it balanced out the benefits of no income tax?

[Puppycow]

Originally Posted by Free Thinkr

And believe me, it will come to that before any change is made.

IOW, you agree with Weinberg that a crisis is inevitable, right?
I mean, you think that there is a way to solve it in theory but you don't think that it will be solved in practice before there is a crisis, right?

[Puppycow]

Originally Posted by kevinquinnyo

I don't understand how taxing land as opposed to income would change anything. Wouldn't taxing land have a wage reducing effect to the point that it balanced out the benefits of no income tax?

A tax on income is a tax on productive economic activity.
If the basic assumptions of economics are true, the more you tax something, the less you get of it.
This is why people like to tax "sinful" behaviour.
If you can tax booze and tobacco and gambling instead of productive work, presumably you will get more of the latter and less of the former. There are limits to this, of course.

[Francesca R]

Originally Posted by Free Thinkr

The problem with traditional taxation is that it undermines its own tax base.

As does LVT, as I'm pretty sure you've agreed before. Either the tax is passed through to production income, or the logical result is that the government ends up owning all land as private owners sell out to them, and as such it generates no further tax revenue, and government is back to taxing things that it doesn't own, which are labour and private capital income.

LVT has little to do with Japan's issues, or their solution.

[NoZed Avenger]

Originally Posted by Francesca R

As does LVT, as I'm pretty sure you've agreed before. Either the tax is passed through to production income, or the logical result is that the government ends up owning all land as private owners sell out to them, and as such it generates no further tax revenue, and government is back to taxing things that it doesn't own, which are labour and private capital income.

LVT has little to do with Japan's issues, or their solution.

"If the only tool you have is a hammer, pretty soon every problem looks like a nail."

Substitute "Land Value tax" for "Hammer" as needed.

[Free Thinkr]

Originally Posted by Puppycow

IOW, you agree with Weinberg that a crisis is inevitable, right?
I mean, you think that there is a way to solve it in theory but you don't think that it will be solved in practice before there is a crisis, right?

Pretty much. Obviously, I'm not psychic or anything, but the historical record of this sort of crisis aversion is not good.

[Free Thinkr]

Originally Posted by NoZed Avenger

"If the only tool you have is a hammer, pretty soon every problem looks like a nail."

Substitute "Land Value tax" for "Hammer" as needed.

And substitute "dumbass comments" for "hammer" and we have your "contributions."

[Free Thinkr]

Originally Posted by Francesca R

As does LVT, as I'm pretty sure you've agreed before.

No, I don't believe I have. There are limits to the LVT; you can only collect the full land rent. But up to that point, it does not undermine its own basis of taxation. When you tax production, you immediately start reducing production.

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Either the tax is passed through to production income,

Impossible at rates 100% or below. But then, if you were to tax land rents at more than 100%, it wouldn't really be a land value tax at all.

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or the logical result is that the government ends up owning all land as private owners sell out to them, and as such it generates no further tax revenue, and government is back to taxing things that it doesn't own, which are labour and private capital income.

This is wrong on two separate levels. First of all, I don't understand why private owners would sell to the government; presumably, owners who did not intend to use land would sell to other individuals who did. The tax would be based on how much individuals were willing to pay to use land, as that's what land rent is.

Secondly, the government of Hong Kong actually does own the land there, and the land generates substantial revenue (though substantially less than it could if their lease system were restructured).

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LVT has little to do with Japan's issues, or their solution.

Right: the largest land bubble in recorded history, and the resulting stagnation since it deflated, has nothing to do with the private collection of land rents! Just ignore that neither the bubble nor the corresponding downturn would have taken place under a scheme where even a majority of land rents were collected for public use.

[Francesca R]

Originally Posted by Free Thinkr

No, I don't believe I have. There are limits to the LVT; you can only collect the full land rent. But up to that point, it does not undermine its own basis of taxation. When you tax production, you immediately start reducing production.

Well I think you've expressed the view that private ownership of land (in the absence of--say--a 100% tax on rent) is unjustifiable/exploitative. Therefore you would set up a system where, effectively, all land is nationalised. At that point, there is no private rent that can be collected and your basis for "tax collection" is simply that government owns all land and government can charge what rent it likes in lieu of tax.

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Impossible at rates 100% or below. But then, if you were to tax land rents at more than 100%, it wouldn't really be a land value tax at all.

If land tax is 100% of land rent, then private land value drops to zero and private land rent drops to zero. It amounts to state appropriation of all land, not tax. And that removes all market mechanisms for allocating land to use, or leaving it idle. And there is nothing necessarily wrong with leaving some land idle. Using it for "tax" reasons when market price mechanisms would not justify this is wasteful.

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This is wrong on two separate levels. First of all, I don't understand why private owners would sell to the government; presumably, owners who did not intend to use land would sell to other individuals who did.

Evidently you don't. But that doesn't make it wrong, it makes you wrong. And usage rights and ownership rights are quite separable and transferable--except that there is no non-arbitrary way to separately assess site value from the value of internal and external site improvements if you abolish the market. People might want to use land; nobody would want to own land. Thus, again, this is not "tax", it is non-market state appropriation of land capital.

Sure governments may be able to get rich indeed via monopoly ownership of land and the ability to charge usage fees as they liked. If they did it sensibly they might even not distort/kill economic efficiency. But it is a step backwards, away from a market mechanism.

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Secondly, the government of Hong Kong actually does own the land there, and the land generates substantial revenue (though substantially less than it could if their lease system were restructured).

Not from LVT they don't, since nobody owns the LV.

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Right: the largest land bubble in recorded history, and the resulting stagnation since it deflated, has nothing to do with the private collection of land rents!

Oh sure real estate bubbles and crashes can arise from private land ownership. But state ownership is no magic bullet for efficiency. It is laughable that you regard it as the curer of all ills from economic meltdown to real estate bubbles to a sore finger and a runny nose. Your posts have a "one trick pony" characteristic in that regard.

As for "exempting" retired and near retired in Japan from your desired "tax"--that's probably more than a quarter of the population. So at a stroke you impose a huge cost on the shrinking labour force which is struggling enough as it is. That is not exactly the first thing Japan needs, suggesting you don't exactly know the first thing about it.