Ryuho Okawa: Let’s talk about something else. Many people talk about “the country’s debt”. The media are striking fear into people saying, “The country’s debt is so high. The government is using twice as much as it earns in tax revenues. Japan is up to its neck in debt and is unable to pay the interest on its loans. If the economy grows, interest rates will go up.” We need to stop thinking this way. It is a mistake to think of government bonds as national debt.

The Japanese people have money and are looking for ways to invest it. If they buy shares, there is a possibility that their value drops, so they buy something safer – they buy government bonds. The country is the last institution to go down, so the citizens invest in their country.

The country gets money from its citizens – money it can use. This is not debt, this is the people investing in their country – like an investor invests in a business.

Ryuho Okawa: If the country uses the people’s investment and introduces policies to promote growth and development, making the economy expand, the investment was worth it and people can harvest the returns.

In a limited company, funds are made available by selling shares, creating debt. But if a company with a capital of 500 million yen says, “Oh my God – we have 500 million in debt. We have to give it back!” the company would no longer exist.

Ryuho Okawa: If it were to give back its capital, a limited company would go bust. So obviously, the company does not pay back the money but uses it to make sure business goes well and is profitable enough for people to get good returns on their investment.

Drucker said even in a non-profit organization, there must be profits. Enough profits have to be generated to pay the cost of maintaining and running the organization. The same is true for the government.

Consequently, we have to stop thinking the government should not make a profit, or that the government needs to continue making a deficit, or that the government has to use all of its revenue within one year. Of course in a way the government is a non-profit organization, but in order to maintain and run the state, we need growth.

Ryuho Okawa: To create growth in our country, we need what businesses would call profits. If nothing remains after the costs are subtracted, we cannot maintain and run the country. Still, in Japan we have had this situation for 20 years. It is time to rethink things.

Thinking that the government bonds that citizens bought are the country’s debt and so must be paid back is quite childish. The people are showing their trust in the country by buying these bonds. What the government needs to think instead is, “Let’s use the money and see just how big we can make our national economy, so people get a worthy return on their investment.”

This is what running a country means.

Ryuho Okawa: For the past 20 years, Japan’s economic growth has been stagnant.

China’s economy has grown to 8 or even 10 times its size within this time, while the Japanese economy has been stuck in one place. This is a sign of bad management. We have to create growth and generate profits.

As a country, we need to generate profits which can then be used to pay back debt. This is the basic idea.

Ryuho Okawa: The media keep saying: “Japan is in trouble. The country has more than a thousand trillion yen in debt.” But this is not debt, it is capital. The country can use this money to create growth. If they had started doing this 20 years ago instead of letting the economy stagnate, Japan would be much stronger than it is now.

If there is economic growth, tax revenue will grow proportionally, and all debt can be repaid.

Ryuho Okawa: All it takes is a change of perspective.