When Japanese say “Abenomics” it sounds as if they’re saying “Abe’s mix” which is what people thought it meant at first, but of course he, or more likely some eminence, is trying to borrow Reagan’s ideas, and to be honest they seem to have been working to some extent. The guy’s been walking around with the most smug expression on his face – he’s enjoying the highest popularity ratings a Japanese politician could expect – 65% last time I heard – and, more important, he might be about to realize his lifelong ambition.
We’ll get into what Abe, and his mentors in the right of the LDP, are hoping to do in a later post, but first, though my dislike for Abe is on record, I have to admit the mood in this country has brightened up a bit this year. As Clinton pointed out, it’s “the economy, stupid!”, and Abenomics is an attempt to jolt Japan out of its 20-year deflation by 1) printing money, 2) boosting government spending and 3) reorganizing the whole economy. The first of those, the easy one, is already under way and has resulted in a cheaper yen, more profit for Toyota and a soaring stock market – up till a couple of weeks ago that is. A sudden panic chopped off 2000 yen in one week, and since then the Nikkei index has been going up and down like a yoyo. Even so, it’s up a good 50% on last November. People are waiting to actually have more money in their pockets, but some of them at least have been convinced by all the talk to spend more of what they have. Sales of luxury goods in particular have been rising and people do seem a bit more optimistic.
#2 has already been done many times and the historic links between the ruling LDP and the construction industry mean we’re quite likely to get still more highways to nowhere and empty “multi-purpose halls”. Of course there’s also useful infrastructure spending, but it’s easy to be cynical here.
On #3 there’s a very long list of useful things that could be done, rather, must be done – better participation of women in the workforce, better English education, reform of agriculture, a sane energy policy, a dependable welfare system etc etc – so we’ll have to wait and see whether Abe really intends to roll up his sleeves and do some of this.
Meanwhile a trickle of price rises of imported food and energy might well turn into a flood which cuts into the standard of living of the less well off, unless companies get serious about increasing wages. Rising interest rates are already starting to be reflected in home loans. Possibly even worse, if a continued fall in the value of the yen undermines the popularity of Japanese government bonds as a safe investment, they will be forced to raise interest rates there. Japan has a huge national debt which has been sustainable up to now because the money was borrowed very cheaply, but a total collapse of confidence ala Greece is not totally out of the question (George Soros).
Unfortunately, there are other reasons to worry that Abe might not be serious about getting Japan’s economy fixed on a long-term basis. There’s an upper-house election coming up in July. At present the ruling LDP do not have a majority there, but if Abe can keep his (ridiculously inflated) support figures till then they’ve got a good chance of a 2/3 majority, maybe with the support of their coalition allies. Abe is very keen indeed to get that majority, and if “Abenomics” is just a means to that end he might not invest enough effort to keep it working beyond July. (Noah Smith) In other words, the whole thing might just be cynical electioneering.
It’s hard to know what to hope for here – as a resident of Japan of course I’d like to see the economy improve, but on the other hand the consequences of Abe getting the credit for it might not be pleasant. Look forward to another diatribe on Abe’s politics before long!
A recent commentary in the Japan Times sounds less than optimistic about Abenomics:
[…] money, and Abe has managed to convince the Japanese public – and many abroad – that “Abenomics” is working, and things are going to get better. It’s mostly been talk so far, but the […]