Japan’s Abe Once Again Puts Off Difficult Reforms

Prime Ministers Matteo Renzi of Italy and Shinzō Abe of Japan attend a ceremony in Tokyo, August 3, 2015
Prime Ministers Matteo Renzi of Italy and Shinzō Abe of Japan attend a ceremony in Tokyo, August 3, 2015 (Palazzo Chigi)

Japanese prime minister Shinzō Abe once again backed away from reform on Wednesday when he delayed a planned sales tax increase that was meant to shrink a huge deficit.

At this point, it seems we would be deluding ourselves if we still take “Abenomics” seriously as a program of economic reform.

When he returned to power in 2012, Abe promised to tackle sclerotic growth in three ways: short-term monetary and fiscal stimulus, long-term fiscal consolidation and structural economic reform.

He only managed the first and has constantly found excuses to put off the second and third — which are the more important if Japan is to find its way back to growth. Read more “Japan’s Abe Once Again Puts Off Difficult Reforms”

Political Dynasties and Their Discontents

Members of the Bush family watch a sports game at the White House in Washington DC, June 3, 2001
Members of the Bush family watch a sports game at the White House in Washington DC, June 3, 2001 (George W. Bush Presidential Library and Museum)

Political dynasties have always been a big part of human civilization and today is no exception.

In the United States, of course, the rise of Donald Trump (and Bernie Sanders) was at least partially a reaction to the dynastic, Clinton-versus-Bush election that only last year most Americans were expecting to get.

Among other things, Jeb Bush’s candidacy split the non-evangelical portion of the Republican establishment in two, preventing it from coalescing around Marco Rubio early on and thus leaving an opening for Trump to force his way into. Hillary Clinton’s candidacy, meanwhile, may even leave the door open for Trump to become president, however unlikely and unappealing that may be. Read more “Political Dynasties and Their Discontents”

Japan’s Economy Shrinks as Abe Puts Off Reforms

Night falls in Tokyo, Japan
Night falls in Tokyo, Japan (Unsplash/Simon Launay)

Japan’s economy shrank at an annualized pace of 1.6 percent between April and June of this year, calling into question Prime Minister Shinzō Abe’s commitment to controversial but pro-growth reforms.

Exports fell, as did consumer spending, depressed by a sales tax hike.

The Bank of Japan’s weakening of the yen has also made imported foods more expensive, putting further pressure on households. Read more “Japan’s Economy Shrinks as Abe Puts Off Reforms”

Japan’s Abe Calls for Pacific Trade Progress, Promises Reforms

American president Barack Obama and Japanese prime minister Shinzō Abe at the White House in Washington DC, April 28
American president Barack Obama and Japanese prime minister Shinzō Abe at the White House in Washington DC, April 28 (White House/Pete Souza)

Japanese prime minister Shinzō Abe promised to enact long-overdue agricultural reforms on Wednesday as he encouraged American lawmakers to make progress on a Pacific trade treaty.

Addressing the United States Congress in Washington DC — the first Japanese leader to do so — Abe said Japan was in the middle of a “quantum leap” toward liberalization. “We have regained our spirit of reform and our sense of speed,” he said. “Japan will not run away from any reforms.”

However, since his election in 2012, the conservative party leader has done little to overhaul his island nation’s agriculture and labor markets. The former are critical if Japan is to join the United States and ten other countries in a Trans Pacific Partnership that could boost global economic output by $220 billion over the next ten years.

The trade talks stalemated last year when Japan’s negotiators walked out of a meeting with their American counterparts. The Americans had taken the Japanese to task for refusing to even discuss a cut in tariffs and withdrew their own offer to lower tariffs on imported auto parts.

The Economist cited one Japanese policymaker at the time describing the episode as the most acrimonious since the bruising trade wars of the 1980s.

Powerful agricultural cooperatives and high subsidies shield Japan’s farms from international competition while rigid labor laws make it nearly impossible to lay off workers. Many firms limit hiring to part-time or temporary workers who are typically paid a third less than full-time employees. 17 percent of Japanese men aged 25 to 34 now hold such jobs. For women of all ages, the rate is a staggering 57 percent.

Despite promises of reform, Abe has done little to make Japan more competitive.

The United States are not without blame. The country subsidizes its own automakers and farmers and many lawmakers, especially in President Barack Obama’s Democratic Party, are reluctant to expand foreign access to a variety of markets, mostly food but also biodiesel and ethanol production, for fear of job losses in their districts and states.

With Republicans controlling both chambers of Congress, Obama may yet get the authority he needs to negotiate the Pacific trade pact.

The president expressed optimism on Tuesday, saying, “The politics around trade can be hard in both our countries but I know that Prime Minister Abe, like me, is deeply committed to getting this done and I’m confident we will.”

Abe reminded lawmakers the following day that the Pacific partnership was about more than trade. “It is also about our security,” he said. “Long-term, its strategic value is awesome.”

Obama’s team sees the treaty as part of their “rebalancing” strategy — popularly known as the Asia “pivot” — designing to bring China into the existing liberal world order rather than have it attempt to create a competing, presumably more authoritarian, order under its leadership.

China and Japan are also embroiled in a sovereignty dispute over the Senkaku Islands, situated northeast of Taiwan. Like many of China’s neighbors, Japan worries about the country’s willingness to use force to press its territorial claims.

China isn’t part of the trade talks. But a successful treaty, involving the world’s first- and third largest economies, would pressure the country to meet its standards and stop trying to game global trade to impede foreign companies.

Disenchanted Japanese Give Abe Another Chance

Japan’s ruling conservative parties were on track to win another majority in snap elections on Sunday but low voter turnout reflected rising disenchantment with Prime Minister Shinzō Abe’s economic reforms.

Japanese media projected Abe’s Liberal Democrats and their socially more conservative coalition partners in the Komeito party would win more than 317 seats in the country’s lower house of parliament, a loss of under ten seats but enough to maintain a comfortable majority.

However, barely one in two eligible voters turned out compared with almost 60 percent turnout in the last election in 2012.

Abe called early elections last month to seek a fresh mandate for his economic policy when the country slipped back into recession.

Key parts of the reform agenda have stalled. Read more “Disenchanted Japanese Give Abe Another Chance”

Japan’s Abe Calls Snap Elections as Reforms Stall

Japan’s prime minister, Shinzō Abe, called a snap election for the lower house of parliament on Tuesday to seek a fresh mandate for his stalled economic reforms. The announcement came a day after data showed the country had slipped back into recession.

Abe also said he would delay a planned sales tax increase to 10 percent. His earlier tax hike, from 5 to 8 percent, is widely blamed for pushing the world’s third largest economy into negative growth.

The nationalist politician, who staked much of his political capital after returning to power in December 2012 on reasserting Japan’s regional influence, nevertheless insisted during a news conference in Tokyo that his economic program was working.

“I am aware that critics say ‘Abenomics’ is a failure and not working but I have not heard one concrete idea what to do instead,” he said. “This is the only way to end deflation and revive the economy.”

But key parts of his reform agenda remain stalled. Read more “Japan’s Abe Calls Snap Elections as Reforms Stall”

Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline

When Prime Minister Shinzō Abe finally unveiled his plans to make Japan more competitive in June, the proposals underwhelmed. While he promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent, Abe shied away from comprehensive agriculture and labor reforms that could revitalize the island nation’s economy. The latter, especially, are sorely needed.

Japan’s rigid labor laws, which make it nearly impossible to lay off workers, have led many companies to limit hiring to part-time or temporary employees who are typically paid a third less. 17 percent of Japanese men aged 25 to 34 now hold such jobs. For women of all ages, the rate is a staggering 57 percent. 70 percent of Japanese women also still quit their job when they have children.

For both genders, regular jobs have fallen 3.1 percent in recent years. The average wage per worker in real terms has dropped 9 percent since 1997 and 2 percent since Abe took office just two years ago. Read more “Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline”

Japan’s Abe Shies Away from Structural Economic Reforms

Japan’s prime minister, Shinzō Abe, finally unveiled the “third arrow” of his economic reform program on Tuesday but the measures hardly signified a decidedly more liberal policy.

The conservative leader promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent. But he notably shied away from proposing agriculture and labor market reforms that could lift the island nation’s economy out of its long slump.

Abe has promised to revitalize Japan’s economy, the world’s third largest, after two “lost decades” that followed a deep recession in the 1990s. Read more “Japan’s Abe Shies Away from Structural Economic Reforms”

Global Interest in Japan’s Election, Expected to Strengthen Premier

As Japanese go to the polls Sunday to vote in elections for the upper house of parliament, all eyes will really be on the margin of victory for Prime Minister Shinzō Abe’s ruling coalition. Judging from the latest polls, and from the results of municipal elections in Tokyo last month where Abe’s Liberal Democrats won handily, the premier can expect to gain control of the upper chamber and claim a mandate for his policies that could fundamentally change the world’s third largest economy and its role in the region.

After the elections, the real drama will start. Abe will be expected to move forward and provide greater details about his plans to restructure the Japanese economy, the so-called third arrow of “Abenomics.”

In addition, Abe could change Japan’s national-security strategy which would transform the role of the military for the first time since the end of World War II. Read more “Global Interest in Japan’s Election, Expected to Strengthen Premier”

Tokyo Assembly Victory Boost for Japan’s Prime Minister

Shinzō Abe received a vote of confidence on Sunday when his party came out the big victor in local assembly elections in Tokyo. The victory could bode well for his Liberal Democratic Party’s chances in key national elections for the upper house of parliament next month.

Sunday’s election to the Tokyo Metropolitan Assembly is viewed as an endorsement for Abe and his reform plan. His party gained twenty seats after the vote. In alliance with the conservative New Komeito, it now holds a comfortable majority. Both parties had all of their candidates elected.

The outcome is especially important in light of Abe’s legislative goals and the Liberal Democrats’ control of the lower house of parliament. If the party takes control of the upper house, the prime minister will be given a freer hand to pass structural economic reforms he believes are necessary to spur economic growth. He has also said he wants to revise Japan’s pacifist constitution to allow the military to participate in more overseas missions. Read more “Tokyo Assembly Victory Boost for Japan’s Prime Minister”