Disillusionment always denotes an error, which was the preceding illusion. In the personal sphere, damages are delimited: responsibility is slight even if painful. On the other hand, in the social sciences it’s a matter of blame. It marks the economists that made the wrong predictions, the politicians that lost elections, and managers that err market shares. In the case of Abenomics, it involves many analysts that bet too easily on the economic policies of Shinzo Abe, Japan’s Prime Minister. The Land of the Rising Sun’s latest data seem to crush all hopes—frequently belonging to those same analysts—that accompanied his election in December 2012. The most important figure and the first to be examined, is the value of Japan’s GDP, which declined 6.8% year-on-year in the second trimester. It’s the worst result in 3 years, since the Fukushima disaster. Inflation is fixed at 1.3% against the Bank of Japan’s aspirations to reach 2% next spring. Unemployment has decreased, but the majority of new job creation has been in underpaid positions. Finally, exports have not taken off as expected, especially after a 20% devaluation of the yen against the dollar over 18 months. The cabinet reshuffle was a result of these modest data. At the start of the month, Abe disrupted his cabinet for the first time, naming 5 women to ministerial posts. It’s a record for country, so used to male leadership to consider it the natural order of things. Not surprisingly, it was discovered that the prime minister’s popularity among women was 10-15% lower than among men. No change was on the horizon: all the ministers—men and women—are of the same environment as Abe. Without a doubt, they believe it’s necessary to sustain the economy to re-launch ambitions, and that China’s expansion must be stopped with growth rather than arms. In addition, it’s a communal policy; all of the countries in Asia have delegated power as a result of economic growth; resorting to nationalism is only a consequence.
Therefore, temples of false optimism seem far away, as well as the benevolent curiosity toward an economic policy that denied almost 30 years of submission to accords signed at the Plaza Hotel, of which 20 are stagnating, after the two “lost decades” following the real estate collapse in 1992. Since then, global demand has not grown; the reduction in consumption and investments became chronic. Industrialists napped and consumers became lazy and distrusting. Everyone was waiting for a fall in prices, punctually on its way. Why then not hold increasingly valuable currencies? They weren’t taking the bait, even if the lure offered by the central bank was clean, economical, and available. Abenomics seemed like a surprisingly simple solution to an impossible problem. If low interest rates didn’t encourage spending, substituting economic subjects for the state was sufficient: Nippon Banzai, with banknotes instead of sabers. There were 3 arrows in Abe’s quiver: monetary policy, fiscal policy, and strategies for growth. The first two went essentially according to plan, but the targets were easy. Interest rates were kept below zero, and a river of liquidity reached the system. The relationship between public debt/GDP was 240%. Public investments recovered. Exports grew, led by an artificially suppressed yen, in harmony with the Nikkei index and the entire GDP. They were unprecedented results for Japan since the previous millennium. The third didn’t strike its target or its trajectory was briefer than anticipated, less ambitious, and with an unprecedented deadweight. Growth strategies adhered to the most exquisitely political slants, both internal and international. Reforming the job market—still uncompleted—means reconsidering the loyalty of each worker, professional, and manager. Careers are lived at the same companies, changing jobs is a betrayal. The advantages are indisputable, but social dynamism—so necessary in globalization—has been negatively affected. Women frequently work reduced hours, but inducing them to change would mean questioning the traditions that want to keep them as students or housewives. Reforms are heading for transparency, competition, and meritocracy. But how can they be enacted if the knot between politics, banks, and industry—as perverse as it was profitable in the past—cannot be dissolved? How can internal investments be stimulated if costs have imposed delocalization to China for decades? The balance of trade is smiling because of exports, but frowning because of the depreciated yen when it needs to buy energy (especially after the closure of nuclear power plants).
Shinzo Abe doesn’t plan to revolutionize his country, only to strengthen it. His program needs time, because structural reforms are laborious and painful. He can be credited with a slight and uncertain economic recovery, but it’s concrete for the first time. His neo-Keynesian policies represent—like those in the US—a practicable alternative to Europe’s rigidity. Japan was the first to discover that deflation is a non-value, because the fall in prices is caused by excess supply. On the Old Continent, the notion arrived late, hindered by the ghost of Weimar. In general, despite the crisis the country continues to live in peace, democracy, and with high living standards that are almost unheard of in the rest of Asia. Criticisms of Abenomics are perhaps premature, and certainly inaccurate if compared to excessive illusions. The disenchantment doesn’t make note of the difficulties. Paradoxically, if the premier raises prices, it will stimulate consumption. He did this recently, changing the VAT from 5 to 8%. In any case, inflation penalizes real salaries of less-affluent workers and suppresses purchasing, as demonstrated by the latest revelations of the GDP. To obtain a good result, he should imagine a more equitable distribution of wealth, with strong policies that spur a diverse composition of purchasing powers. However, Abe obviously can’t and doesn’t want to do this.
