Was it really only two years ago that “Abenomics” became a new staple of the Japanese vocabulary? Actually a bit less – the electoral triumph that catapulted Shinzo Abe into his second prime ministership occurred in December 2012.
“Abenomics” seemed to signal a reinvention of the “gray science” of economics and, simultaneously, a reinvention of Japan, so long stagnant but now at last, under a vigorous new leader with new, trailblazing ideas, about to roar back to its rightful place in the world.
The media played along as long as it could, but by now the bloom is clearly off the rose, declares Friday (Nov 7) in chorus with most of the other weeklies.
There were critics at the outset who said Abe’s animated salesmanship was too simple to be true, but the suddenly cheap yen did seem to fuel a recovery. Prices rose, corporations waxed enthusiastic, stocks soared. Had Japan at last shaken off its doldrums?
No, say Friday, it had not. Beneath the bubbly surface the less glamorous elements of Japan Inc – small and medium-size businesses, ordinary consumers – were feeling a tightening pinch that the optimists chose to ignore or downplay. That can’t continue indefinitely. Abenomics’ honeymoon lasted a long time but seems finally over.
Friday cites some figures. In Tochigi Prefecture, north of Tokyo, incomes declined 7% over the past year. Nationwide, according to the Teikoku Data Bank, 35 importing firms went bankrupt in August, as did 52 more in September.
“The idea that the cheap yen would solve all problems was an illusion,” the magazine hears from financial journalist Tomoyuki Isoyama.
It solved some problems for some sectors, if only temporarily. Exporters were Abenomics’ biggest boosters – the low yen made them more globally competitive, though not as dramatically as had been hoped, since many of them had already transferred their manufacturing operations overseas to escape the effect of the pre-Abenomics high yen.
Smaller businesses, meanwhile, suffered from the rising costs of imported raw materials – fuel in particular – which, being small and therefore locked in fierce competition, they could not simply pass on to their customers. The rising bankruptcy figures are a reflection of that harsh reality.
“A true growth strategy,” says Shinshu University economist Akio Makabe, “would have involved structural reforms beneficial not only to the biggest corporations but also to smaller businesses and the outlying regions. Ideas currently on the table – casinos, special economic zones – do not fit the bill.”
As Abenomics falters, problems fester. Everybody know what they are – the rapidly aging population with its attendant rising social welfare costs, and a seemingly intractable public debt, the impetus behind last April’s unpopular consumption tax increase and the driving force behind talk of another one next October. Local elections loom next spring. Friday fears a plethora of golden promises – regional subsidies, special tax breaks, “whatever it takes to win popularity” – that will turn out either meaningless or fiscally destructive.
Such, Friday seems to be saying bleakly, is the state of Japanese politics. In the absence of an electable opposition, Abe and his Liberal Democratic Party seem unchallengeable for the foreseeable future, and in the absence of an alternative to Abenomics, that future looks uncertain indeed.© Japan Today