The
fundamental problem with Abenomics is that Mr. Abe does not have a coherent
perspective on economic reform to work from, whether from personal expertise
(he is not a trained economist and has minimal business experience), conviction
(the economy is far from his first love), or through an economic czar to
delegate the task to (there is no Heizo Takenaka to Junichiro Koizumi, no Zhu
Rongji to Jiang Zemin). This was not been a problem for releasing the first QE
arrow, essentially following in the footsteps of US and European monetary
orthodoxy. The only meaningful opposition came from the Keidanren leadership,
reflecting the elderly businessmen’s natural suspicion of easy money. But the
businesses themselves? Probably not as reluctant to embrace what should be good
for their bottom line. Besides, Keidanren had progressively lost its political
relevance since it gave up the role of super-bundler for financing the LDP. The
second, fiscal arrow, meanwhile, was essentially an extension of what the LDP
and politicians in general are inclined to do and have been doing through the
ages: spend public money.
The
third arrow, which is (was?) structural reform, is a different animal. Reform
requires whacking away at vested interests, but when you’ve been in charge for
the better part of 60 years of a highly homogeneous society like the LDP, most
of those vested interests will also be your bedrock constituencies. A difficult
task indeed, and made more difficult by the lack of leadership. The uneasy
coalition-secretariat of ministry bureaucrats do appear to have a core of
consisting largely of the usually reform-minded METI, but without political
vision and leadership, there is no way to take measures that run the risk of
the dissatisfaction of vested interests and their ministerial representatives
boiling over.
