Sunday, April 24, 2016

Abenomics and the Limpness of the Third Arrow

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.

Here, the one notable exception to Abe’s unwillingness to seriously challenge powerful vested interests is instructive: his decisions around the Trans-Pacific Partnership negotiations. I believe that here, his main concern was the perceived need to reinforce the Japan-US alliance and cement the US pivot/rebalancing towards Asia—basically keeping the US onside. Barring such non-economic concerns, only incremental, largely tactical advances as far as the third arrow/structural reform is concerned are likely to emerge.

Monday, January 25, 2016

Political Dying Wishes? Not in Japan or (Mostly) in America

A close friend of mine who read “The dead people of America really don’t want Hillary Clinton to be president” and asked if we “Japanese make such requests in obituaries?  I doubt Europeans do.  I guess one other example of American exceptionalism.” I responded:

Few Americans make such death wishes; these are examples of "exceptional" Americans, not American "exceptionalism." More generally, they are examples of the tradition of the dying wish—last meal of the condemned, "No grass shall grow on the grave of this innocent man..." "Bury me where this arrow falls" etc. etc.—that has a long Anglo-Saxon and I suspect European tradition.

We do not have that tradition in Japan. The increasingly rare newspaper obituaries are almost always prosaic, formulaic even, affairs. We did have the tradition of the poem as one leaves this world (辞世の句) in the 5-7-5/7-7 tanka form (with the 5-7-5 haiku form becoming acceptable far more recently). If people of any substance (or people close to them) were not skilled enough to compose one, they could pay for-hire poets to do it for them. In fact, some wealthy nobles would hire them full time, much like illiterate European nobles hired scribes to do their writing for them, at a time when composing such poetry for any and all occasions public or private was de rigeur.

Those last poems, though, were typically meant to be words of wisdom, an intangible epitaph that exemplified the life of the dying, usually not a wish. The most famous by far are the words of the near-mythical robber Ishikawa Goemon, who is reputed to have said as he was about to be boiled in oil (yes, we did that too around the rough and tumble warlord years), "Ishikawa and the sands of the shores may come to an end, but the seeds of robbers will not (my translation)."

(Edited for clarity.)

Footnote: Apparently, it was a Trump tweet that touched off all the commotion. Will the US media never tire of him?