Abe’s economic plan unimpressive, as expected

June 20, 2007
By Ken Worsley

The Bloomberg headline says enough, really: Abe Releases Japan Economic Plan Amid Criticism, Lower Ratings.

After the plan was approved by the Cabinet, Abe told reporters, “We are able to show in the report that we will seriously carry out reforms.”

Was Abe still talking about the economy? He’s talked quite a bit about his pet projects, Constitutional reform and education reform, but precious little about the economy since coming to office last September. Quoted in Bloomberg, Jeff Kingston, a political science professor at Temple University in Tokyo, said, “It’s more public relations than substance. I’d be skeptical that these proposals will have a big impact.”

Abe’s economic plan involves increasing the productivity of Japanese workers by 50% in the next five years. Think about that: 50% gains in productivity in five years. Japan’s labor productivity has been unchanged, at the bottom of the OECD for 15 years, and Abe wants to increase it by 50% in the next five years. How? How???

But foreigners are always so critical. What do the Japanese experts have to say? Here’s one:

Koizumi’s former economy czar, Heizo Takenaka, called this year’s initiatives “slogans,” not policies. In an interview yesterday, he said Abe’s administration should be more willing to take unpopular positions to restructure the government.

Ouch! (By the way, if Takenaka’s saying that, I’m willing to bet that he’s willing to bet that Abe’s time in office is drawing to a close.)

The day before the proposal was to be released, the Wall Street Journal was already all over it:

When Shinzo Abe became prime minister in September, voters and investors hoped he would continue Japan’s moves to cut public spending, boost economic growth and shore up the pension system.

So far, they aren’t impressed. Tomorrow’s proposal could add to their discontent, when Mr. Abe’s cabinet is expected to approve its annual blueprint for economic policy. Early drafts released by the prime minister’s Council for Economic and Fiscal Policy already have triggered criticism.

Economists say Mr. Abe isn’t pursuing with sufficient vigor the small-government policies of his predecessor, Junichiro Koizumi, or making sufficient moves to deal with a declining, aging population. Richard Jerram, an economist at Macquarie Securities, describes Mr. Abe’s economic policy as “notable by its absence.”

Did the WSJ talk to any Japanese people? Takenaka’s quoted in the article, but the best quote comes from The Guy No One Has Ever Heard Of, Mr Susumu Sato:

Mr. Abe’s policy focus is “completely away from people’s life,” says Susumu Sato, 66 years old, a pensioner who used to work for a bank. “There are many people who are living a tough life, but instead of facing those people, he is talking about the constitution and other things.”

Other things! Yes, Mr Sato - Abe is talking about other things. For example, after the Cabinet meeting that approved his plan, Abe told reporters, “The financial and capital markets are the vital underpinnings of all our industries and economy…It is important that we try and develop Japan’s markets to a level on a par with international financial centers such as New York and London.”

How? How????

Filed Under Cabinet Office, Economics