Abenomics All Set

The Prime Minister, Shinzo Abe, released all arrows of Abenomics, the policy mix for getting rid of deflated economy. The first and the second arrows already passed their target, without any permanent effect on Japanese economy. It is the third arrow, or growth strategy, that will prove real worth of Abenomics. The strategy, however, proved to be insufficient, because the policies could not be breaking the great wall of established interests, being afraid of opposition in the national election next month. Markets showed disappointment.

The Cabinet Office uploaded on their homepage the key points of the Basic Policies for Economic and Fiscal Management and Reform, which was decided by the cabinet on Friday. (http://www5.cao.go.jp/keizai1/2013/20130614item_02.pdf) It analyzes that twenty-year stagnation was caused by ‘delay in actions to adapt to structural changes, regretting negative interaction between macro-economy and micro-economic aspects leading to further deterioration.” It also noticed high level of public debt, which amounted to about ¥1 quadrillion.

So, what should be the remedy of Japan economy? The strategy was aimed at “an economy and society that guarantees free and fair competition and open economic environments.” In other words, the key was how Japan would be successful in deregulation in its economy. But the strategy was insufficient in terms of deregulation. While it allowed the private companies renting farming land, they still cannot buy it. Mixed medical treatment, which would be the mixture of treatments with public health care and those without it, was not effectively allowed.

Reducing national debt was almost ignored. Spendings for pension system and medical treatment was not considered to be cut in the strategy. Although the administration led by the Democratic Party of Japan stressed the importance of social security reform, current LDP administration is reluctant to discuss the future of social security.

That negative attitude to put burdens on people’s lives stems from the fear of defeat in the election. The Prime Minister believes that if he asks people reducing payment from pension system or raising medical fee before election, voters will turn their back to LDP. What is he doing by putting aside necessary measures for economic reform? That is to get simple majority in both Houses of the Diet, which is necessary for promoting Abe’s personal agenda, including amendment of the Constitution. One thing is clear now. His right-leaning policies have nothing to do with enhancing people’s lives in Japan.