It is bureaucrats who are holding back a powerful and dynamic economy – as elsewhere in the world, argues Alex Kinmont.
Many people complain the Japanese economy is woefully lacking in dynamism. Education, entrepreneurialism, productivity, FDI, deflation, debt, demographics are all frequently referred to as causes of Japan’s inevitable decline.
However, the closer one comes to Japan, the more positive visitors tend to be about it. Indeed, many visitors get too enthusiastic about the focus on quality and process that clearly prevails.
Here to reconcile these two ways of thinking is Alexander Kinmont, the CEO of Milestone Asset Management. Alex is a shrewd critic of the fatalistic idea that Japan has weakness it will never be able to shake off. He would rather emphasise the dominant role played by the Ministry of Finance and the Bank of Japan in forming policy. Indeed, he blames the Ministry of Finance and the central bank for their often effective efforts to counter the PM Abe’s reflationary plans – just as they have blocked reflationary plans for the past 30 years. Despite the dramatic announcement of negative interest rates (to stimulate spending), for example, the BOJ made sure they that they would only affect a very small part of the financial system and thus not generate real change.
Alex thus argues there is nothing fundamentally wrong with the Japanese economy. The problem lies in the bureaucracy. Indeed, many of the ‘problems’ of the Japanese economy, such as demographics, are excuses cited purely to defend the status quo, he estimates.
Alex’s analysis reflects his concerns about central banks and policy in all developed countries. He notes that what was originally an anti-inflationary stance has evolved into a ruthless focus on maintaining bond prices. This has protected the financial sector, but when twinned with austerity, has been punitive for ordinary workers.
He estimates that the Brexit and Trump phenomenon were an attempt to break these restrictive conditions. Ordinary people want to escape policies engineered overwhelmingly for the benefit of the financial sector and big business. Yet even with these huge bail-outs and financial policies to maintain bond prices at their highest level in human history, European banks are in danger – were bond prices to fall, the capital base of many European banks could be revealed as dangerously fragile, making it unlikely these policies will reverse soon.
The EU ‘s struggles on austerity versus growth thus reflect almost exactly the debate Japan has been going through in recent decades.
Anybody interested in hearing some independent and iconoclastic comments about where orthodox economic thinking is leading us, should attend this event.
Date: November 29th 2016
Time: 7:00 – 9:00pm
Place: Robert Walters Japan, Room 7&8 on the 14F
Shibuya Minami Tokyu Bldg. 14F, 3-12-18 Shibuya, Shibuya-ku Tokyo 150-0002
Map: Google Map Link
Price: 4,000 non-DN member 3,000 DN Members
