Speaker: Takuji Oku founder Japan Macro Advisors https://www.japanmacroadvisors.com/
Where: Andaz Hotel, Toranomon Hills
When: October 20 12-1.45pm
Title: Will Abenomics help or hinder Abe in the election?
Cost: 7,000 yen. Kindly bring the correct change. A high-quality lunch box, coffee, water and dessert will be provided.
This salon, to be held 2 days before the general election, will examine the state of Japan’s political economy.
Our speaker will assess Abenomics – but not in terms of the “tools” employed, namely the famous “three arrows” which covered monetary easing, fiscal stimulus and supply side reforms. Rather, he will focus on the “outcomes” of these 3 arrows.
As everybody knows, putting money in voters’ pockets is usually the best way of staying in power.
Thus, Mr Okubo will assess whether Japan has emerged from deflation (and its crippling effect on Japan 250% debt-to-GDP ratio as well as corporate balance sheets), Abe’s record on employment, and crucially, his efforts to hike wages and household income.
Indeed, one of the biggest criticisms of Abenomics was that loose monetary policy benefitted asset holders; fiscal policy benefitted those company with powerful voices in the government; and structural reform initiatives were insincere. Above all, observers complained that ordinary Japanese workers would suffer under Abenomics (lower wages if inflation rose and more expensive houses). This was not just unfair, it prevented the investment of trillions in excess corporate cash.
The key to Abenomics has to be higher wages. The good news for Abe is that slowly, slowly these are coming about. Especially casual workers are seeing their hourly wages go up. Full time workers are not yet seeing much of a jump in wages, but employment security has improved. These are the unsurprising benefits of the 3 million new jobs added to the Japanese economy since Abe came to power, according to Mr Okubo. Consequently, the labour market is tight and a rising number of part-time workers are turning into full-time workers with proper benefits and higher pay.
All this is excellent news for Prime Minister Abe, who understands higher household incomes could also be the solution to Japan’s declining demographics. In a country with a smaller government budget for health and education than almost any other developed nation, higher incomes would permit larger families.
Does the opposition Party of Hope offer better? In one crucial respect, it does, namely the deferment of the dreaded consumption tax which is meant to go up (yet again) in October 2019. Previous rises have slammed the brakes on economic expansion. Perhaps on this alone, Koike might win support. However, in other ways she is incoherent: advocating a universal income policy (expensive) while complaining about Abe’s fiscal and monetary looseness.
Mr Okubo will also look at Abe’s dismal record on “structural reform”. Abe has invested little political capital in Arrow 3. Will the Japanese economy pay the price, or was Arrow 3 unnecessary for an economic boom?