The End of the Abe Administration—The End of Abenomics? Books on Past and Present in the Japanese Political Economy
Jason Morgan ([email protected]) is associate professor at Reitaku University in Kashiwa, Japan.
PRIME MINISTER ABE SHINZŌ’S RESIGNATION AND THE END OF AN ERA IN JAPAN
On August 28, 2020, Japanese prime minister Abe Shinzō entered a Tokyo press conference and began speaking. Speculation had been building for weeks that Prime Minister Abe would step down. The rumor was that the health condition, ulcerative colitis, which had cut short his first stint as prime minister in 2007 had worsened again. This turned out to be true. Prime Minister Abe announced at the August press conference that he would be resigning upon the election of his successor, thus bringing to a close one of the most historically and economically momentous administrations in postwar Japanese history.
Prime Minister Abe navigated, very capably in my view, a slew of challenges. There were history-interpretation standoffs with South Korea, for one thing. These were concluded, on paper at least, with the December, 2015 agreement between Abe and now-imprisoned former South Korean president Park Geun-hye, in which the Korean side promised to stop using the comfort women issue as a political weapon. Abe also had to find some way to work with a maverick American president, who upon entering office in early 2017 immediately withdrew from the Trans-Pacific Partnership on which Abe had expended enormous amounts of political capital, and who has continued to threaten to draw down the base system forming the bedrock of the Japan-US alliance.
Abe chose to prioritize security and stability in more than just his carefully cultivated partnerships with Park Geun-hye and Donald Trump, for example by formulating a “quad” approach to containing communist China by strengthening ties with the U.S., India, and Australia. Aggression against East and Southeast Asian states by the People’s Liberation Army Navy (PLAN) continues, to be sure. But Abe skillfully maximized his constrained capabilities despite the postwar “surrender constitution” of Japan, which technically forbids Japan from possessing any kind of military force. Frequent missile launches in Japan’s direction by North Korean dictator Kim Jong-un helped convince the Japanese people—laboring under what Japanese conservatives call “heiwa-boke” (or the false sense of security inculcated by the postwar reliance on the United States to deal with military matters)—that the time had come to re-acquire the ability to strike back, perhaps even preemptively, against a foreign aggressor. The removal of the hamstring on Japanese military action by revising the constitution and making Japan a fully sovereign nation again was, to my mind, the real priority of Abe’s two terms in office.
In September of 2020, Suga Yoshihide, Abe’s long-time deputy and the Chief Cabinet Secretary (kanbō chōkan) tasked with explaining the daily vicissitudes of government to an often-querulous press corps, garnered the votes to win the leadership position of the Liberal Democratic Party (LDP) and therefore, by default, the prime ministership of Japan (the LDP being the traditional ruling party during the postwar). It seemed as though Abe’s legacy was secure. Whatever remains undone by the Abe administration, such as constitutional revision and securing the release of Japanese civilians kidnapped by North Korea and held as hostage by the Kim regime to this day, is sure to be kept at the top of the to-do list by the incoming Suga team.
There is one legacy, however, which appears on much shakier ground than it did just a couple of years ago. That legacy, many would argue, is the keystone of Abe’s political career. It was his platform for re-election to the prime minister slot for the first time fourteen years ago, and its reputation has swayed the poll numbers for Abe and the LDP like virtually nothing else. The signature element of the Abe years is, without doubt, Abenomics. Will Abenomics survive Suga? Or, to put it differently, will Japan survive Abenomics?
THE CORONAVIRUS INTERRUPTION
This question may sound counter-intuitive, even melodramatic, given the Wuhan pandemic which has cut deep wounds into the Japanese economy. Surely, many will argue, Japan’s biggest worry right now is not Abenomics, but the fallout from COVID-19. There is very good reason to think this way. Some of the numbers that I have seen these past months have caused me to go goggle-eyed over the statistics pages. Nissan Group reported a 29.6 percent drop in sales in the first quarter of 2020 over the same quarter of 2019. Japan Airlines (JAL) announced at the end of October, 2020, that it could lose as much as 270 billion yen for the year. In August of 2020, Japan’s annualized GDP was reported to be a staggering negative 27.8 percent. In late October of 2020, the Bank of Japan’s (BoJ) balance sheet was a record 690.36 trillion yen, more than 6.5 trillion USD at current exchange rates. This is all largely the result of externalities far beyond the control of Japanese policymakers.
It is worth pausing here to note, as an important aside, that some of the best writing on the coronavirus crisis has been in Japanese. Prolific author and former weekly newsmagazine editor Kadota Ryūshō’s Ekibyō (“epidemic” or “pestilence”) has emerged as the standard for long-form corona journalism. Produced with astonishing alacrity, Ekibyō is a blow-by-blow account of how the virus, and the (fake) news about the virus, spread out of China and then blanketed the world. Kadota’s book takes in Chinese and Japanese politics and media reports, regional and world politics, and private-sector responses in an all-inclusive, fact-heavy, yet highly readable account, almost like a Michael Crichton write-up of a fast-moving event with a myriad of angles. Former New York Times journalist Alex Berenson has garnered notoriety in the U.S. as a public-facing writer chronicling the pandemic in the broadsheet version of the longue duree, but Kadota quite frankly outranks Berenson by several orders of journalistic magnitude. It is a pity that Ekibyō is not available in English, as the bestseller would provide English-speaking readers with tremendous insight into how politicians and the media handled the crisis and how outside political actors and Japanese scientists and public health officials tried to move the virus-awareness needle in different directions for a variety of different reasons. The portrait that emerges of a political class caught flatfooted and scrambling to formulate a response to a blindsiding, black swan event has many parallels with what transpired in Europe and the United States.
In the swirling confusion of the Corona Year, there has been a little economic good news in Japan. Teleworking is catching on like wildfire, for example, and Prime Minister Suga is concomitantly pushing ahead with digitalization, an area in which Japan has lagged behind South Korea and the People’s Republic of China. The Minister of Digital Transformation, Hirai Takuya, is charged with jump-starting Japan’s digital renaissance, and there is a strong tailwind in the push toward online commerce and telecommuting during the COVID-19 pandemic. But the reality is that telework often means lost revenue elsewhere. Many of the train lines which shuttle the Tokyo workforce between the capital and the suburbs every day have stopped running trains into the wee hours, a cut in services which translates into a further hit to profits for many Tokyo-area businesses. Very few office workers are enjoying a nightcap at an izakaya anymore, and Tokyo governor Koike Yuriko’s attempts to find a balance between keeping shops open and keeping the virus at bay have cast a pall over business overall. Many restaurants have closed, and theaters and other congregation-reliant industries are struggling to survive.
Despite, or because of, all of this economic carnage, Abenomics appears alive and well. The Bank of Japan is printing money like Bazooka wrappers. “Stimulus” is sloshing around everywhere. I personally got a “stimulus” deposit from the central government earlier this year—great news, until I get the tax bill next March. This can’t go on forever, and so it won’t.
JAPAN’S POLITICAL ECONOMY PAST AND PRESENT
While the economic pain is visible to everyone and is certainly a political wrangling point, unlike in the United States there are very few libertarians in Japan who are raising their voices about the escalation of MMT measures to astronomical levels. In fact, many Japanese conservatives are calling the loudest for even more government intervention. Tamura Hideo, for example, a special reporter with the capitalism-friendly Sankei Shimbun newspaper and a former editor at the staid Nihon Keizai Shimbun who writes often for the conservative press, and Tanaka Hidetomi, a professor at Jobu University in Gunma who also writes on the political economy for right-of-center publications, have both encouraged the Bank of Japan to print even more money to bring Japan out of the COVID-19 crisis. In the October, 2020 edition of Seiron, a serious economics and politics journal with a wide readership in Japan, Prof. Tanaka even argued—provocatively in this plague year—that “fiscal austerity is itself the biggest disaster” (zaisei kinshukushugi koso saidai no saigai). (Seiron, 133–40) Low-tax free-marketers like my friend and colleague, historian and policy analyst Ezaki Michio, have also joined the fray, arguing that the best thing the Japanese government could do to improve the economic outlook would be to cut taxes. But Ezaki’s familiarity with American history and economics may be influencing his anti-interventionist views in a way that escapes nearly every other pundit or policymaker, for Ezaki remains a very lonely voice in a crowd of interventionists. Ironically, the party which has adopted the most stringent anti-tax-increase platform in recent years is the Japanese Communist Party, which is tacking to the hard right of the “conservative” establishment on this core fiscal issue.
Sniping over the tax rate notwithstanding, and granted that the Wuhan pandemic has badly damaged the Japanese economy, the fact is that government intervention did not start with the outbreak of the latest Chinese bug. Conservatives in Japan who argue for government intervention and economic relief from the political side are drawing from a deep political-economic tradition here. As a grad-school classic by former University of Chicago historian Tetsuo Najita, Ordinary Economies in Japan: A Historical Perspective, 1750–1950 (2009), explains, the Japanese economy is in many ways conceptually underlain by a notion of economics as mutual aid. The kō, or pre-modern communal societies designed to mitigate risk by promising to help any community member in need in a kind of localized insurance plan, are still exerting influence today. Bootstrap success story and hard-work champion Ninomiya Sontoku (1787–1856) espoused this ethos in an attempt to imbue the rapidly-developing Edo economy with a humane, ethical tenor. While the Japanese economy is, of course, infinitely more complex now than it was in the nineteenth century, and while modern Tokyoites are probably much closer in economic outlook and practice to consumers in other global big cities than to traditional communities in rural Japan, the conservative, and, indeed, default view of Japanese economic thinkers continues to be rooted in this mutual-aid ideal. The very word for “economics” in Japanese, keizai, is a contraction of keisai saimin, which means to govern a polity and rescue, or provide relief for, the people living there. Etymology is not destiny, but it is often at least a telling point of departure. Japanese moral philosopher Hiroike Chikurō’s concept of dōkei ittai, or the notion that economics and moral action are ultimately the same thing, exemplifies the tradition of economics as doing good. When Japanese conservatives speak about economics, it is likely that they are going to appeal to this kind of economic communalism, which is, after all, the traditional approach to how politics and economics ought to interact.
Because there is such a different set of assumptions in Japan about what economics is, it is imperative that those outside of Japan who want to understand the Japanese political economy go deeper than the occasional headlines about Abenomics. Indeed, non-specialists inside and outside of Japan are often surprised to find that there has been such a rich tradition here of economic thought. While there are excellent studies of Japan’s political-economic past—one hefty but outstanding
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