Abenomics

choi

(1) Paul Krugman, Japan the Model; Our last, best hope for recovery?  New York Times, May 24, 2013 (column).
http://www.nytimes.com/2013/05/2 ... apan-the-model.html

Quote:

"Then Japan fell into a seemingly endless slump, and most of the world lost interest. The main exceptions were a relative handful of economists, a group that happened to include Ben Bernanke, now the chairman of the Federal Reserve, and yours truly. These Japan-obsessed economists viewed the island nation’s economic troubles, not as a demonstration of Japanese incompetence, but as an omen for all of us. If one big, wealthy, politically stable country could stumble so badly, they wondered, couldn’t much the same thing happen to other such countries?

"Still, at least we’re [America's] growing. Europe’s economy is back in recession, and it has actually grown a bit less over the past six years than it did between 1929 and 1935; meanwhile, it keeps hitting new highs for unemployment. Yet there is no hint of a major change in policy [in Europe].

"So, how is Abenomics working? The safe answer is that it’s too soon to tell. But the early signs are good

My comment: After the financial crisis, Dr Krugman has advocated flooded US with easy money (but nobody listens to him). Little wonder he has supported Abenomics.

choi

(2) Japan and Abenomics | Once More With Feeling. The Shinzo Abe shaking up Japan’s economy seems a different man from the one whose previous premiership was marked by nationalistic posturing. He isn’t. Economist, May 18, 2013.
http://www.economist.com/news/br ... -one-whose-previous

Quote:

(a) "His [Shinzo ABE's] measures—doubling the monetary base through an unprecedented programme of quantitative easing—exceeded everyone’s expectations, and their daring was played up by Mr Abe’s advisers. They are convinced, and have convinced their boss, that getting Japan out of its deflationary funk is less about policy details than perception—in particular, about shaking people out of a deflationary mindset. The approach, one says, is a kind of 'shock and awe.'

(b) "Nominal GDP determines the level of tax revenues—and, astonishingly, persistent deflation has left it where it was 1991 (see chart 2). This has depressed tax revenues, a chief reason why the gross national debt has widened to about 240% of GDP. * * * In the budget for the year that ended in March, and across central and local governments, total government spending on pensions, health care, nursing care and family benefits was ¥124.5 trillion, or 26.1% of GDP. But government revenue amounted to only ¥59.2 trillion, or 12.5% of GDP. Borrowing largely made up the difference.

(c) "So Japan desperately needs a sustained increase in the long-run rate of economic growth. Hence the third of Mr Abe’s arrows: sweeping reforms designed to invigorate the supply side of the economy. Mr Abe talks of ending the protection enjoyed by Japan’s farmers, doctors and pharmaceutical companies; breaking open the labour market’s rigidities; improving education; cutting through boundless regulation; opening utilities up to competition; encouraging innovation and spurring business investment.

(d) "His staunchest supporters, including his chief cabinet secretary, Yoshihide Suga, told him that committing to the TPP beforehand would endanger the LDP’s chances in July’s elections for the Diet’s upper house. The farm lobby is, after all, an important plank of the party’s support. Yet the prime minister insisted on doing it when he went to Washington in February. Delay, he thought, would show a want of leadership. He seems to have been right. Mr Suga now calls TPP 'the biggest pillar of reform.' He is the chief defender of Mr Abe’s decision, and no wonder. Mr Abe’s poll ratings continue to climb; he enjoys support of over 70%, unparalleled for a recent leader. The LDP looks set for a landslide in the upper house to match the one it achieved in the lower house in December.

My comment:
(a) The title "Once more with feeling" came from

Once more with feeling!
http://en.wikipedia.org/wiki/Once_More,_with_Feeling!
(a 1960 British comedy film; adapted from a Broadway play which opened in 1958)
(b) The section heading "Well begun is half not done" is a word play on "Well begun is half done"--by Aristotle.
(c) There is no need to read the article, if you do not want to.

choi

In posting (2), the Economist article carries Chart 2: the nominal GDP since 1987 shows Japan has barely increased, US has tripled, and China has rocketed, astonishingly (if it is to be believed), OUT of the chart (presently 34 times the 1987 level). By "nominal GDP," the figure includes inflation (which is higher in China than in the other two--sometimes much higher, eg, in 1989). Probably in local currency (as opposed to conversion to US dollar), because Japanese Yen appreciated a lot in late 1980s and early 1990s, which does not appear in the chart.