
Japan's Abe is the world's best leader right now? - MaysonL
http://www.bloombergview.com/articles/2014-06-11/japan-s-abe-is-the-world-s-best-leader
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ekianjo
> . The result: Japan has escaped deflation. The stock market is up, growth is
> way up and even wages are finally starting to rise.

where?? Wages have not moved up at all. But hey, my shopping list's total
price has gone up by 30% in the past 6 months, and Uniqlo has just announced
that for the first time in like 20 years they are going to raise their prices
in Japan, because hey, a weak Japanese yen makes commodities more expensive
and they just can't continue like that anymore.

But yeah, Abe's the _Best Ever_!

What a joke of an article.

~~~
ZirconCode
Where do you shop? My prices have gone up by about 5%. Groceries have mainly
remained the same for me. The consumption tax has also been raised, do not
forget. I believe Uniqlo planning to raise prices does not reflect a failed
fight against inflation.

~~~
ekianjo
I've since increases since the sales tax went active that have nothing to do
with a 3% increase, more like a 10-15 % increase in prices. Milk has gone up
from 170 JPY where I shopped to 200 JPY in a matter of weeks. And that's just
one item, I can give you dozens of examples like that. Anyone who's claiming
there's no inflation is clearly blind or refusing to see the truth out there.
Most of the time, these people happen to the politicians in power. Strange
coincidence.

~~~
mattm
A lot of businesses used the consumption tax increase to raise prices. I
attended an expo for English language school owners last year and most said
they were planning to raise their prices and hope no one would notice.

As I drove by a barber shop on April 1st, they were changing their sign from
2500 yen for a haircut to 2900. A tad more than 3%.

The clinic my wife works at raised one of their monthly services from 7000 yen
per month to 12000 yen!

~~~
glandium
> A lot of businesses used the consumption tax increase to raise prices.

That. And the government encouraged it. In 2004, a law made it obligatory to
display prices with consumption tax included (税込み). That obligation was lifted
6 months ago. Guess what happened as a result. Displayed prices didn't change.
Products at 1000 yens tax included (税込み) are now 1000 yens without tax (税抜き).
1080 yens out of consumer pockets, instead of 1029. 8% increase instead of
~3%. The flip side is that this makes for better margins for businesses.

Even businesses that did absorb the tax increase now claim to do a bigger
favor than they are actually doing (that is, their 1000 yens service is still
1000 yens, but they advertize it's 1000 instead of 1080)

I haven't seen much of the kind of prices increases you describe, though.

~~~
mattm
Ah, I didn't know about that. When I came to Japan it seemed every price was
always tax included. I have noticed recently that some places have tax being
extra. Now I see why.

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JacobAldridge
I've been interested to see how Abenomics has played out - it certainly
started with a bold vision, but most of what I've read (and that's not a lot,
I'm no expert) seems to have indicated that it hasn't really worked.

So this article excited me - I love to see a grand vision being implemented
and the goals coming together. A quick look at the comments, however,
(including ekianjo's immediate response here) seems to indicate that rather
than demonstrating Abenomics success, all this article does is demonstrate
that the author doesn't have a grasp on the facts. Oh well.

~~~
ChrisGaudreau
> but most of what I've read (and that's not a lot, I'm no expert) seems to
> have indicated that it hasn't really worked.

Well, the primary goal was reflation, so by that measure, it's been a
resounding success so far. Growth, exports, and consumer spending have been
boosted a lot, too. I'm a little worried that the sales tax increase will
reverse this trend, but we will see.

~~~
ekianjo
You don't measure success in economics over a single year. Already companies
are starting to revise their forecasts since they are starting to face
expensive commodity prices (coming from the weaker yen) and the whole domestic
economy is hurting because of the rising Petrol price.

Yeah, a _resounding success_ by all measures!

Let's reconnect in 5 years and see such policies transformed Japan for the
best.

~~~
ChrisGaudreau
Re-read what I said:

Well, the primary goal was reflation, so by that measure, it's been a
resounding success so far.

Notice "by that measure" and "so far". Please do not distort my words.

But yes, you're right; it could end as an unmitigated disaster economically.
We just don't know yet.

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mattm
This article sounds like a paid advertisement for Abe.

Let's see, earlier this year, he was campaigning for companies to use their
piles of cash to increase wages. What does his government do? He cuts salaries
for teachers.

Also, living in Japan as a foreigner, his foreign policy stances worry me. He
is antagonistic. He was the first PM to visit the infamous Yasukuni shrine in
6 years provoking China and Korea. He also is currently trying to reopen the
constitution so that Japan can support it's own army which will further
destabilize relationships in the region.

Sure, he's cutting the corporate tax rate but he raised the consumption tax 3%
a couple months ago and will go up another 2% next year. Prices are already
very high in Japan and the government already receives a staggering amount of
revenue. There are so many taxes and licenses and import controls here it's
unbelievable.

The linked article said base pay increased 0.1% from a year earlier. Hardly an
indicator that his policies are working. Plus factoring in the consumption tax
increase, it means people have less disposable income.

My wife works as a homecare nurse and she has countless stories of families
that are struggling to get by. A large percentage of the population is elderly
and live on very fixed budgets. Abe wants to increase inflation but has no
policies on addressing how to support these people during the transition. 25%
of the country is already over 65 and this will keep increasing. Recently
coverage for prescription drugs also went down meaning seniors need to pay
more for their medicine.

~~~
hkmurakami
Furthermore, iirc there have been longstanding talks to delay the "retirement
age" (and thus the start of state pension payments) form 65 to 68.

For as long as I can remember, said state pension has been under water, and
current 20 year olds are expected to be paid something like $200,000 less than
what they put into the system.

The country has some good things going, but it is also littered with numerous
time bombs.

~~~
mattm
This is a good point. The pension system, as it stands now, is just basically
another tax.

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crdoconnor
>In other words, unlike everyone else in the world, Abe listened to Milton
Friedman, and the results are looking good.

This is absolute horseshit. Japan has been following Friedman's proscriptions
(QE forever) for the last 20 years! Look where it got them!

Abe has actually continued in these footsteps with one fairly minor difference
- he's mixed in a 25% Keynesian spending kick with the QE. This has propelled
a bit of inflation and wage growth, along with the business-as-usual propping
up asset prices.

Now this author is trying to claim that this was thanks to cutting corporate
taxes and QE. These are the policies that Japan DIDN'T change with Abe.
Furthermore, these are the policies that are causing the Japanification of the
West's economy.

Abe's plan would have been a major success (instead of a dribble of success)
if he just cut the Milton Friedman inspired bullshit QE entirely and printed
money and spent it on employing people until inflation and wage growth were up
to normal levels.

>Boy, was I wrong. I was wrong, wrong, wrong.

He's still wrong, wrong, wrong.

~~~
ChrisGaudreau
> Japan has been following Friedman's proscriptions (QE forever) for the last
> 20 years!

I would say that Japan has been following Friedman's prescriptions _until
now_. The major difference between monetary policy before Abe and after Abe is
that Abe has made it clear that he won't jack up interest rates as soon as
there is life in the economy. Past governments made it clear they would take
away the punch bowl as soon as there was a hint of growth.

Basically, Abe has convincingly promised to be irresponsible. And so far, it
has worked to beat deflation. Many other indicators are looking better, too,
but it'll take some time before we know if it really works. (Hyperinflation?
Wages? and so on)

~~~
crdoconnor
Abe committed to continue doing what Japan has been doing for the last 20
years anyhow. That is not a change in monetary policy. That is not a
commitment to being irresponsible. That is just business as usual. No
inflation was caused by that.

The _only_ difference is that he mixed in a BIT of stimulus spending to the
mix.

That actually had a real inflationary effect on the economy, although the
stimulus wasn't that big so the effect wasn't that big either.

------
ekianjo
> Japan’s top social problem is the role of women.

Says who ? Of course there are women who are aspiring for a career and this
may be a problem for them, but then, most women in Japan are actually fine to
leave work and go on with a life at home taking care of the children. I've
seen several colleagues of mine who graduated from Tokyo University and had
good jobs (with responsibilities similar to men's) and who left their career
because they wanted to focus on kids instead, and had no regret doing so.

~~~
hyperion2010
About four years ago I was waiting for a plane in London and struck up a
conversation with a former American Nissan exec who had spent a long time
working at HQ in Japan.

He told me the story of countless meetings in which the senior female exec
(there were very few) was expected to get up and leave the meeting for a
period of time to retrieve and serve tea. He personally was disgusted and said
that that was only a single example. IIRC he said in response to my question
about why Japan had struggled to get out of their depression: "Employing only
half their labor force might have something to do with it."

~~~
hkmurakami
Ugh I really hope this anecdote is from the early nineties at the latest but I
have serious doubts...

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Pitarou
Abe is certainly making a difference. But a bastion of liberal democracy?
Hardly. For instance, look at the man he parachuted in as the head of NHK:

[http://www.bbc.com/news/world-asia-25901572](http://www.bbc.com/news/world-
asia-25901572)

And there's a large stretch between trying to boost the economy by encouraging
female labor force participation and feminism. By that standard, Saddam
Hussein might have been called a feminist in some periods of his reign.

Opinion is sharply divided over whether Abe's economic policies make any
sense. I'm in the "they're insane" camp. I've likened Abe to the captain of a
ship who, seeing an iceberg looming, calls out, "Full steam ahead! We're going
to smash our way through." But all observers agree on these two points:

1\. Abenomics will be a disaster without large-scale structural reform.

2\. The reform we've seen so far isn't nearly enough.

Optimists believe that this reform is just round the corner ... that even as
we speak Abe is busy quietly building the necessary consensus in key
organisations, because that's the way reform is done in Japan.

The pessimists want proof.

Finally, there is a terrible, terrible paradox at the heart of Abe's economic
policies. This is a complex matter, so forgive me for skipping most of the
details and implications.

No matter how you measure it, the Government of Japan is up to its neck in
debt, and is still sinking. The only reason it can keep going is because it
pays remarkably low interest rates. But the first "arrow" of Abenomics is to
push up inflation, and you can be sure that this arrow will meet its mark
because they can always "print" more yen. One of the iron laws of economics is
that, when inflation goes up, so do interest rates.

Now, to cut a long story short, it looks like the government's going to get
out of this bind by directing the Bank of Japan to print even more money to
buy it's debt at below-market prices. In fact, if you follow the bond market
news, it's clear that this is already happening. And that, my friends, is a
recipe for collapse in confidence in the yen.

Speaking for myself, as a Japanese resident, I believe that the yen is an
increasingly risky asset to hold. I make a point of keeping at least 50% of my
savings out of yen, and away from the Japanese financial system. When the shit
hits the fan, I don't want my money to be stuck behind Iceland-style capital
controls.

\---

EDIT: Changed "recipe for inflation" to "recipe for collapse in confidence in
the yen" in response to comments below.

~~~
yk

        No matter how you measure it, the Government of Japan is up to its neck in debt, and is still sinking.
    

Thing is, you need to measure the dept against some measure of economic
activity ( or actually against some measure of pay back capability), and then
the funny thing is that the higher the dept, the easier it is to get to
sustainable levels by deficit spending. So dept goes from D to D + d and GDP
goes from G to G + x d, solving for a critical multiplier x0 where the ratio
stays constant,

    
    
        x0 = G/D
    

So the more dept you have, the less productive need your stimulus program to
be to reduce dept. Additionally, for this you can replace the measures by
inflation adjusted measures and you get the same result, with some dependence
on the real interest rate. ( Which can be negative.)

Additionally it is surprisingly hard to get hyperinflation, just printing a
few percent of GDP in new money per year will not do the trick. ( Try
occupation of a major industrial region, after the end of price controls plus
a lost world war.)

~~~
VexXtreme
Not to be pedantic or anything, but what do you mean by "dept"? It's an honest
question. Are you referring to debt or is it a different concept I'm not
familiar with?

~~~
barsky
It seems like a typo.

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free2rhyme214
This is my response to this article:

"Hahahaha...far from it."

~~~
ChrisGaudreau
That doesn't provide any value. Would you like to articulate your arguments?

