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Opinion: What Drives Shinzo Abe? - By Gwynne Dyer
23/05/2013 09:37:00
Shinzo Abe, now six months into his second try at being prime minister of Japan, is a puzzling man. In his first, spectacularly unsuccessful go in 2006-07, he was a crude nationalist and an economic ignoramus who rarely had control of his own dysfunctional cabinet. By the time he quit, after only a year in office, his popularity rating was below 30 percent and his health was breaking down.

Last December his Liberal Democratic Party (LDP) won a landslide victory in the elections for the lower house of the Diet (parliament), and as party leader he became prime minister again – but what a difference six years makes. He’s still a radical nationalist who on occasion comes close to denying Japan’s guilt for the aggressive wars of 1931-45, but in economics he is now Action Man. His approval rating is currently over 70 percent.

In only six months Abe has broken most of the rules that defined Japan’s budgetary and monetary policy for the past twenty years, and he has promised to break all the old rules about restrictive trade policies as well. (Together, his new policies are known as “Abenomics”) He has launched a make-or-break race for growth that only the boldest gambler would risk. Who is this guy, and what happened to change him so much?

A resident foreign academic with long experience of Japan once told me that there were only around 400 people who really counted in Japan: they would all fit into one big room. Most of them would be there because their fathers or grandfathers had also been there, and Shinzo Abe would certainly be one of them.

Abe’s grandfather, Nobosuke Kishi, was a member of General Tojo’s war cabinet in 1941-45, a co-founder of the LDP in 1955, and prime minister in 1957-60. But heredity does not guarantee competence, and on his first outing in power Shinzo Abe was an embarrassment to the LDP. He has obviously acquired some braver and perhaps wiser advisers since then, most notably Yoshihide Suga, now chief cabinet secretary.

Abe put several ultra-right-wing ministers in the cabinet, and it is Suga’s job to keep them from giving voice to their revisionist views on history. “Our Cabinet will adopt a unified perception of history,” he told them. “Make no slip of the tongue because it would immediately cost you your post.” He also polices Abe’s own tongue: no more remarks like “It is not the business of the government to decide how to define the last world war” or “comfort women were prostitutes.”

Abe doesn’t mind, because he has bigger fish to fry this time round. He has launched a high-risk strategy to break Japan out of twenty years of economic stagnation by cutting taxes, raising government spending, and flooding the economy with cash.

One of his first acts was to put his own man in as head of the Bank of Japan, and order him to break the deflationary spiral by adopting a target of 2 percent annual inflation.

He has also promised to smash the protectionism that has hampered the Japanese economy for so long, although this will require him to take on the powerful agriculture and small-business lobbies. He has even promised to join the Trans-Pacific Partnership (TPP), an American-led effort to liberalise trade in the region, in order to guarantee that the structural reforms will continue.

Structural reforms will have to wait until Abe also has a majority in the upper house of the Diet, which he confidently expects to win in the July elections, but already his strategy is showing results. Economic growth in the first three months of this year equates to about 3.6 percent annually, more than four times higher than the long-term average of the past two decades, and the Japanese stock market is up 80 percent since January.

The strategy is high-risk because Japanese government debt is already the highest in the developed world: 240 percent of Gross Domestic Product. If the surge in growth does not last, the government’s income from taxes will not rise (it is no higher now than it was in 1991) and in a few years the debt will soar to an unsustainable level. The country will essentially go bankrupt.

Of course, the surge may persist; creating a perception of vigorous growth is half the battle. But why take such a risk? Probably because Abe is keenly aware that Japan had the world’s second-biggest economy when he was prime minister the first time, and now it’s only the third-biggest. The country that overtook it was China.

For a thousand years China was the dominant power in eastern Asia. Japan wrested that role from it in the late 19th century, but now it’s going back to its natural home – and Abe would do almost anything to prevent that. That’s why he takes such a hard line on the dispute between the two countries over the Senkaku/Diaoyu Islands. But much more importantly, he must get the Japanese economy growing again, or the country will end up far behind China.

To avoid that, he will take any risk.

(Gwynne Dyer is an independent journalist whose articles are published in 45 countries.)
Comment:
Yes, quite possibly.
Our author is known for respecting facts in generating analyses.

Don't forget Fukushima, though.

In "slewienomics" that is quite the economic "punch" or perhaps "hammer" would be better, there.

The only way Japan can survive, economically, is to "print" to keep "the checks in the mail" like almost all fiat central banks, including China. Now, they have a "reason" to print MOAR!

And it appears they will "get away with it" too.

[Kicking The Can = Buying Time], does it not?

What are we waiting for? Everybody wants to know?

Right now, the new Libyan Constitution and National DESIGN of the "UltraLight Flight Self-Governance" and maybe this will give The People some reason to get back To Work, again.

The UN "Governance Experts" nannies are going to explain the Banking System to some of the smartest, shrewdest, horse-traders on the planet.

Would I like to be a fly on that wall! L0L!!!

They may be involved in a "war" but in many respects they may also be on the same "side" although Japan has stronger ties, now, with the West, than China, it appears.

The fascists want everyone to believe the banking problems are causing the governance problems, but actually the converse is MUCH more the case.

China may be "most favored" but if the Japanese were simply trying to HOLD ON until the UN and the Constitution Committee and the Revolution figure out how to protect life, liberty and the pursuit of happiness, then we might see they were waiting to vote on something or other, themselves.

Perhaps people might realize that changing the banking BEFORE the governance is changed to something cogent and SMALLER is just gilding the poppy plant, one more time.
 

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