Liberal economists in the US are absolutely ga-ga about Abenomics, and for good reason. Under Japanese Prime Minister Shinzo Abe\u2019s\u00a0leadership the Bank of Japan (BoJ) has flooded financial markets with money pushing stocks up nearly 80 percent in a matter of months, while $116 billion in fiscal stimulus has turbo-charged the real economy lifting First Quarter GDP to an eye-watering 4.1 percent. Naturally, this astonishing performance has attracted the attention of pundits in the US who have lavished praise on Abe for his three-pronged approach to revitalizing the moribund Japanese economy and for his commitment to beating two decades of entrenched deflation. Nobel prize winning economist, Paul Krugman recently devoted an entire column to the topic in the New York Times where he congratulated Abe for his \u201csharp turn towards monetary and fiscal stimulus\u201d noting that \u201cstocks have soared, while the yen has fallen (which is) very good news for Japan because it makes the country\u2019s export industries more competitive.\u201d Here\u2019s more from the Krugman piece:<\/p>\n
\n\u201cSo the overall verdict on Japan\u2019s effort to turn its economy around is so far, so good. And let\u2019s hope that this verdict both stands and strengthens over time. For if Abenomics works, it will serve a dual purpose, giving Japan itself a much-needed boost and the rest of us an even more-needed antidote to policy lethargy.\u201d (\u201cJapan the Model\u201d, Paul Krugman, New York Times)<\/p>\n<\/blockquote>\n
While Krugman is\u00a0somewhat cautious in his praise for Abe\u2019s gigantic Quantitative and Qualitative Easing (QQE)\u00a0program\u2013which is on track to double the money supply in just two years\u2014 fellow Nobel prize winner, Joseph Stiglitz, shows no such restraint. In a breathless editorial in the New York Times, Stiglitz goes on and on about the virtues of Abe\u2019s monetary and fiscal policies opining that \u201cAbe\u2026 has done what America should have done long ago.\u201d Here\u2019s more from the same article:<\/p>\n
\n\u201cMr. Abe\u2019s plan also reflects an understanding that monetary policy can only go so far. One needs to have coordinated monetary, fiscal and structural policies.<\/p>\n
Those who see Japan\u2019s performance over the last decades as an unmitigated failure have too narrow a conception of economic success. Along many dimensions \u2013 greater income equality, longer life expectancy, lower unemployment, greater investments in children\u2019s education and health, and even greater productivity relative to the size of the labor force \u2013 Japan has done better than the United States. It may have quite a lot to teach us. If Abenomics is even half as successful as its advocates hope, it will have still more to teach us\u2026.<\/p>\n
Abenomics is, without a doubt, a huge step in the right direction.\u201d \u2013(\u201cJapan Is a Model, Not a Cautionary Tale\u201d, Joseph Stiglitz, New York Times<\/em>)<\/p>\n<\/blockquote>\n
Stiglitz is not only a top-notch economist, he\u2019s also a really good guy. Still, I think he\u2019s wrong about Abenomics, in fact, I think that if Krugman or Stiglitz read a little more about Abe\u2019s so called structural reforms, they\u2019d see that all the monetary and fiscal hullaballoo is just a smokescreen to conceal the same old trickle down, Voodoo reforms that have increased poverty, widened inequality,\u00a0\u00a0and fueled social unrest everywhere they\u2019ve been implemented.\u00a0The truth is,\u00a0Abenomics is just a cover for plain old class warfare. (like QE in\u00a0the US.) Now take a look at this\u00a0excerpt from an article in the Economist: \u00a0\u201dOne area that reformers hoped the committees would tackle is Japan\u2019s labour market. Unless they are going out of business, firms are barred from firing staff employees\u2026\u2026.\u201d<\/p>\n
This provision to fire-workers-at-will is at the very top of Abe\u2019s list of\u00a0reforms.\u00a0\u00a0So how does handing out pink slips fight deflation? How does it\u00a0fix the tax code so capital is taxed at a higher rate than\u00a0labor so personal consumption rebounds and real wages increase? (Wages have been drifting lower in Japan for 20 years.) \u00a0How does that increase labor\u2019s share of productivity gains so workers can spend more at the grocery store, shopping malls or car lots?<\/p>\n
It doesn\u2019t help anything, does it? It\u2019s just another giveaway to big business. And, remember, kicking employees to the curb, (\u201clabor flexibility\u201d) is at the top of Abe\u2019s list of \u201creforms\u201d.<\/p>\n
And what other reforms does Abe have in mind? Here\u2019s more from the Economist:<\/p>\n
\n\u201cAgriculture is in urgent need of reform as Japan enters negotiations for the Trans Pacific Partnership, a free-trade agreement, in July. Most farmers, tending tiny plots on a part-time basis, are uncompetitive. Companies should be allowed to buy farmland, said private-sector members of the ICC; at present they may only rent, and are bound by tight regulations.\u201d (Economist)<\/p>\n
Great. So Abe wants to sock-it-to the smalltime farmers who are busting their ass just to make ends meet so he can give a bigger share of the profits to the corporate cutthroats in Big Ag. That ought to fix the economy, don\u2019t you think?<\/p>\n
Then he plans to sign the sovereignty-eviscerating TPP which will give unprecedented legal powers to corrupt multinationals and thieving financial institutions. How does that improve the economy? And when has \u201cfree trade\u201d ever benefited ordinary working people? Never, that\u2019s when.<\/p>\n
Abe also wants to create \u201ca series of deregulated and lightly taxed zones around the country, to be overseen by a new minister.\u201d (\u201cMisfire: The Third Arrow of Abenomics\u201d, The Economist)<\/p>\n<\/blockquote>\n
That\u2019s how you fight deflation; by creating\u00a0tax free hideaways where slave-wage workers toil under prison camp conditions\u00a0to boost profits for obscenely wealthy mega corporations? And\u2014according to the Economist\u2014this the \u201ccenterpiece\u201d of Abe\u2019s reforms. Some centerpiece, eh? Can you feel the love?<\/p>\n
This is why I think Abenomics is a fraud that will fail miserably, because all the Keynesian claptrap surrounding the fiscal and monetary stimulus is just a fig leaf to conceal the real policy objectives, which are (as always) the privatization of public assets, the dismantling of vital market-stabilizing regulations, tax breaks for the wealthy, and a full-blown assault on working people.<\/p>\n
Shinzo Abe is a fanatical, right-wing, militarist crackpot who is trying desperately to spark an economic revival so his rapacious pig-friends can enjoy another looting spree. Liberals like Stiglitz and Krugman would be well advised not to support that effort.<\/p>\n
MIKE WHITNEY<\/strong><\/em>\u00a0<\/strong>lives in Washington state. He is a contributor to\u00a0Hopeless: Barack Obama and the Politics of Illusion<\/a>\u00a0(AK Press).\u00a0Hopeless is also available in a\u00a0Kindle edition<\/a>.\u00a0Whitney\u2019s story on how the banks targeted blacks for toxic subprime mortgages appears in the\u00a0May issue of CounterPunch<\/a>\u00a0magazine.\u00a0He can be reached at\u00a0fergiewhitney@msn.com<\/a>.<\/em><\/p>\n