Abenomics needs people power

Prime Minister Shinzo Abe needs to consult with Japan’s public in order to form good policies, writes Bethany Schoer.

As Abenomics begins its second iteration, an increasing number of policy experts have been observing its progress with suspicion and concern. Faltering in the wake of China’s economic slowdown, the Japanese economy shrank by 0.8 per cent in the last quarter, with signs another recession may be on the horizon.

In what appears to be a dubiously optimistic move, Prime Minister Shinzo Abe has suggested this next round of reforms will not only repair the shrinking economy but also enduring socio-economic matters such as an ageing population and low fertility rate. He said these are “structural problems long-neglected in Japanese society” which he “intends to tackle head-on”.

While this overt display of ambition and misjudgement may very well be contributing to the current failures of Abenomics, it is by no means the sole cause. Its recent failures have been worsened by problems inherent in Japan’s society and its institutions – most importantly, a lack of political dialogue.

For decades, Japan has been plagued with the issues of a rapidly ageing society and a steadily declining birth rate. While advanced economies typically necessitate a birth rate of around 2.1 births per woman to maintain a stable population, data from the World Bank indicates that Japan’s birth rate currently sits at just over half this figure, with 1.4 births per woman. This matter is compounded by Japan’s koureishakai （高齢社会）or ageing society, in which the total number of people aged over 65 comprises one-fourth of the total population, culminating in extensive burdens on Japan’s already precarious welfare system. A deep-seated unwillingness to resort to immigration has meant that these issues are considered obstacles to economic growth and security.

Comprised of three main tenets, or “arrows” – monetary easing, fiscal stimulus and far-reaching structural reform – Abenomics has undergone considerable revisions since its inception in December 2012. It aims to boost Gross Domestic Product (GDP) by 20 per cent to 600 trillion yen (A$5 trillion) by 2020. However despite abundant criticisms from the outside, Abenomics has generated some degree of success. The aggressive stimulus has generally worked, lowering unemployment rates with the help of government intervention in the private sector. Official reports from the Japanese government have flaunted the triumphs of Abenomics, even going so far as to declare that “a virtuous economic cycle has been steadily in motion” amidst predictions that deflation and gaps in GDP would eventually be vanquished.

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Yet a clear dilemma arises on further inspection: the pressing socio-economic and institutional issues on which Abenomics focuses cannot be solely addressed through an approach that is strictly premised on economic growth. The ability to resolve these problems hinges on the Japanese government’s willingness and potential to harness public opinion on a long-term basis.

Harnessing public opinion in Japan to inform policy development is, however, easier said than done. A culture of political dialogue in Japanese society is notably lacking, and this is likely to compromise the future success of Abenomics. Conceptions of civil society in Japan are less politically-motivated and more founded on neutral ideas of social welfare and altruism, existing in forms such as volunteer groups and non-profit organisations.

Historically, the actions of these groups have been supported and endorsed by the Japanese government, but this has occurred on a conditional basis, with the government neglecting, questioning or even rejecting the legitimacy of the policy proposals of these groups. This has meant that non-profit organisations have been largely deterred from pursuing their agendas through political channels.

Perhaps most crucially, cuts to funding to the social sciences and humanities at several major Japanese universities are likely to further impair political participation among Japan’s youths.

A survey of university presidents conducted by Yomiuri Shimbun revealed that 26 out of the 60 universities that feature social science and humanities programs will either close or make significant reductions in these programs, capitulating to demands put forward by the Japanese government. With disciplines such as law and economics bearing the brunt of these changes, it does not take much to see that this move will have major repercussions on political engagement in the future. President Abe is deterring not only the formation of political groups but also the expression of political grievances at large, and in doing so, is completely rejecting guidance from those who can provide the policy innovation necessary for Abenomics to flourish.

Wedged between the effects of enduring cultural practices and the pressure to respond to a Japan in the throes of a socio-economic crisis, Prime Minister Abe is caught between a rock and a hard place. The Japanese government has sold Abenomics as a cure-all strategy for dealing with its problems, presumably founded on the notion that an economic foundation will help Japan to quantitatively, and more tangibly, track and recognise its improvements.

Yet maximising the supposed benefits of Abenomics requires the involvement of the public, and with citizen engagement in politics limited to the odd referendum, an uphill battle awaits.