Kudo's Blog;Uncertainties increase over fate of Prime Minister Abe's economic revitalization initiative

December 11, 2014

By Yasushi Kudo
President of The Genron NPO

The fate of Prime Minister Shinzo Abe's economic revitalization initiative is becoming more uncertain, at a time when Japan's House of Representatives (Lower House) has been dissolved for a snap election set for Dec. 14.

The prime minister's "Abenomics" policy endeavor to pull the economy out of years of deflation has not achieved the intended favorable economic circle as far as a series of economic indicators is concerned.

It cannot be said at the moment whether the desired economic circle will never be closed in the months ahead. Further, various recent economic figures, such as those on Japan's mining and manufacturing production, and exports in terms of volume show an improvement in the country's economic condition. Therefore, there are clues to Japan's economic revitalization, but it cannot be determined that there exists strong momentum for a favorable economic cycle.

In a recent study conducted by The Genron NPO and the vernacular daily newspaper the Mainichi Shimbun, the government's economic policy measures scored a less than impressive 2.8 on a five-point "report card" for its two years of performance. This was down 0.4 points from 3.2 points in a similar study a year ago. The government's policy performance was examined mainly in view of the ruling Liberal Democratic Party's campaign pledges for the previous Lower House election in December 2012, which paved the way for the inauguration of the Abe administration Dec. 26 of that year.

A score of 3 points means that the policy involved is a work in progress, but that it remains to be seen whether its targets will be achieved. A score of 2 points means that the targets will not be attained. The latest score on the Abe administration's economic policy performance represents only a slight decline from the year-before level, but we can say a cautionary "amber" light has come on ahead of the course of the Abenomics policy campaign.

The Genron NPO-Mainichi study covered 67 verifiable policy objectives in 11 categories that the LDP presented in its election pledges in late 2012. The policy categories under review are the economy, public finances, rehabilitation measures for areas hit by the devastating earthquake of March 2011, education, diplomatic and national security issues, social security, energy supply, local economies, agriculture, political and bureaucratic reforms, and a revision of Japan's Constitution.

The overall score for the government's policy performance for the past two years came to 2.5 points, down 0.2 points from 2.7 points a year before. Under the outcome-based Genron NPO evaluation method, the latest findings were fairly severe.

Our score sheet of one to five points tells the voters whether the policy involved is on course to achieve its goal, or whether achievement is becoming difficult or unpredictable. We do not demand that the policies in political parties' "manifesto" campaign pledges should be implemented by all means. It is quite natural that some policies should be amended in the course of finding a solution to the problem involved, but in these cases, the reasons why those policies have been changed must be explained to voters.

Unless an explanation is given, the score for the policy area involved will be reduced by one point. Actually, a one-point reduction was made this time for six of the 67 objectives in the LDP's campaign pledges as they lacked a full explanation for voters.

Policy performances in the 11 areas were each examined by three experts selected for the study. This means that a total of 33 people have participated in the study. In addition, about 15 other experts provided their comments for the study through hearings. The outcome of a questionnaire of part of those registered on a 6,700-strong database of well-informed people was also used for the study.

Prime Minister Abe dissolved the Lower House on Nov. 21 in an attempt to obtain voters' endorsement of the government's decision to put off for 18 months until April 2017 a planned hike in the consumption tax from 8 percent to 10 percent.

What to do with the consumption tax is very important because it is a crucial issue for rehabilitating Japan's social security system and the debt-ridden public finances. We must be aware that time is limited for us to attain the rehabilitation targets.

Because the Abenomics policy initiative has been set in motion, it must be a success. At present, Japan is nervous about where/when the initiative might fail, that an exit from the economic doldrums will not be found and that its public finances will collapse.

An ideal election I imagine is an election where political parties present their respective prescriptions to a crucial issue on which voters' opinions are sharply divided. Then, a sense of tension will increase among voters because they have to think seriously about their matters of concern. Today's Japan is in such a situation, but it is very difficult to understand what kinds of issues are being questioned in the upcoming election.

I think that the Dec. 14 election is extremely important for the future of this country. There are various issues on which politicians must seek the electorate's judgment. These issues include whether Japan should continue controversial nuclear power generation, how to establish a sustainable social security system amid the aging of society and whether Japan's fiscal discipline will be re-established only if the consumption tax is raised to 10 percent. Also important is whether it is justifiable to change the interpretation of Japan's Constitution only with a Cabinet decision, as instanced by the Abe administration's decision in July to allow Japan to exercise its right to collective self-defense.

The election campaigns have started, but these issues are not being fully discussed among the political parties. How should we, the voters, view such a situation? This is a problem. Many voters are deeply concerned about the future of Japan and the course of its economy. But the political parties, not only the LDP but also opposition parties, have not presented any answers to these problems in their manifesto campaign promises. Therefore, the voters should scrutinize the meanings of the problems that the political parties have shown to the people and their ability to fully grapple with the series of challenges facing Japan.