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Can Japan get out of its downward spiral?

15 7 2
13.07.2020

Kizugawa, Kyoto Pref. – Since the mid-1990s, Japan appears to have fallen into a continuous negative spiral in every respect. The past decade alone has ample examples of how the nation has been trapped into the vicious downward cycle.

On March 11, 2011, the disaster at the Fukushima No. 1 nuclear power plant forced the government to fundamentally rethink its energy policy which, at one point before the disaster, sought to rely on nuclear power for more than 50 percent of the nation’s electricity supply. The Basic Energy Plan revamped in July 2018 said renewables will be a primary source of energy, but a steep gap remains between the targets of the energy policy and the reality of the nation’s energy landscape.

The Abe administration’s Abenomics policy — which is, after all, little more than an aggressive monetary stimulus program — is nearing an end, along with the administration itself, without ever achieving its deflation-busting target of a 2 percent annual inflation.

If economics is a branch of science, reflationary economic theories have now been refuted by the large-scale social “experiments” that Japan has gone through. What have been touted as the achievements of Abenomics, including the upsurge in share prices and the weak yen, remain at the mercy of external shocks such as the trade dispute between the United States and China, turbulence in U.S. stock markets and the COVID-19 pandemic.

The improvement in the job market in recent years is not so much the fruit of monetary easing as an outcome of the collapse of Japanese-style labor practices based on lifetime employment, as shown in the increase of people with irregular jobs. In short, it became easier for businesses to increase or reduce people on payroll, and the employment cost per worker has declined. The average........

© The Japan Times