Japan, the forgotten miracle

Published 22.05.2017 23:39

Up until 20 years ago, Japan was heralded as the recovery miracle of Eastern Asia. The performance, discipline and assiduity of the Japanese people and their industrial prowess were cited as examples almost everywhere. Not that the Japanese way of living had any attractiveness, but the absence of leisure time was largely overseen to the profit of what was economically delivered: The funny small Japanese cars of the 1950's turned into beautifully made passenger cars and became a very serious threat to European and U.S. car industries by the 1970's. The sophisticated instruments were monopolized by Japanese companies, the brand names Sony and Panasonic became world leaders. The motorbike market was totally overwhelmed by Yamahas and Hondas. Japan exported massively, imported few and experiencing dreamy growth rates.

Then came the financial crisis of 1998, where the weakness of the Japanese banking system was the main reason for the debt crisis that occurred in Southeast Asia, among the "tigers." Starting from this misfortune, the Japanese economy entered a stagnation period, where growth was lagging behind, if not totally missing, where unemployment was a problem and where the "Japanese miracle" was largely forgotten.

Shinzo Abe was elected prime minister in a gloomy economic and social environment by the end of 2012. Not only did the economy have real trouble regaining some dynamism, but the People's Republic of China emerged as a real global power in the region, economically and, for the first time since the 15th century, militarily also. So the new premier, a very charismatic politician, started a long-term recovery strategy, called "Abenomics." He chose to send three arrows, as he would name them: favourable fiscalism for companies and individuals, monetary stimulus and budgetary stimulus. For four years, Shinzo Abe has been dumping hundreds of billions dollars into the Japanese economy, without seeing positive results. As a matter of fact, without seeing any results whatsoever. Then, after nearly four years of stimuli, the results came. The growth is there, the last quarter was 2.2 percent, this is quite balanced growth, it does not rely on ephemeral export results nor on clever manipulation of financial instruments. There has been a strong recovery, coupled with the increase of internal demand and inflation remaining very low. The unemployment is quite astonishing, at a mere 2.8 percent. In view of the participation of the whole society to the active population, such a low unemployment rate can almost be taken for full-employment.

There has been continuous growth for five quarters without interruption, all this in a country with deficient demographics, which does not accept almost any immigration. The models for economic recovery will certainly be revised after this obvious success of "Abenomics." Nonetheless, Japan is not the only example, and that brings us perhaps to the heart of the matter: François Hollande, when elected president in France in 2012, just a few months before Shinzo Abe, had in mind a very similar long-term strategy. Curbing the unemployment rate, until the end of his five-year mandate, to the detriment of fiscalism. He has indeed revised the fiscal system and did a lot to render flexible the labor market. He has not been successful in due time. The results came when his campaigning deadline for a second term was largely over. He remained the least supported president of the Fifth Republic at the end of his mandate and chose not to ask for a second term he in all semblance would not get.

The unemployment in France has started to durably go down, this will chiefly help the new President Emmanuel Macron. But there is a very important issue in both examples: The duration of a deep strategy may not necessarily coincide with the duration of a mandate. Shinzo Abe was chosen as the leader of the Liberal Democratic Party, in government almost without interruption since its foundation in 1955. François Hollande represented a Socialist Left in France, which has never held power for more than a term, even under François Mitterrand.

Success in economics transcends the short and medium term electoral goals. This is difficult to accept for a politician, whose main motivation is to remain in power, but this is how it works. Turkey has been under a single party government since the end of 2002, without discontinuity. It creates an ideal situation to implement long-term strategies in economics, but the voters usually chose to support tangible results. This essential and inherent problem will be on our agendas in the coming months and years, so long that with favourable demographics, the Turkish government has to restructure and reform the economy.

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