Team Abe’s grand plan leaves ghosts in charge of a haunted house


Special To The Japan Times

As I observe Team Abe in action at the helm of the Bank of Japan and elsewhere, a rather terrifying passage from a poem by William Hughes Mearns comes to mind:

“Yesterday, upon the stair, I met a man who wasn’t there. He wasn’t there again today. I wish, I wish he’d go away . . .”

There were no surprises in the BOJ’s announcement last week about the new monetary policy package formed at its Policy Board meeting. Quantitative easing will be carried out on an unprecedented scale. Buying up of Japanese government bonds will also take place at record-breaking levels. That buying will find new focus on the longer end of the yield curve spectrum.

For all intents and purposes this is no longer a central bank. This is an agent of the government studiously intent on securing its master’s approval.

An additional worry in this context is that the BOJ Policy Board’s decision to go for Team Abe’s gung-ho approach to monetary management was apparently unanimous. Was there not one person among the policymaking body who felt inclined to contest the Team Abe approach? We do indeed live in sad and strange times if that was the case.

The more we discover about Team Abe’s approach to economic management, the stronger my image grows of the man on the stairs who wasn’t there. For there is a curious touch of unreality in all of the measures and pronouncements that emanate from these people. They seem to have no feel for what is actually happening on the economic ground.

All that they are concerned about is how to “regain” Japan.

This is very backward-looking of them. The Japan that they seem to want to regain belongs in the 1960s. Thus preoccupied with the past, they are incapable of placing themselves in the here and now. Hence, they are the people on the stair who are not there. The “there” they occupy is not the same as ours.

Because the people who are not there are out of touch with real people, their only partner in dialogue is the markets. No wonder the not-there people are so intent on appeasement. They seem to be confusing market-pleasing with policymaking. The markets know this and will always be clamoring for more. The more you give them, the greedier they get. The not-there people have allowed themselves to be taken hostage by the gluttonous.

It is a frightening thing to have to place economic management in the hands of people who are not there. Not being there, they cannot know what people are really feeling, what their real problems are and how they are trying to deal with them. Not being there, they cannot feel other people’s pain. There is something altogether heartless in what they say and seem to want to do.

Mindlessness has always been a problem with Japanese politics, and there is no reason to assume otherwise about this government. The almost automatic resort to Rip van Winkle economics testifies to that effect. To this great tradition has now been added the element of heartless unconcern that exhorts self-help and looks coldly on a caring society.

Mindlessness is a misfortune but heartlessness is sin. To be saddled with a government that is equipped with both is sheer disaster for a nation. Yet what else can one expect from people who are not there? If only we could wish them away.

William Hughes Mearns received inspiration for his piece from a reputedly haunted house where the man who wasn’t there was supposed to make his nonappearance. Japan is now that haunted house.

Noriko Hama is an economist and a professor at Doshisha University Graduate School of Business.

  • seetell

    So brave for Mr Hama to speak out in consensus-oriented Japan. But, then, it is no wonder that he was not nominated to the BOJ Board of Governors which also rather provides the answer to his question of why no one at the BOJ objected to doubling the monetary base over the next two years. No dissension was allowed.

    This is well-written in a poetic sort of way but fails to lay out Mr. Hama’s concerns for those who will have to live in the reality created by Abe and Kuroda going forward. One can begin by stating that inflation is nothing but a hidden tax on savings. Already, income and savings made when the Yen was at 80 to the USD have been devalued by 23% with no commensurate rise in wages coupled with increasing prices on imported goods like fuel and food. Responsible people who save, the middle class, and the poor will bear the burden of propping up the export industry, real estate, investors, and the banks with no guarantee that this scheme will increase economic activity beyond the short term and only in a manner which steals consumption from the future because people will only have two options for the money, spend it or buy equities.

    This grand experiment is akin to thinking that because one aspirin will cure a headache, a whole bottle should cure cancer. It flies in the face of the failure of the same type of policies over the past two decades and is based on hope without any supporting evidence other than an unproven theory which has found favor among a political class which know little more than how spend other people’s money.

    People would do well to heed Mr Hama and the few others out there who caution against “Team Abe’s” political and economic regime.

  • Mushtaq Memon

    Difficult to agree with Noriko sensei! It is like a debate in USA where the economists not nominated on the Presidential Committee make very strong arguments against the government policies. Abenomics has very interesting and bold components. The only challenge I feel is about the human capacity in Japan that is lacking in service sector and other sectors except in manufacturing sector. If Japan can manage to build the human capacity then Abenomics can work in line with its aims. Nevertheless, Japan is taking very difficult decisions and sometimes blind decisions. We can pray for this lovely country for success.

  • physiocrats

    Why does this newspaper have such an overwhelming bias against Abe and the newly announced monetary plans? Many of the most respected economists in the world have been urging the BOJ to have a more active policy to fight deflation. And now they are. The stock market has reacted positively thus far, and the debt service cost for the government has plummeted. What is with the conservative bias? Time will tell, and I tend to believe the more credible Nobel economists on this specific issue than biased reporting.