When I was a wee thing, just a slip of a girl launching herself into the mad and exciting world of economic policy reporting, you used to hear a lot of talk about Japan's "lost decade." From World War II to about 1990, Japan posted the most miraculous economic transformation of the 20th century. Self-flagellating magazine articles and paranoid novels were written by anxious Americans who saw — all too clearly! — that Japan's mighty economic engine would soon overpower lazy, atomistic Americans, forcing us into a sort of well-transistorized serfdom. Then the Nikkei crashed and the mighty engine stalled. And unlike your Camry, it proved difficult to repair. Japan alternated between stagnation and recession for the better part of a decade. Then longer. Eventually, the lost decade stretched past 20 years. It is now approaching the quarter-century mark.
Many times during this Longest Decade, Japan has made some policy change, and analysts have proclaimed that finally — finally! — Japan was getting serious about good economic policy, and turning things around. Abenomics was the latest and arguably the best of these reforms.
Prime Minister Shinzo Abe's "three arrows" of fiscal stimulus, monetary easing and structural reform were designed to attack three of the biggest problems that economists have identified with Japan's economy: insufficient consumer demand, deflation, and a highly protected and inefficient domestic sector that bears little resemblance to its world-class exporting powerhouses.