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If deceiving taxpayers were a sport, Japan would win the gold for runaway Olympics costs spiraling toward ¥3 trillion, 10 times initial estimates. But the real cost of Tokyo 2020 could be to Japan’s economic reform prospects.

It’s hard to recall a developed nation so excited about two weeks of sporting events few will recall two months after the five-ring circus leaves town. Japan is in the grips of full-blown Olympic mania. None more so than a government that should spend every waking moment implementing structural changes aimed at higher living standards 40 years from now. Instead, it’s obsessing over sports-facility designs, tourist lodging, Wi-Fi availability, putting English signage in taxis and whether Olympic marketing logos were plagiarized for a fleeting moment four years from now.

These are but a few examples of the short-termism gripping Prime Minister Shinzo Abe’s Japan. And what a worrisome spectacle it is as Abe’s “fourth arrow” distracts the government from making the original three a reality. In December 2012, Abe sold his revival program with a samurai metaphor. Three arrows fired at a target can do some damage, but three shot together ensure success. And so Abe pledged to fire monetary, fiscal and deregulatory shots simultaneously at deflation.

Outmaneuvering Istanbul for the 2020 Games several months later was an insurance policy — a fourth arrow sure to up Abe’s reform firepower. Instead, the Olympics are diverting attention, resources and future prosperity away from the best chance Japan has had in 20 years to regain its mojo.

Team Abe reckons just staging the games will suddenly make Japan Inc. more international — more innovative, less risk averse, ready to harness anew the kind of energy its people generated in 1964, the last time Tokyo hosted the Summer Games. It seems to believe that 2020-related booms in construction and tourism will accelerate wage gains and morph Japan into humankind’s greatest vacation mecca.

Hosting the games won’t magically make a population notoriously weak at English speak the lingua franca of global business like Singaporeans. It won’t give risk-adverse 20-somethings the courage to start new companies and question authority. It won’t make women shine in the way Team Abe hopes. It won’t change Japan’s anti-immigration mindset. It won’t yank corporate executives out of the Japan Inc. matrix and miraculously increase returns on investment. It won’t end a productivity-killing seniority-based promotion system.

The Olympic torch returning to Tokyo won’t prod executives to share mountains of cash with workers. It won’t change a rote education system that prepares students poorly for the app-economy era. It won’t boost Japan’s standing in global education rankings (the University of Tokyo is barely the fourth best in Asia). It won’t encourage lawmakers to deregulate rigid industries or lower trade barriers. It won’t prod companies to become more meritocratic or reduce takeover defenses.

Tokyo 2020 won’t encourage young Japanese to venture overseas for schooling and work (as their fathers’ generation did). It won’t improve relations between Tokyo, Beijing and Seoul. It won’t refocus energy policy away from risky nuclear power to renewables. It won’t clean up the radiation around Fukushima or help more than 100,000 people displaced since the March 2011 earthquake move back home. It won’t reduce the nation’s crushing debt load. It won’t increase accountability among government bureaucrats who stymie change. And it won’t get Japan any closer to raising interest rates away from zero or its reliance on a weak yen.

And yet, the government is betting the magic of Tokyo 2020 will make these changes and many others a reality.

Abe’s recent Olympics appearance in Rio de Janeiro was as surreal as it was telling. There she was, Yuriko Koike, Tokyo’s first female governor on the stage, proudly accepting the Olympic flag. It was a powerful moment for patriarchal Japan, especially amid Abe’s talk of making the nation’s women “shine.” And then Abe crashed the party with his Super Mario stunt to outshine Koike. If only he’d expended that kind of time, energy and creativity implementing Abenomics. If only he’d spent the untold millions his Rio trip cost on more pressing matters.

Koike, by contrast, is actually doing her job, much to Abe’s dismay. Already, she’s delayed plans to relocate the iconic Tsukiji fish market amid a toxic soil scandal. Koike is raising questions about the move’s ¥600 billion price tag, just as she’s sending waves of panic through Olympic organizing circles by investigating fast-swelling costs. There’s even talk of scrapping three planned new venues to keep the games from hitting the ¥4 trillion mark — or more.

As Team Abe micromanages an event on which cities from Chicago and Paris are passing, urgent reforms to end deflation and maintain Japan’s relevance in the age of China are getting sidetracked.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian economics. www.barronsasia.com

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