Weeks rarely get worse for world leaders than the one Shinzo Abe just had.

First, Donald Trump scrapped a trade deal essential to revitalizing Japan’s economy, even after Abe scurried to New York to kiss the president-elect’s ring. Vladimir Putin made clear he’d been playing Abe with hints Russia might cede some of the disputed islands off Hokkaido. Efforts to cozy up to South Korea’s Park Geun-hye are kaput as impeachment beckons. New data showed Abe’s much-heralded ploy to end deflation has, four years on, produced zero inflation.

But the real blow to Abenomics was a ManpowerGroup survey showing why it flopped — and how much work Tokyo must do to change the narrative. Turns out, Japan’s millennials are the “least positive” about their future among the biggest economies, even trailing young Greeks by a wide margin. Fewer than 40 percent of young Japanese see a successful career ahead, while 37 percent of millennials fully expect to work until the day they die (compared with an average of 12 percent among the 18 countries in the study). By contrast, 18 percent of Chinese and 15 percent of Greeks expect to work until their last breath.

These comparisons tell Abe and Bank of Japan Gov. Haruhiko Kuroda all they need to know about why Abenomics got so little traction. There’s dangerously little confidence in the future, a mindset Abe’s policies have done more to entrench than battle.

Abenomics has three parts — monetary easing, fiscal pump-priming and deregulation. We’ve seen an explosion of easing, and still deflation persists. We’ve seen a construction boom ahead of the Tokyo 2020 Olympics, and wages still stagnate. The problem: Phase three, the one most vital to fattening paychecks, competitiveness and job growth, has barely begun. Modest steps to tighten corporate governance, empower women and poke vested interests are too little too late for aging, rigid Japan. Abe fanned cynicism by promising economically insecure 20-somethings the world and producing only hints of that vision.

As Kuroda’s predecessor, University of Chicago disciple Masaaki Shirakawa, told Abe’s team in 2012, Japan’s deflation is about demographics, not monetary stimulus. The nearly 30 percent of Japanese over 65 aren’t buying homes, cars, computers, designer clothing or lavishing cash on pricey travel, fancy eateries or impulse buying. But, as data show, neither are millennials.

People tend to get the governments they deserve, as the old saw goes. In Japan, it’s also troubling how little they expect of companies and managers for whom they work. ManpowerGroup finds, for example, that only 55 percent of Japanese expect to work with “great” people, compared with, say, 91 percent of Brazilian millennials.

The answer is taking the weights off the economy’s ankles. Abe squandered nearly four years trying to tweak the Constitution, globe-trotting and joining a Trans-Pacific Partnership that’s more about making Washington happy than raising living standards. He expended virtually no energy increasing innovation, cultivating entrepreneurship, modernizing education, reducing red tape, opening Japan Inc. to foreign influence, leveling the playing field for women, importing international talent or taking on vested interests.

For example, here’s what passes for notable “reform” in Abe’s Japan: his Liberal Democratic Party asking farm cooperatives to disclose any plans they might, maybe, perhaps have to increase efficiency. No word yet on addressing those 778 percent rice tariffs. With the demise of the TPP, Abe will have to display a level of political will he hasn’t shown to upset his party’s biggest support bases.

That won’t help millennials any more than it’ll cheer the over-65 set. Only headline-grabbing steps to restore Japan Inc.’s dynamism and some game-changing inventions that convince young millennials the future is bright can do that. Abe sprinting to Trump Tower to pledge allegiance to the next U.S. leader smacked more of desperation than visionary leadership. Abe would get far more mileage out of ensuring tomorrow’s leaders that the national pension system will survive (cuts are being mulled as we speak) amid the surging public debt load.

Abe must persuade young Japanese they won’t have to pay to care for elderly parents with dead-end jobs that pay less and less. He must loosen labor markets so workers are more innovative, productive and less stressed.

Until Abenomics wins over millennials, they won’t make big-ticket purchases, while fewer get married or have kids. That means uglier demographics, falling further behind China, increased gloom and, yes, more deflation.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.