As populist shocks upend the globe, Japan is a fascinating study in calm. Explaining why is a fashionable preoccupation among economists and pundits. Some credit socialist mores that soften capitalism’s sharpest edges, others an entrenched political system impervious to insurgency. A cultural preference for harmony over disruption also factors into the equation. But even as Japan avoids a Brexit moment or a Donald Trump-like jolt, it’s tripping over nationalism in unappreciated ways. The proof isn’t angry protests, defaced cemeteries or social-media backlashes — it’s the underperforming economy.

It says everything about Tokyo’s plight that a 0.1 percent gain in inflation is reason to rejoice. Never mind that the first rise in consumer prices in 13 months in January was an imported-oil phenomenon — bad inflation, in other words — Prime Minister Shinzo Abe’s policies, it’s said, are finally working. Such optimism is belied by a 1.2 percent drop in household spending. That drum tight labor markets — 3 percent unemployment — aren’t boosting wages or spending is as much a riddle to economists as the dearth of populist angst.

Abe’s nationalism helps explain why. In a March 2 Wall Street Journal column, Greg Ip connected the dots between Brexit, Trump, Hugo Chavez and possible upheavals in France, Hungry and elsewhere to reduced trade and prosperity. It’s complicated, of course. “Unfortunately,” Ip hedges, “what’s bad for democracy isn’t automatically bad for growth — just look at China.”

Look at Japan, too. When Abe returned in December 2012 for a second go as leader, he promised a big bang unlike Japan had seen in over a century. But other than a couple of modest tweaks and massive monetary easing, the last 1,532 days saw none of the bold structural changes Abe advertised.

That’s because Abenomics is a Trumpian distraction. The strategy? Look over here — the Nikkei is rising! Look over there — even Sony is making money! Look over that way — we got the 2020 Olympics! Just don’t look at what I’m really doing: reinterpreting a pacifist U.S.-written Constitution; whitewashing Tokyo’s wartime aggression; pushing patriotic education; passing a draconian secrets law that could jail journalists and whistleblowers; putting military boots overseas; perhaps even okaying (which he vehemently denies) a lucrative land deal to a school that supports his revisionist view of history.

Abe’s shaky 2006-2007 stint as prime minister ended amid scandal and jingoistic distraction. Now he faces controversy over a sweetheart land deal for an ultra-nationalist school operator with which Abe’s wife had an association. It has the potential to derail his agenda and reinvigorate opposition leaders demanding answers. It’s also a timely example of how nationalism gets in the way of reform.

U.S. President Trump uses tweets to distract the media and voters. Abe uses Nikkei rallies, splashy events and spin to direct attention away from his taking care of family business. His overriding focus is reducing the stench surrounding the 1940s legacy of his beloved grandfather, former Prime Minister Nobusuke Kishi. A member of the wartime Cabinet of Gen. Hideki Tojo, Kishi was accused of war crimes. The U.S. went easy on Kishi, who in 1957 rose to the nation’s top job.

Abe’s obsession with normalizing Japan’s military autonomy is largely about family-legacy enhancement. It’s no coincidence that he gunned so aggressively for the Olympics. His grandfather brought the games to Tokyo in 1964, a moment of euphoric pride in a nation bombed to bits 20 years earlier. Abe sees a similarly magical spectacle in 2020 as a nifty family bookend. Never mind it’ll cost Japanese taxpayers far more than $20 billion.

Welcoming the five-ringed circus to town is more diversion than economy booster. It won’t boost wages, innovation or competitiveness any more than Bank of Japan easing. Only hedge fund managers are cashing in on the Nikkei’s gain and complacent executives are getting corporate welfare thanks to a weaker yen. Left out are households that haven’t seen a serious raise in decades. Japan’s under-appreciated female masses still face a sexist playing field stacked against them. Millennials toil with labor dynamics that, in the fifth year of Abenomics, are as suffocating and seniority-dominated as ever.

Abe has crossed the globe to raise Japan’s stature, including two trips to the U.S. for audiences with America’s nationalist-in-chief. What he should do is spend more time at home under the hood of an aging economy that’s lost its groove. Nothing would boost Japan’s global esteem faster than 4 percent growth on a consistent basis and rising demand for American, German and Chinese goods. Nothing would help the Nikkei keep pace with gains in the Dow Jones Industrial Average (up more than four times more than the Nikkei so far this year) like shaking up a rigid economic culture.

If only Abe spent more time thinking about 2040 than 1940, Abenomics might be making Japan great again.

William Pesek is executive editor of Barron’s Asia. www.barronsasia.com

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