The Kobe Steel scandal rapidly going global offers insights into why more Japanese households aren't feeling the benefits of today's 2.5 percent growth.
The Nikkei is going gangbusters, something Prime Minister Shinzo Abe is highlighting as proof Abenomics is succeeding ahead of Sunday's general election. But for whom? Real wages rose just 0.1 percent in August following a 1.1 percent drop in July. With the economy enjoying its longest expansion in 11 years, labor markets drum tight and companies awash in profits, incomes should be surging. Such mismatches will happen when a revival scheme is 90 percent monetary easing and, at best, 10 percent structural change.
Most of those tweaks since December 2012 relate to corporate governance. Abe championed a U.K.-like stewardship code to encourage shareholders to speak out and prod companies to hire more outside directors. But these largely voluntary and unoriginal guidelines are no match for Japan Inc., something of which Kobe Steel Ltd. reminds us anew.