Is Shinzo Abe the pioneer of Trumpism? Japan’s prime minister is that and more in the worldview of Donald Trump whisperer Steve Bannon, who arrived in Tokyo on Sunday to laud Abe’s drive to “re-instill the spirit of nationalism.”
Bannon’s speech to the Japanese Conservative Political Action Conference was more like a sales pitch for consulting contracts than fact-based look at Nagatacho realities. After all, the former Trump adviser is licking deep wounds from a stinging defeat in the southern U.S. state of Alabama. His favored candidate — a kook accused of child molestation — lost a Dec. 12 election for a Senate seat. What better way to forget than hawk your retrograde ideas — and services — 11,000 km away?
Yet Bannon’s take on Abe’s perceived successes — calling him “Trump before Trump” — offers a timely window into why the “make Japan great again” gambit is coming up woefully short at the five-year mark.
Bannon praised Abe for having “talked about a nation’s pride, a nation’s destiny, a nation taking control of its future.” In reality, Abe is doing all this at the expense of structural reforms needed to restore Japan’s competitiveness and living standards as China races ahead. Nor has Abe prioritized closer ties with his main trading partner, preferring a Faustian bargain with Bannon’s former boss U.S. President Donald Trump.
The first misstep can be seen in the paltry growth in wages since December 2012. For all the superlatives about Japan’s economy — longest expansion in 16 years, lowest unemployment in 23 years, highest Nikkei values in 26 years — average workers aren’t prospering. When real wages rose in October for the first time since December 2016, it was by all of 0.2 percent.
Abe has been Trump-like in one regard: believing that surging stock prices denote economic success. Trump thinks record highs for the Dow Jones Industrial Average absolve his administration of all manner of sins. Why harp on the cronyism, arrogance and the slow pace of structural upgrades, Trump says, when surging shares suggest all’s grand? Abe holds up the Nikkei’s 128 percent boom on his watch as similar justification.
Favoritism scandals at schools Moritomo Gakuen and Kake Gakuen? Look, Team Abe says, the Nikkei is going gangbusters! Mushrooming 2020 Olympics spending? Investors aren’t worried. The parade of corporate scandals from Kobe Steel to Mitsubishi Materials to Obayashi Corp.? Meh. Tokyo’s assault on press freedoms and draconian secrets and security bills? Buy my Abenomics.
Abe shares in a Trumpian trickle-down economics fantasy. All the Bank of Japan’s largess and efforts to tighten corporate governance have done, though, is enrich shareholders and big landowners. Left out are the salaryman masses wondering when, oh when, the Abenomics rubber will meet the road. What’s more, the focus is shifting to additional corporate tax cuts to keep pace with Trump’s.
There’s a cart-and-horse dynamic at play here. The reason foreign companies aren’t rushing to make long-term investments in Japan is less about taxes than an insular corporate culture, chronic rigidities, dismal demographics and woeful productivity. As Randall Jones of the Organisation for Economic Co-operation and Development points out, labor efficiency is about one quarter below the most advanced OECD members.
That, he says, is “surprising, given Japan’s outstanding performance in education and skills, and high level of research and development spending.” The result? Even greater wage inequality at a moment when Abe is pledging to increase prosperity.
These fixes require micro re-engineering, not macro stimulus that tosses money at the problem. Japan has been doing just that for 27 years now, since the collapse of the bubble economy. It’s a lesson Abe failed to heed in his 2006-2007 stint as prime minister. It’s one the five prime ministers who served between the first Abe government and today’s didn’t learn. And Tokyo is again repeating those mistakes, punting wholesale reforms ahead and tweaking at the margins with fresh stimulus packages that don’t prepare Japan for the decade ahead.
Bannon credits Abe for “rearmament,” but how does that arm corporate Japan to avoid becoming a subsidiary of China? Bannon says “Japan has every opportunity to seize its destiny, to re-establish its national identity (and) in true partnership with the United States, reverse what the elites have allowed to happen,” ignoring that Abe is the elite of the elite. He forgets, too, that Abe’s extreme focus on national identity and history is clouding Japan’s future.
It’s awkward to hear Bannon spitting all over the Trans-Pacific Partnership as Abe struggles to revive it. Calling a deal Abe spent vast political capital joining an “ill-defined, generalized” process smacks of insensitivity of Tokyo’s plight as China rises.
Tokyoites and Alabamans obviously have little in common. Well, other than Bannon’s epic misunderstanding of events on the ground in both places. But in showing Abe love for the wrong policies — ones that five years on remind us Abenomics has been focused more on rhetoric and spin than genuine change — Bannon may have inadvertently diagnosed why his hero Abe isn’t making Japan’s economy great again.
Based in Tokyo, American journalist William Pesek is the author of “Japanization: What the World Can Learn from Japan’s Lost Decades.”