Japanese PM Shinzo Abe helps big firms but fails to tackle structural problems
The Japanese prime minister's policies have done plenty for big firms, but failed to tackle structural problems left by years of deflation
Abenomics, as the radical economic policies of Japan's Prime Minister Shinzo Abe have inevitably been dubbed, has delighted the country's big industrial and financial players.
Big hedge funds have been among the biggest gainers of Abe's policies to end decades of deflation and stagnation. Some funds have scored rip-roaring gains of more than 40 per cent in the year so far, while others have settled for more modest returns of 19 to 36 per cent.
Whether the people of Japan should rejoice yet is a more difficult and probably doubtful proposition. Abe has been long on public relations, but weak on his promises to reform and restructure an economy that has become used to years of deflation as government debts have piled up to 250 per cent of gross domestic product.
The years of the locusts have eaten away more than financial discipline. They have left an economy and society stuck in their ways and bypassed by more imaginative, inventive companies and countries.
For a simple demonstration, compare and contrast Japan's Sony with Samsung of South Korea, two supposedly flagship electronic companies. Sony languishes in losses without a good new product for years, while Samsung has gone from strength to strength, with sales of US$179 billion last year, making it the world's biggest electronics company by revenue, and challenging Apple in the global range of its products. And that is only Samsung's electronics wing.
The economic survey of Japan from the Organisation for Economic Co-operation and Development last month provides a good summary of the problems that Japan faces. It puts emphasis on the need to restore financial discipline, but it has a string of other conclusions and recommendations, some of which will not be easy to accomplish while restoring discipline.