With no clear plan, Shinzo Abe's lofty goals to revitalise Japan are mere wishful thinking

Kevin Rafferty doubts the prime minister can fulfil his pledges to boost the country's flagging economy, increase the fertility rate and stem population ageing - all without a clear road map

PUBLISHED : Friday, 16 October, 2015, 12:05pm
UPDATED : Friday, 16 October, 2015, 12:05pm

Shinzo Abe, Japan's prime minister, correctly identified the problems his country faces if it wishes to recover from its economic crises that have seen it falling from being the second most powerful economy in the world towards middling-power status.

READ MORE: Shinzo Abe outlines new plan to revive Japanese economy

Then, with waves of his magic wand, he virtually solved all the problems: he will expand the country's economy by 20 per cent; transform agriculture into a powerhouse via the Trans-Pacific Partnership agreement; increase economic dynamism by giving women a greater role; and increase the fertility rate to stabilise the population at 100 million.

Perhaps the biggest worry is that most people are not worried, behaving like the proverbial frog happily luxuriating in warm water that is being heated

If only: perhaps Abe should let someone take over who can actually work out how to achieve the policy prescriptions, far more difficult than making promises.

Many problems are of Abe's own making because he has abused his political and economic capital by ignoring the economy for nine months to force through new security laws of questionable economic value.

Growth is flat. After years of quantitative easing, inflation refuses to get moving. The stock market is riding high on the prospects of yet more quantitative easing, causing the yen to fall.

Japan's supporters say it is a leader in global science and technology - witness the two Nobel Prizes in this year's awards - and remains No 3 in the world in terms of total gross domestic product.

Everyday life for the majority is certainly comfortable and, equally important in turbulent times, safe. Unemployment is 3.4 per cent. But if you look beyond the simplistic headline numbers, Japanese have many reasons to worry.

In terms of purchasing power parity, India is now ahead of Japan to be the world's third-biggest economy. By income per capita, Japan - with about US$36,000 - has slipped, which puts it somewhere between 24th and 30th in the world league.

READ MORE: Japan's greatest challenge is demographic not economic

Even if you strip out small resource-rich places like Qatar, Brunei and Saudi Arabia, plus Macau (thanks to income from casinos), Japan comes well below the US (US$54,000), and below Switzerland, Ireland, Australia, Sweden, Germany, the UK and France in per capita rankings.

All this is before the damage of a declining and ageing population have begun to bite a heavily indebted government. Japan's population has fallen below 126 million and is heading for 87 million by 2060. Already, 26 per cent of Japanese are 65 or older, and that will rise to 40 per cent.

Perhaps the biggest worry is that most people are not worried, behaving like the proverbial frog happily luxuriating in warm water that is being heated, ignorant that it will soon be boiled. One reason for the inaction is that the government takes all the decisions.

Should Abe be congratulated for pointing out the problems, or damned for his patronising and potentially totalitarian attitude that he can solve by edict issues with complex roots going deep into society and post-war history? He declared he planned to raise Japan's total GDP to 600 trillion yen (HK$389 billion) from about 491 trillion last year, but offered neither a timetable nor a road map for getting there. His determination that women should be 30 per cent of Japan's managers flies in the face of facts that women are 6 per cent of managers and about 1 per cent of senior executives.

Even a nursery school teacher could tell Abe that there is a potential contradiction between his demand for more women in work and for women to produce more children. One dared to say so on a BBC programme this month: "I understand why Prime Minister Abe says that the economy needs more women to work - but I wonder if he is listening to the actual mothers."

Kevin Rafferty is a political commentator