Japan’s finances are being pushed towards a cliff by a prime minister who is drunk on borrowed money.
These are two of the alarming images which were appeared in the international press this week to describe Prime Minister’s Shinzo Abe’s economic policy, Abenomics.
Abenomics is nearly always criticised by the foreign media for being neither innovative nor effective. The latest spending announcement from the prime minister was generally dubbed “disappointing”.
The general view in the foreign press is that fiscal stimulus packages, like the one announced this week, are part of a long-established, boring and unsuccessful attempt to solve Japan’s economic problems by spending borrowed money on wasteful projects.
The key criticism is that this racks up ever more debt for Japan and does not address fundamental issues with the way Japanese society is organised.
The fiscal cliff idea comes from the view that if Japan keeps spending like this, at some point the money will run out and Japan’s economy will face a precipice and then a terrifying, sudden fall.
The claim that the government is “drunk on money” comes from the idea that because the spending is of borrowed money, rather than money derived from tax, it cannot last. Barron’s Asia said Mr Abe is therefore like a drunk person high on a drug which makes his problems worse.
Despite being aware of such criticism, Prime Minister Abe continues to spend money on projects which he hopes will stimulate the economy and keep Japan out of recession.
The measures are popular among Mr Abe’s supporters.
Bloomberg explained that the latest spending package includes funds to provide better port facilities for cruise ships and to accelerate the construction of a high-speed maglev train line.
There is also a substantial sum to help with reconstruction following earthquakes.
And a large proportion of the money is specifically designed to help address the problems associated with an ageing population. For example, it will help to pay for child care for mothers who want to work. Getting more women to work is seen as one way of balancing the number of people who are retiring.
So in the minds of the Japanese, the real test of Abenomics is how well it fits together as a coherent set of policies which benefit the whole of society, including women and the elderly.
Few Japanese people regard it as a perfect solution to a complex set of challenges. But they accept it as a plausible approach even though it does nothing to reduce Japan’s mounting debt.