Riding to the rescue
The prime minister has been given an opening. Will he take it?
WHEN the Bank of Japan (BoJ) moved unexpectedly on October 31st, the effect was to galvanise the world's financial markets and, at home, to breathe new life into Shinzo Abe's programme to pull the country out of deflation. The scale of the central bank's action—it will print money to buy ￥80 trillion ($698 billion) of government bonds a year, equivalent to 16% of GDP—directed politics away from a string of distracting cabinet scandals.
Mr Abe's plans for the economy had been flagging. A rise in the consumption (value-added) tax in April had prompted an alarming drop in spending by consumers. The first shoots of inflation started to retreat. Having climbed to 1.5% in April, core inflation fell to 1% in September—far off the 2% target that the central bank had said it would achieve by the spring of 2015. Meanwhile, some spread rumours that a conservative old guard at the central bank was regaining sway and could block Haruhiko Kuroda, its governor, from fulfilling his promise to do “whatever it takes” to rid Japan of deflation.
As it was, Mr Kuroda only narrowly won consent for the bank's move. On October 31st four of the board's nine members voted against expanding quantitative easing. That lack of consensus caused almost as much of a stir as the easing itself.
Yet the BoJ's move strengthens another consensus among Japan's policymakers, which is that Mr Abe will soon be obliged to press ahead with a second rise in the consumption tax, next October, from 8% to 10%. Mr Abe has to decide by the end of this year if he is not going to, in order to introduce legislation to stop the hike. After a dreadful second quarter, when GDP shrank by an annualised 7.1%, many of Mr Abe's economic advisers are convinced that the initial rise was a mistake. A battle is on between the finance ministry, which is pushing for the increase to deal with Japan's ballooning public debt, and the prime minister's office, which leans towards altering the timetable. Akira Amari, the key minister for economic reforms, seems to favour sticking to the timetable.
In reality, argues Gerald Curtis of Columbia University, the radical action taken by Mr Kuroda, a staunch advocate of a hike in the consumption tax in order to maintain the country's fiscal credibility, may have removed most of the prime minister's political leeway for postponing one. Mr Abe is likely to make his decision after final GDP figures for the third quarter are released in early December; a closely watched preliminary estimate comes out on November 17th.
The problem with an increase in the consumption tax is that it hits the very people who need to spend more. In similar fashion to America or Europe, quantitative easing has benefited big businesses and wealthy individuals owning shares or property in Tokyo and a few other big cities. But ordinary Japanese, notably in the regions that are emptying of people, feel left behind. Support for Abenomics is slipping as more people feel there is little in it for them. As well as the rise in the consumption tax, households have had to contend with higher prices from a weaker yen, notably higher energy and fuel costs. At least these have fallen in recent weeks as global demand for oil has weakened. It is one reason Mr Kuroda felt able to act by loosening policy further. The yen weakened immediately. The news that the government pension fund will double its holdings of equities, including foreign ones, has also helped drive down the yen even as it has boosted stockmarkets.
In all the excitement over monetary easing, the part of Mr Abe's programme to do with structural reform has gone mostly unmentioned. The government has at times dangled the prospect of impressively bold reforms, such as allowing firms to fire permanent workers in return for severance pay while also making the employment of Japan's millions of workers on non-permanent contracts more secure.
In some areas, good progress on such reforms is being made, in particular over the participation of women at work. Some 820,000 women have joined the workforce since Mr Abe came to office in 2012. The government will oblige large companies to publish figures on the number of women on boards. Two-fifths of career civil servants hired this year were female, a sizeable jump. The hope is that the scandals around the resignations last month of two women cabinet ministers, following minor financial misdeeds, will not prove too severe a setback to the government's campaign to better the lot of working women.
Elsewhere, in a series of special economic zones, experiments are taking place to free up strict regulations over farming and other sectors. Yet overall, says Heizo Takenaka, an adviser to Mr Abe, the government's attempts are falling short. Mr Takenaka was once enthusiastic about the prospects for stronger leadership.
As barons in the ruling Liberal Democratic Party last month sought the means to silence the opposition on the subject of political-funding scandals, speculation grew that Mr Abe might call a snap election by the end of this year, discomfiting an opposition in general disarray. Similar rumours swirled following the central bank's action. Yet with a majority in both houses of the Diet guaranteed until 2016, Mr Abe already has the muscle to make real reforms. He just needs to use it.
上个月里执政党自民党中的大人物试图以防民之口的方式来应对人们对政府资金丑闻的非议，因此，越来越多的人们猜测安倍晋三可能在今年年末之前进行提前选举，以解决人们对这一混乱局面的反对情绪。而日本央行的此次举动也引起了类似的流言与猜测。而鉴于日本国会的参议院和众议院中大部分成员都会在2016年前保有议员身份，因此安倍晋三其实已经有了在改革上大展拳脚的资本。关键就看他是否要这样做了。译者 戴京涌 校对 胡靓