Japan; a name that brings with itself elegance, efficiency, and sheer respect. A name that often associates itself with the right reasons, be it diplomacy, culture, or work ethic. A name that fills my heart with something positive and makes me want to witness itself. Yes, it might appear that I am romanticizing the Land of the Rising Sun (again) and put the blame on a family member associated with a Japanese company, but to be honest, there are little lies in the statements above. However, the nation has been home to a lot of activity recently and has given me a chance to pen down some important facts.
The country’s longest-serving Prime Minister, Shinzo Abe, stepped down on August 28 citing health reasons. In-office since 2012, he provided the much needed political stability to Japan, before whom the nation had been led by 19 Prime Ministers in the last 30 years, the era often termed as the “revolving door”. the Prime Minister also focused tremendously on foreign policy and diplomacy, strengthening ties with major powers and entering in free trade deals with Asia and the West. However, one term has been dominating the headlines since he came to power and stands out - “Abenomics”, referring to Prime Minister Abe’s economic policies and his stance on the fiscal and monetary measures.
Japan’s economic struggles date back to the 90s, termed as the “lost decade”. The recession-clad nation had been suffering from a drop in exports and very low consumption. Shinzo Abe upon taking office provided hope with a promise to smoothen the rocky terrain with unique policies.
His plan was built on three pillars. One, Quantitative easing by the Bank of Japan. Two, fiscal stimulus through government spending, and three, structural reforms to make industries more competitive. In an attempt to revitalize the economy, Prime Minister Abe had announced the second highest stimulus package in Japan’s history amounting to 20.2 trillion Yen The Japanese have never been big spenders, and restrictive lending of credit was followed, which resulted in negative interest rates, incentivizing people to loosen their pockets. Structural reforms included diversity in the workforce, transforming the agricultural and the health sector, and fruitful trade deals like the Trans-Pacific Partnership, among many other things. A major highlight was the target of a 2% inflation rate annually. To take care of the revenues needed for rising social security expenditures, the policy also included increasing the consumption tax rate, a measure that has attracted heavy criticism.
Were the policies a success? Very difficult to say. In 2013, an excellent 3.5% growth rate accompanied by a 55% rise in the stock market shed bright light. The GDP is certainly higher, unemployment has gone down and revenues have been on the up. Before the pandemic, eight straight quarters witnessed growth, unprecedented in Japan’s history. High tech electronics, robotics, and tourism have consolidated and contributed massively.
But on the flip side, the tangible impact has not been enough. Between 2012 and 2015, real GDP contracted by 6.8% annually. The consumption tax has been raised from 3 to 5 percent and then again to 8 percent, a move that has not facilitated spending. Structural reforms have been inefficient. In 2014, the people in a survey suggested that they did not experience any personal effects, and little wage raises. Prices have only risen by 0.7%. Fears persist of a risk of hyperinflation. Debt is nearly 245% of the GDP, 11 trillion dollars.
Ergo, a lot remains to be seen. Abe has departed, but his economics is here to stay.
Defying all odds, Yoshihide Suga secured maximum votes in the internal Liberal Democratic Party’s election and stepped into the role. The son of a strawberry farmer, Suga is the fixer who gets things done. Known as the Iron wall due to his refusal to answer unlikeable questions, Suga is tough and disciplined, waking up at 5 and starting meetings at 6:30. He understands Japan’s bureaucracy like no other.
Prime Minister Suga has vowed to follow the principles of Abenomics. His initial plans include cutting the high mobile phone carriers’ fees, an agency to overhaul digital infrastructure and insurance coverage for fertility treatment as the country faces depopulation. Reducing carbon emissions and abolishing contractual stamps are some other moves. However, Yoshihide Suga is someone who has always prioritized domestic affairs over international matters, and continuing Shinzo Abe’s brilliant diplomatic relations remains a challenge. He has visited Vietnam and Indonesia strategically and pledges to have strong relations with the Biden administration, particularly over climate action. The abduction of the Japanese by North Korea is an area that he needs to address. But, as Suga took office, a larger cloud loomed over the horizon - Covid 19.
Covid 19, Abe and Suga
After 700 people were infected on the Diamond Princess in the very early days and a humongous aging population, it was certain that Japan would be the next epicenter of the disease. But since the onset of the pandemic, Japan has been spared from the worst and has had just 27 deaths/million, with the world average being 234 and the G7 average being 949. However, the figure is highest in East Asia, and Japan has been marred by a recent spike in cases and deaths, around 1337 cases in Tokyo itself on New Year’s Eve. What have they done right and what not?
The then Prime Minister Shinzo Abe realized the situation and formed the Japan Anti Coronavirus National Task Force as early as 30 Jan 2020. But the team, unlike other countries, didn't impose strict lockdowns or did mass testing. They focused on a cluster-based approach after realizing that 80% of the infected people do not pass on the disease, and instead did specialized retrospective tracing and took care of superspreader locations. The public health notices focused on 3 Cs to avoid for the Japanese faithful - Closed spaces with poor ventilation, Crowded places, and Close contact and conversations, and adherence to the same seemed to be very high. With limited testing capacity, Japan used smart science. Measures like closing down schools were acted early upon. Economically, two 117 trillion Yen stimulus packages were rolled out, enhancing employment, business and SME support, consumption promotion, and public investment. This amounted to 22% of the GDP, one of the highest in the world.
But several blots stain the clean cloth. Public surveys said the government response seemed perplexing and they downplayed the virus. They clung to the idea of holding the Olympics and provided no clarity. Cherry blossom events were carried out by officials, flouting rules. Abe announced a new policy of delivering two masks to every household, but that was heavily scrutinized as citizens complained of stained and damaged masks. As doctors suffered on the frontline, Abe put out a video playing with a dog asking people to stay indoors, angering the Japanese. Many companies were not equipped to let their employees work remotely. Only 1 out of 63 vaccines undergoing trials is from Japan. Hospital occupancy reached stage 4 in many prefectures. This highlighted the incapable health sector.
As Suga came in, he tried different things but failed. His approval ratings fell miserably, and mainly due to his “GoToTravel” campaign, an attempt to reinvigorate domestic travel and help airlines and hotels by offering steep discounts. This conflicted with the message to travel less and had to be taken back in December 2020. Suga then attended an exquisite dinner of eight with people over 70 (high-risk age group), when people were advised to dine with a maximum of 4, and had to apologize. Suga declared an emergency in January 2021, with a strict fine of 300,000 Yen on businesses, bars, and restaurants staying open apart from shortened operating hours. He also pledged to provide up to 1.8 million Yen/month to each restaurant that complies. People going to work reduced by 70%. The youth is not complying with the laws, and there have been reports of a shortage of frontline staff due to discrimination and pay cuts. All this has not been taken generously by the Japanese and made things worse for Suga.
Despite these blemishes, Japan has not been trapped in the Covid storm and has managed to keep the mortality rate low despite a very old population, and a big hand goes to the Japanese culture and lifestyle.
Keeping it simple
The Japanese way of living personally has me in awe and has helped in the fight. Masks were a regular sight in Japan even before the pandemic as people look to keep themselves and more importantly, others, away from pathogens. They bow instead of shaking hands. They remove shoes before entering homes. They do not eat on streets and public transport. These are lessons to be learned. As Covid has compelled people to move back to minimal ways, the Japanese have embraced emptiness for a long. They relish their concepts of Danshari (getting rid of 80% of your things) and Ma (celebration of space). They care for, respect, and revere their elders. They are realistic, not idealistic. Discipline in life, swiftness in work, and precision of things are what defines them.
As we come to a full circle, the family member I talked about in the start told me that on a regular broadway, you look around and will find all people in coats. That says a lot about Japan, as we have in this article too. Leaders, economy, Covid, and culture, Japan catches the eye. And with good effect, indeed.