David Frum


Can 'Abenomics' Revitalize Japan?


Noah Kristula-Green lauds the efforts of Japanese Prime Minister Shinzo Abo to stimulate the economy now, while restoring Japan to a pattern of higher growth in the long term. (Also, he explains what "Abenomics" means, which you may find quite helpful).

The hope is that a cheaper Yen will make exports more valuable, loans more appealing, and encourage domestic spending. So far the market has shown signs of confidence in the policy. The value of the yen is falling exactly as planned, and Japanese stocks on the Nikkei are doing very well. As a result, Abe and his government are now remarkably popular; the Japanese population is usually apathetic but it is giving a stunning 76 percent approval rating to Abe's government.

There are potential pitfalls ahead: Changes in monetary policy might ultimately be easier to achieve than changes in Japan's bigger structural problems, and Abe's nationalism does risk antagonizing nearby nations.

But if Abenomics succeed then the lesson for Americans will be that the aggressive monetary policy can work if it is bold and if it given space to operate. The U.S. Federal Reserve has conducted its own quantitative easing policies, but they are not strongly supported by many U.S. politicians. There is a pathological fear that anything which weakens the value of a currency or which might be inflationary can't have any positive outcomes. Japan might just prove that this is not the case.