THE YALE PROFESSOR SHAPING JAPAN'S ECONOMY***** http://www.*****
Why you should care
If Japan’s economic experiment is a success, it will lift the global economy and provide some important lessons. And flush friends make for flush friendships.
When Shinzo Abe, head of Japan’s Liberal Democratic Party, decided to mount a political campaign premised on the radical restructuring of Japan’s economy, he placed a call to Yale professor emeritus Koichi Hamada
当安倍晋三作为自民党党首决定参加以激进经济改革为前提的竞选时，他电话联系上了耶鲁大学退休教授 滨田宏一 。
“Japanese investors are cheering the Tokyo Stock Exchange’s best year since 1972. What’s behind the stunning turnaround?”
One of the deans of the Japanese economics community, Hamada had been trying to persuade Abe and other Japanese politicians for years that only bold steps will help pull the country’s economy out of its two-decade malaise.
The 77-year-old professor finally found someone who was willing to listen.
That call took place in the fall of 2012. Barely a year later, the Japanese government has dropped the term “deflation” — the bête noir of its economy — from its monthly reporting, and Japanese investors are cheering the Tokyo Stock Exchange’s best year since 1972.
What’s behind the stunning turnaround? An aggressive set of monetary and fiscal policies that Hamada and other senior economists have been pushing to reset expectations about the Japanese economy and encourage companies and individuals to invest and spend more. The key element has been the effort to increase inflation by committing to the monetary policy of “quantitative easing” — increasing a country’s money supply by buying up government bonds.
“These policies aren’t exactly new, but the scope is exponentially larger than anything Japan has tried before.”
It’s the same sort of tactic Federal Reserve Chairman Ben Bernanke has used over the last few years to propel America’s gradual recovery. The Bank of Japan is hoping to drive up inflation to 2 percent by 2015, an ambitious goal that it insists is within reach. A happy side effect has been the devaluation of the Japanese yen, making the country’s goods cheaper abroad and boosting exports. On the fiscal side, the Abe government passed a massive $200 billion stimulus package.
Koichi Hamada speaks during an event in Tokyo on Sept. 4, 2013.
These policies aren’t exactly new, but the scope is exponentially larger than anything Japan has tried before, says Peter A. Petri, professor of international finance at Brandeis University and an expert on Asia. Through his bold rhetoric and personnel moves, Abe has signalled “the beginning of a comprehensive and sustained effort to build a new economic model,” Petri says. “A lot of this is about expectations, and they managed expectations marvelously in the last year.”
布兰迪斯大学国际经济教授，亚洲方面经济专家Peter A. Petri发表讲话：“这些政策确实不新，但是这一次的政策规模以日本以往任何一次都要大。“安倍通过大胆的言行及人事调动开启了全方位和持续性的新经济模式。人们对这样的经济模式更多的是一种期待，但是去年一年来，日本没有让人们的期望落空，“他说。
Hamada counseled Abe as he was crafting the policies, but he demurs when asked if he’s the “brains” behind the approach, as many have called him。
“Hamada cannot help the prime minister when it comes to the tricky politics of the next and, experts say, most crucial, phase of Abenomics — structural reforms.”
“That is an honor, but there are at least two or three or more who could be called the same way,” says Hamada, who started out studying law before turning to economics. He’s since amassed an impressive array of academic degrees — a bachelor’s and master’s as well as a law degree from the University of Tokyo plus a master’s and Ph.D. in economics from Yale. Hamada returned to New Haven from Tokyo in 1986 and has been teaching at Yale ever since. But he maintains his Japanese citizenship and still speaks English with a heavy accent.
Hamada first met Abe while serving as a senior adviser for the Japanese government’s Economic Planning Agency from 1998 to 2001. Abe was a deputy cabinet secretary, first under Prime Minister Yoshiro Mori and then for Mori’s successor, Junichiro Koizumi, and he was responsible for coordinating meetings with Hamada’s agency.
The two kept in touch and when Abe made a bid for prime minister in the fall of 2012, “our paths suddenly joined together” again, Hamada says.
Hamada has since become one of Abe’s most trusted economic advisers, even from his base thousands of miles away in Connecticut.
Abe is not an economics expert, says Petri, but he was “sufficiently knowledgeable to listen to economists” like Hamada, who collectively have “played an important role in convincing him that fairly extraordinary steps had to be taken” to right the Japanese economy.
That’s not to say that the prime minister always heeds his advisers. For example, Abe announced in October that he would allow an increase Japan’s sales tax this coming spring, despite strong warnings from Hamada that the move could jeopardize the economy’s nascent recovery. Hamada now says that the Bank of Japan should be able to mitigate the impact through monetary policy, but it will have be proactive. “The bank of Japan should be watching all the time,” he says.
And Hamada cannot help the prime minister when it comes to the tricky politics of the next and, experts say, most crucial, phase of Abenomics — structural reforms. The Yale economist says that without a restructuring of the Japanese economy — through government deregulation, lowering corporate tax rates, opening up the labor market and freer trade — it will not be able to sustain the growth of the first year of Abenomics.
“Abenomics is at this kind of critical stage where the first part of it, which is to build up confidence that Japan can do better than it has … has been tremendously successful,” says Petri. Now ”people’s confidence has to be justifed by real reform.”
Those efforts, however, face stiff opposition from entrenched bureaucrats and some of Japan’s most powerful industries. Any one of the reforms is a heavy political lift; achieving them all will likely take decades. And external factors — like rising tensions with China and South Korea — could also upset the recovery.
Hamada does not underestimate the challenges. Some of the reforms he and others are calling for — like new immigration policies — could fundamentally reshape Japanese society. Says Hamada, ”The Japanese may have to sacrifice their tradition, ethnic homogeneity, sometimes a very safe way of life.”
Without such steps, however, there’s a good chance that Japan’s gains from year one of Abenomics may dissolve into another lost decade.
rotorhead1871 · July 20 at 8:25pm +3
japanese society is too closed for this to work in the long run...they just cannot let anybody else in their game.
.Says Hamada, ”The Japanese may have to sacrifice their tradition, ethnic homogeneity, sometimes a very safe way of life.”
and THAT will never happen.......
Mike Carter · July 22 at 11:53am
It’s the same sort of tactic Federal Reserve Chairman Ben Bernanke has used over the last few years to propel America’s gradual recovery. - one of the worst recoveries in American history and a decidedly failed strategy which is now crumbling at its very foundation as our economy retracts instead of expanding.
这和美联储的主席BEN Bernanke 过去几年用于振兴美国经济的做法是一样的——美国史上最糟糕的一次复兴，并且绝对是一个失败的政策，在我们的经济不仅没有前进，反而是在后退了。
Brian Lamothe @mike Carter · July 23 at 8:09am +1
And what would you have proposed? Because I and many others are doing very well right now. And what exactly is this evidence of the economy retracting you speak of? One bad quarter which coincided with the worst winter in recent memory? Sounds like you are getting your news from a bunch of negative blowhards.
Christian Russo @Brian Lamothe · July 24 at 8:26am
Brian Lamothe Just wait until the fed funds rate is increased from 0%. Every time there's been even a whisper of a rate increase, the market sells off-... and we know quantitative easing can only last for so much longer. Sure, right now everything is peachy, but if you comprehend what the results will be when the aforementioned occurs, you will understand Mike's point.
John David Deatherage · July 20 at 3:03pm
This author confuses growth in the stock market with growth in the economy. The Japanese Central Bank's loose money policies are boosting stock prices. That is not evidence that the economy is growing faster.
Andy Cho · July 20 at 10:53pm
it's NOT going to happen... japanese economy dooms-day~