Voters handed the architects of Japan’s bold new economic policy a sweeping electoral victory over the weekend, delivering 76 of the 121 open parliamentary seats to the Liberal Democratic Party and its coalition partner.
The result should boost the so-called Abenomics platform championed by Prime Minister Shinzo Abe — a mix of coordinated government spending, central bank stimulus and structural economic reforms designed to push up prices and end 15 years of deflation.
The fiscal and monetary aspects of the program have already helped weaken the yen and dramatically boost the profits of exporters, driving the Nikkei index through the roof in the process.
The parts of his plan which have been implemented so far are basically a traditional Keynesian response to a depressed economy. Abe was willing to go as far as was needed.
Keynesian economics proved to be a political winner in Japan not because most voters have strong opinions about monetary policy, but because it works and what people really care about is results. The general rule in almost every democracy is that if you deliver strong economic improvements you will win elections.
By comparison, when Democrats in 2009 tried to do only half-ass Keynesian economics with a far-too-small stimulus they suffered greatly as a result. The big 2010 losses were not because most regular people opposed stimulus but because Democrats failed to produce positive results.
The outcome was the worst of all possible worlds. The measure was too small to produce the needed results so it seemed to also discredit the Democrats’ entire strategy.
Some claim it is unfair to criticize Democrats for too small a stimulus because a possible Republican filibuster won’t allow for a large measure, but if you are going to be stupid enough to actually let your political opponents cripple your only chance of success, you deserve to lose.
Photo by G8 UK under Creative Commons license