The Indicator from Planet Money - The Economic Legacy Of Shinzo Abe

Shinzo Abe served as Japan's Prime Minister for nearly eight years before suddenly announcing his retirement in August. Today on the show, the lessons of Abenomics for the US and other countries.

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Content Keywords: economy prime minister Shinzo Abe Japanese Ave Hammond

I want this indicator from Planet Money on card the first year someone just happen this year that you might not have noticed the news at the end of August that Japanese prime minister Shinzo Abe announced that he was retiring but the story was actually a huge deal Ave Hammond Japanese prime minister uninterrupted longer than anyone in history almost eight straight years and more importantly he had to turn around a struggling Japanese economy by doing things that were totally unexpected and the other countries might be able to learn from The Economist Noah Smith live in Japan for several years and he still spends about a month or every year now analyzing the Japanese economy and 1ave took over as prime minister at the end of 2012 know what did not think much of it because I had been prime minister once before back in the 2008 was not a super impressive stretch. No says, I didn't expect him to do more this time, but he completely defied my expectations.

Hired a bold team of advisors and implemented the most dramatic economic revitalization plan in living memory lasts, which in recent years has been fighting trade Wars and making it harder for immigrants to move here. I did the exact opposite for Japan. No says I'll be governed is an economic liberal which means he opened up the Japanese economy to trade and immigration and then he tried to make Japanese companies more Dynamic more competitive. He became Japan's most liberal leader probably in the post-war era which is astonishing because everyone expected him to be this arch-conservative Kevin's extremely conservative background and had a lot of right-wing allies instead. He ended up changing Japan in the liberal Direction.

Bonanza show the legacy of Shinzo Abe. How did he get the Japanese economy back to growth again? And one of the lessons of his time is Japanese prime minister for the US and for other countries chat with no Smith right after the break.

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No, I want to start with trade because so many other countries have kind of close themselves off from trade in recent years. I'm in the u.s. Famously under President Trump pulled out of the trans-pacific partnership trade deal with all these other countries including Japan at the start of his presidency. And then of course, he also launched trade Wars race Terrace raised other barriers to trade in July be kind of did the opposite for dependent absolutely did under Ave. Japan became the world's biggest promoter of trade agreement signed a big trade agreement with the EU and managed to keep the trans-pacific partnership going despite Trump having withdrawn the United States. So essentially Ave became the standard bearer of free trade or at least for trade agreements the reasons for pursuing all these trade agreements are of course to open up markets for Japanese exports, but also through opening up Japan to Foreign imports to put pressure on hidebound.

Unproductive Japanese Industries, especially the agricultural industry force them to modernize and increase productivity pan faces because I think it's a challenge that a lot of other countries or paying attention to to see how Japan deals with it because they also might face a future in which they have to deal with it. And it's that Japan's population is aging average age is rising and that makes it harder for the Japanese labor force to grow over time because there may not be enough young people to offset the older people who are retiring and leaving the labor force. So what did I may do to confront that challenge and and bring people into the Japanese labor force he did basically two things number one. He tried to increase women's participation in the labor force number to he tried to get more immigrants to come work in Japan.

Both of those things have been sort of stagnant for years. It wasn't much immigration and women face lot of barriers come in the labor force right right women had been increasing their labor force participation gradually, but this really accelerated under Ave. As for immigrants. It had immigration have been really low before Ave. And then sharply accelerated under him. Those are both things that other countries are also grappling with so what specifically did they do to lower barriers for women to enter the Japanese labor force. One of the bearers is the daycare is really hard to find an expensive in Japan. So the administration built many daycare centers, although now so many women are going into the workforce that the Y has difficulty keeping up with the demand that he built a lot more day care centers. He also expanded parental leave policies dramatically to make it easier for parents to go.

Take care of kids for a while and then come back to their old jobs in addition. He leaned on companies to hire more women. He forced companies to disclose how many women they were hiring including for managerial positions and then companies that hire more women would get preferential Awards of government contract. So that was another powerful tool graichen two things. Basically number one for skilled immigrants. They made a fast track to permanent residency made it easier to come live and work in Japan. If you had some sort of skills number to he created a new program with was called a guest-worker program, but is really an immigration program because it has a path to permanent residency. So that's four more sort of unskilled labor at the Japanese Central Bank that would use

Aggressive monetary policies to really stimulate the economy and to get the Japanese economy growing fast enough that people and companies would be spending enough money to raise inflation in Japan up to 2% a year after years of of low inflation and even prices falling because people were not spending very much money. So were those monetary policies successful in your opinion they were so the Central Bank printed a bunch of money. It bought a large bunch of assets including much of the country's stock market. However, this failed to raise inflation to the desired 2% Target, even though it got the country out of deflation, but they didn't hit the target and there's a number of other ways in which sort of Grease the wheels of financing for corporate Japan that probably helped and so monetary policy, even though they didn't hit that inflation Target did help a lot.

You look at the Japanese economy in the time under Ave. And you look at all these different policies that we just discussed and then are they put in place and would seem to have had a positive effect. What do you think are the lessons of a base time is prime minister for for other countries in for the leaders of other countries. I think the number one lesson is that people care about their standards of living Abby had a chance to focus on culture wars and he passed it up and instead focused on increasing people's lot in life and avoiding culture War entanglement and focusing on making things better for people and doing whatever you need to do and not being a prisoner of ideology not deciding ahead of time that every policy you do needs to conform to some idea of how Economic Policy should work but instead being pragmatic and simply doing what works. That's the lesson for other leaders.

Thank you so much. Thank you.

This episode of the indicator was produced by Darren woods and Jamila Huxtable. It was fact-checked by Sean. Saldania or editor is Patty Hearst in the indicator is a production of NPR.

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