Copyright The Financial Times
…In the 1980s Japan accomplished its century-long goal of “catching up with the west”. It has groped unsuccessfully ever since for what to do for an encore. It sent the economy into overdrive to accomplish the other part of that Meiji-era slogan, which was not only to catch up with but to “overtake the west”. That produced an economic bubble and subsequent “lost decade”, a period that came to an end after Mr Koizumi became prime minister in 2001.
But his success in pursuing a reform agenda came in the face of intense resistance from within his own party and was more a consequence of his personal popularity than a result of any public enthusiasm for a more liberal economy. Once he left office, traditional forces that had been knocked down but not knocked out recovered a lot of ground. The result has been a succession of inept leaders and the absence of a coherent policy agenda.
It would be comforting to think that this is all part of a Schumpeterian process of creative destruction. But since Mr Koizumi’s 2006 departure, it has been a process without creativity. There will be more destruction, perhaps including the demise of both the LDP and DPJ and the formation of new parties. Whatever the political goings-on, there is no optimistic short-term scenario for Japan…
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