Japan is showing world leaders how to save their economies

By Matt O’Brien

One of the most successful politicians in the world just won one of his most important elections, but nobody seems to have noticed. Maybe he should try tweeting more.

I’m talking about Japanese Prime Minister Shinzo Abe. His Liberal Democratic Party just managed to hold on to its two-thirds majority in Japan’s lower house of Parliament, which it needs to be able to amend the country’s constitution, even though a series of scandals had recently pushed Abe’s personal popularity to new lows. It helps when your opposition is weak — and also when your policies have made the economy strong.

Abe — who will host President Trump later this week at the beginning of Trump’s 12-day Asia trip — came into office five years ago with a mandate to jolt Japan’s economy out of its somnolent state. That, at least, was the story he told. Reality, though, was a bit more complicated. Japan, you see, had been the first county to go through the boom, bust and stagnation cycle that the rest of the world has gotten to know and hate so much the past 10 years.

But even that doesn’t give you a sense of how bad things were, or how much worse they could have been. Japan really did have one of the biggest bubbles in history. One story — almost definitely a myth, but one that gives you an idea of how crazy things were — held that the land under Tokyo’s Imperial Palace was at one point valued as more than the entire state of California. Not to mention that Japan’s stock market hit what is still an all-time high of 38,916 back in 1989. It’s only 21,740 today.

To put that in perspective, Nomura economist Richard Koo estimates that Japan lost three times more …read more