Japan’s vote for bold reform

Shinzo Abe Tokyo – With the powerful mandate of the Japanese people, demonstrated by their overwhelming vote of support in our country’s December 14 election, my government’s ability to act decisively has been strengthened immeasurably. Indeed, we now not only have the authority to act, but a clear and definitive message from the electorate that we must do so. In particular, we now have a mandate to launch what has become known around the world as the “third arrow” of so-called Abenomics: structural reform. And it is structural reform that will unleash the competitiveness, and long-pent-up dynamism, of Japan’s firms and people. By calling in November for a snap general election, my aim was to consolidate the government’s political capital – not in order to hoard it, but to spend it on the reforms that were first promised two years ago. Now, with our renewed mandate, that is what we will do. First, we intend to subject Japan’s tax regime to a fundamental review. This entails not only an increase in the consumption-tax rate, the second round of which we have postponed, but also making the necessary adjustments so that our tax system no longer impairs investment incentives. Some of the agro-business organizations – the epitome of vested interests – must change, and we will push them to do so. Second, we must adapt Japan’s labor regulations to the norms of modern life almost everywhere, which means allowing every individual to strike a beneficial balance between life and work. We Japanese will always work hard – I have no doubt about that. But we also need to enable and encourage more Japanese women to participate in the workforce, whether at the beginning of their careers, or after choosing to have and raise children. Moreover, it is not just bold domestic reforms that must be embraced. Japan also needs to change how its economy interacts with the world. Consider the Trans-Pacific Partnership (TPP) and the Japan-European Union Economic Partnership Agreement. Completion of both trade and investment deals are among the most urgent tasks we face, because Japan’s economy needs powerful external catalysts to spur change in how we compete at home and for export markets. Japan has no alternative other than to do everything necessary and feasible to enhance its labor productivity. We now have the Japanese public’s support to make all of these changes happen. That support is based on explicit statements of the government’s intentions. For example, it is now well understood – and approved – by voters that, come April 2017, my government will raise the consumption tax. Until then, we will no longer be bogged down in debating the merits of this decision. But we also know that the political space that we have secured is too precious to be squandered. We must use it single-mindedly to implement reforms that enhance Japan’s long-term growth potential. Our country’s global standing depends on it. Over the last two years, I have traveled 354,200 miles, visited a total of 62 countries, and conducted 246 one-on-one meetings with heads of state and other national leaders. These experiences have convinced me that there is an enormous amount of trust in the world about the path that postwar Japan has taken. In particular, there is no doubt about the norms and principles that our people and our government have long upheld, such as popular sovereignty, respect for human rights, and peace – all pillars of the Japanese constitution. Japan has also gained international credibility for the fact that, for seven decades, its diplomacy has not once sought to coerce or intimidate any other country with threats of military force. Most significant, global trust in Japan reflects the modesty and decorum that countless Japanese have exemplified as they worked to make our economy one of the world’s three largest. The faith that the world has placed in Japan and its people has been Japanese diplomacy’s most valuable asset. Our mandate from the Japanese people is to ensure that this tradition continues, undiminished, into the future. That is the oath I will be making as I assume leadership of Japan for the coming electoral term. For me and my government, the main task ahead – working even harder to restore Japan’s economy – is inseparable from safeguarding our country’s position in the global vanguard of peace, progress, and prosperity. Shinzo Abe is Prime Minister of Japan. Copyright: Project Syndicate.

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Japan’s vote for bold reform