Naked Capitalism has the article Why is Anyone Surprised that Abenomics Failed?

Yves again. So understand full well why austerity gets such favorable treatment. In its current version, where central banks use QE and super-low interest rates to offset its bad effects, the result is rip-roaring asset prices and a continued shift of income and wealth to the rich. The financial classes, who have considerably sway with the media, want to be sure these beatings continue until morale improves.

I was surprised by this turn of events in Japan.  I thought Abe was actually using a fiscal stimulus approach.  If you refer to the wikiPedia definition of Abenomics, you can understand why I was confused.

Abenomics refers to the economic policies advocated by Shinzō Abe since the December 2012 general election, which elected Abe to his second term as Prime Minister of Japan. Abenomics is based upon “three arrows” of fiscal stimulus, monetary easing and structural reforms.

I admit that I wasn’t following what was going on in Japan very closely.  This article sets me straight on my false understanding of what Abe was doing. The fiscal stimulus part of Abenomics was too little and ended far too early. Sound like the policy of any President you know?

These policies fail and fail again, and yet some economists keep insisting that they will work.  Maybe it’s time to refer to Greenberg’s Law of Counterproductive Behavior to wit “If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the behavior was trying to produce.” It is clear from this article that the actual goal was “a continued shift of income and wealth to the rich.” In all cases this result has actually been achieved quite nicely.

The Boston Globe/The New York Times did a wonderful job of proving exactly what the Naked Capitalism article said. As published in The Boston Globe, the article was headlined “As Japan struggles, leader calls for early elections”. Online the headline was Abe’s call for early elections in Japan prompted by fear.

One problem, economists say, is that Abe failed to use the upturn as a chance to push through painful market-opening moves and structural changes needed to make the recovery last.

What you will never find in a story from The New York Times nor from The Boston Globe is “One problem, economists say, is that Abe failed to continue the fiscal stimulus long enough, and foolishly allowed the regressive consumption tax to take effect.” There are many economists (see the Naked Capitalism article above) who are saying this. In what universe does it make sense to put a tax on behavior you want to encourage – consumption?

As this article does point out, wealth in Japan for the working people is being shifted to the wealthy. The non-wealthy are hit by falling wages and rising taxes. A national sales tax is aimed at the middle and lower classes and takes the pressure off the wealthy classes. The wealthy spend a far smaller percentage of their income on consumption than every one else.  So a “fair” sales tax on consumption takes a far smaller fraction of the income from the wealthy than it does from the non-wealthy.

Yet the repeated failure of these policies in many places around the world continues to stump the reporters of The New York Times.