Kishida Weans Himself Away From Abenomics Mantra

Abenomics was supposed to be the magic toolkit that revitalized the Japanese economy. But nine years and a couple of prime ministers later, growth remains sluggish, and wealth disparity has risen, William Sposato reported for Foreign Policy.

Photo Insert: Japanese Prime Minister Fumio Kishida is veering away from "Abenomics" and is instead pushing for what his administration calls "New Capitalism."

Picking up on growing public anger over inequality, newly elected Prime Minister Fumio Kishida has laid out a populist economic policy that offers cash, seeks to bolster potential growth sectors, and prods companies into raising long-stagnant wage levels.

While the ideas have their attractions, they also mean a greater state role in an economy that most experts agree needs less government intervention to succeed, not more.

The program, which Kishida touts as no less than a “new capitalism,” features tax incentives—and in some cases tax penalties—for companies, depending on whether they raise wages or not. His goal is to avoid becoming yet another revolving-door prime minister like his predecessor Yoshihide Suga, who lasted just over a year in office.

Suga’s fate was no exception. Since 2006, seven Japanese prime ministers have been unable to last much beyond the one-year mark in office, brought down by gaffes, mini-scandals, and general public weariness with having them in charge.

To set himself apart, Kishida has turned his back on the Abenomics of former leader Shinzo Abe, the one man who managed to break the one-year curse (on his second try) with a record-breaking nine years in office, in two separate terms, before stepping down in 2020. Kishida’s move has popular support.

In a survey by Japan’s Jiji news agency in October 2021, 62.5 percent of respondents said he should reexamine Abenomics, while only 14.7 percent said he should keep on the same road. While Abenomics did invigorate the top tier of Japan’s economy, with a rising stock market and strong corporate profits, lower-paid staff and small companies were largely left behind.

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