Three quick reminders that we should view Japan’s trade from a multilateral context. So has the yen depreciated against its major trading partners? We know the US$ story. But in recent years Japan – China trade surpassed US – Japan trade, while Japan – EU trade expanded to nearly the size of that with the US. So we need to look at the yen versus a wider array of currencies.
As it happens (and, with years of looking at such, unusually) these three graphs all look about the same. But the details, the details! – the yen has depreciated LESS against the dollar than against the yuan or against the euro. Roughly it’s gone from ¥80/US$ to ¥100/US$ or about a 25% swing. Against the yuan (RMB 人民币) the swing is from about ¥12/元 to ¥16/元 or about a 33% swing. Against the euro the yen has dropped from ¥90/€ to ¥130/€ or 40%. So if you approach the topic from an American perspective, you miss the magnitude of the swing.
That however doesn’t mean a huge economic impact. Exports are about 15% of Japanese GDP, so a 10% jump adds about 1.5 percentage points, as a one-time boost. But imports will rise in value [but fall in volume] so the net change will be smaller. There will also be an impact via higher import prices that will take a year to feed through. Again, that will be a one-time shift. Add the two together, and add the 2014 consumption tax rise, and what we’ll see is a return to normal: mild deflation and weak employment.
Trade is not the only factor in the economy, indeed from a European perspective it’s not a big deal. Other things can work in the economy’s favor, indeed other things must: trade alone is neither sufficient nor necesssary.
Note: all figures rounded.
Washington and Lee University
There was a very interesting panel discussion at Temple University in Tokyo about the LDP’s efforts to amend the Constitution and what this portends for human rights. It was noted that part of this LDP effort rests upon a rejection of what is called the Western conceit of universal human rights and an appeal to crafting a Constitution more in line with what the LDP sees as Japanese tradition.
In the question-and-answer session, one of the people asked why this nationalistic LDP effort seems to have more appeal to young people now than it had to young people in, say, the LDP’s early years. Why are today’s young people more nationalistic than young people were in, say, the 1960s? The answer was, basically, “I don’t know. Perhaps because they have been domesticated.” But I wonder if the question’s premise is true. Are young people today more nationalistic than young people were in the early 1960s?
The 1960s are remembered as a time of political activism among the young. But looking at that activism, it had a very nationalistic tenor. It was, essentially, an effort to unleash Japan from the American military. And it was anti-LDP because the LDP was seen as the handmaiden of the U.S. military establishment, as exemplified by the Security Treaty. They were saying we want to disentangle Japan so Japan can chart its own course. True, there was much admiration for Mao and China, but it was the decoupling from the U.S. that was at the heart of the Ampo struggle.
Today, the LDP is positioning its effort as an effort to decouple Japan from a U.S.-imposed Constitution. Never mind that the LDP proposals have a very Chinese ring with the emphasis on the preservation of public order, they are not being proposed as a turn toward China. Rather, they are being advertised as an effort to enable Japan to chart its own course. And it is this appeal that finds support among young people. Is there any real difference in the degree of nationalism involved?
We sometimes hear that Japan should tone down the rhetoric. And it should. Especially the unprovoked rhetoric such as Abe’s efforts to rewrite history. But at the same time, Japan’s neighbors should also keep their more jingoistic impulses in check.
Case in point: the recent piece in the People’s Daily about how China supposedly has a legitimate claim to sovereignty over Okinawa. China’s defenders will likely point out that this is a newspaper piece and not an official government position paper, but surely nobody believes the government of China does not have a strong say in what the People’s Daily prints.
Elsewhere, Edith Terry has suggested everyone introduce themselves, give a mini-bio, and state what they expect to get from the list, as well as any code of conduct they think is required. This sounds like an excellent idea, at least the introduce-yourself part, and I hope people will take advantage of the Comments function to do this. Who are we?
One issue that is getting attention here in Japan but is, I suspect, pretty much off the international radar, is the LDP’s push to amend Article 96 of the Constitution. Unable to get a broad consensus on changing anything else, they have focused on Article 96 (which lays out the procedures for amending the Constitution) and have argued that the requirements are unreasonably demanding. Yet many other countries have just-as-demanding requirements and have amended their Constitutions.
If there is no reason to amend the Constitution except to make it easier to amend the Constitution, why bother? Change for the sake of change is no more responsible than opposition for the sake of opposition. But of course, for the LDP, it is not just for the sake of change. It is to open the gateways to a retrogressive rewriting. Article 96 is just the crack-laced candy. “Go ahead and try it. Won’t hurt you.” Their gateway drug.
The BOJ recently released its biannual inflation outlook (経済・物価情勢の展望: ２０１３年４月). The graph at right shows inflation (dark) and hourly wages; while the latter are up slightly, such metrics are volatile and affect inflation with a lag. But wages are central: they are the largest cost for most businesses, and until they rise, well, there won’t (can’t!) be inflation.