Abe Shinzo: A retrospective

All the ways he defied my expectations.

Photo: 多摩に暇人

As everyone by now knows, former Japanese prime minister Abe Shinzo was assassinated yesterday while giving a campaign speech in the city of Nara. The assassin, Yamagami Tetsuya, said that he killed Abe because of his supposed ties to an as-yet-unnamed religious group, whose leader Yamagami also reportedly wanted to kill. (Update: The group is the Unification Church, also known as the Moonies.)

Assassination is not unheard-of in Japan — the mayor of Nagasaki was assassinated in 2007, and a Diet member was slain in 2002, both probably by members of the mafia. But ideologically motivated assassinations, which were common in the turbulent prewar age, are now rare — the last major one was in 1960. This one has deeply shocked the country, and may change Japan’s easygoing culture of public political speechmaking, where major politicians stop off by train stations to talk to small crowds.

Abe was the most important Japanese politician of his time — certainly since his grandfather Kishi Nobusuke in the late 1950s. He came into office at a very difficult time, when Japan was recovering from a huge earthquake, tsunami, and nuclear disaster. Most Japanese prime ministers are weak figures who govern by consensus and let the bureaucracy or party factions handle most things; Abe used the mandate created by the post-earthquake crisis to centralize policymaking power in the hands of his cabinet. Over his eight years in office — very long by Japanese standards — he made a number of important policy changes that reshaped the entire country of Japan.

I wrote about these changes in a post a month ago:

The Japan that Abe Shinzo made

This post provides as good a summary of Abe’s effect on Japan as any I could write today. Basically, I identified three big things:

1. Abe’s economic policies boosted corporate hiring and made it easier for mothers to work, raising labor force participation dramatically for women, young people, and the elderly.

2. Abe ended Japan’s pacifist era by “reinterpreting” the constitution to allow for a more normal military; this will probably result in Japan boosting defense spending and taking an active role in helping to defend its regional allies, such as Taiwan.

3. Abe dramatically expanded immigration to Japan, causing demographic shifts that will reshape Japanese society in the decades to come.

Here are some excerpts that give a good summary:

Abe’s tenure as Prime Minister thus represented the end of Japan’s post-bubble period — a long dreamy period where corporations and families coasted on built-up wealth. The country is back to the grind…

In a way, the [military reforms of the] Abe administration…represented the end not just of the post-bubble period, but perhaps the post-WW2 period as well. The legacy of Japan’s fascist imperial conquests will no doubt continue to dog the country to some degree, as will the painful memory of its ultimate defeat. But those memories were never going to define Japan forever; at some point, it was going to become a normal country again, and normal countries have militaries and military alliances…

[I]t was Abe who threw the switch and started [Japan’s] momentous change [on immigration]. Facing a demographic crisis never before seen in his country’s history, he chose to change the country in unprecedented ways. Faced with a choice between national weakness and decline and the wrenching uncertainty of demographic change, he chose the alternative that had the best chance of keeping Japan wealthy and strong.

Ultimately, I believe that will be Abe’s legacy. At a moment when economic, geopolitical, and demographic factors were threatening to send Japan into permanent decline and irrelevance, he did what he had to do to keep Japan in the game. The full ramifications of that won’t be known for a long time. But already, the country feels different. The old era is gone, a new one is in bloom.

So if you want to read more about those changes, check out that post. You should also check out Tobias Harris’ excellent biography of Abe.

But in fact, Abe’s transformative impact came as an utter shock to me (and to many others). From the start, I was extremely pessimistic about Abe, and even antagonistic to his administration. My recognition of his pivotal importance, and of the benefits of his policies, came only grudgingly over the years. Here’s a retrospective on all the ways Abe defied my expectations.

How Abe surprised me on economics

The main reason I started out so pessimistic about Abe was that during his first brief stint as PM in 2006-7, he was just another inconsequential politician who wafted through the top spot without getting anything done. Shortly after he returned to power at the end of 2012, I wrote the following on my old blog:

I remember Shinzo Abe's first term as PM. So I know what a walking facepalm this man represents. A brief refresher course: Abe's agricultural minister killed himself after a corruption scandal, and another of his cabinet ministers resigned after another such scandal. His health minister, Hakuo Yanagisawa, managed to hang on despite a wave of negative publicity after he called women "baby-making machines".

Abe is mainly interested in social and cultural issues. He is the Japanese style of socio-cultural conservative, sort of a Newt Gingrich type…[he] really just does not care very much at all about the economy….his overwhelming priority is erasing the legacy of World War 2, with the economy a distant, distant second…

Expect Abe to continue making noise at the BOJ, and expect to see…a bit more quantitative easing…Essentially, he will continue the current talk of radical monetary policy experimentation precisely as long as he thinks it's holding down the yen, and then abandon it for a different mercantilist stopgap…I'd love to see a bold monetary experiment. But I'm pretty sure I know these LDP jokers, and I'm pretty sure they're not going to deliver in the crunch.

A couple months later, I began to cautiously change my tune, as inflation expectations rose and the stock market boomed. But I was still basically in the anti-Abe camp:

Abe seems to have shifted a lot of people's [inflation] expectations…Yet I still stand by my initial evaluation - Abe is generating a brief fillip of optimism and a sense of economic movement in order to secure an LDP majority…After that, his conservative instincts…will take over…talk of radical monetary reform will evaporate[.]

But a month later, I had changed my mind — at least, on the Abe administration’s willingness to implement a monetary policy that was both bold and serious. Abe and Kuroda’s economic revitalization program was succeeding far beyond anything that Japanese leaders had done since the bursting of the land bubble in 1990:

I was wrong.

For months I voiced heavy skepticism that Shinzo Abe's new administration would follow through on its plans for huge economic policy changes - in particular, a serious push for reflation. Yesterday, Abe's new central bank chief, Haruhiko Kuroda, proved me wrong by announcing a dramatic new program of quantitative easing…

Abe defied my expectations and really implemented a serious policy change. Now, we get to see how well monetary policy really works[.]

By mid-2014, with deflation in retreat, employment surging, and tax revenues rising, I had become a full-blown Abenomics convert:

I was a Shinzo Abe skeptic. That's putting it mildly…Boy, was I wrong. I was wrong, wrong, wrong.

Let me be blunt: Shinzo Abe is the most effective national leader in the world right now. I never thought I'd say this, but he's an example that the rest of the world should be following…

Backed by economic adviser Koichi Hamada and Bank of Japan Governor Haruhiko Kuroda, Abe first implemented the biggest monetarist push in world history. He went the opposite direction of Europe, and -- unlike the U.S. -- he gave every indication that the shift toward monetarism was permanent. The result: Japan has escaped deflation. The stock market is up, growth is way up and even wages are finally starting to rise…

But that's just the beginning. Abe is moving to cut Japan's corporate tax rate, which along with the U.S.'s is the world's highest. The country's government-run pension fund will probably invest more of its money in risky but high-yielding assets (in an echo of George W. Bush's failed plan for Social Security). Abe has launched a large number of deregulation efforts, and has pushed -- so far unsuccessfully -- for Japan to join the Trans-Pacific Partnership, which would lower trade barriers. He is beginning to curb the powers of Japan's entrenched bureaucracy. He has even suggested bringing in 200,000 immigrants a year to supplement Japan's shrinking labor force…The rest of the world should be paying attention.

This last part bears emphasizing. Abe’s bold monetary policy was just the beginning of his economic revitalization effort. It was the “third arrow” of Abenomics — structural reform — that resulted in most of the major and lasting changes. The most important reforms were:

• Agricultural reform

• Trade agreements

• Corporate governance reform

• Promotion of women in the workplace

Key to this program of reform was Abe’s mental flexibility and openness to new approaches. Paul Krugman, who met with Abe, gives notes this in a recent thread:

Paul Krugman@paulkrugman

I decided to spend some time arguing that given its demographics, Japan really needed to make better use of its women. But I never got to raise that argument, because he brought it up first. Whatever you say about him, Abe was not a simple social conservative 6/

11:21 AM · Jul 8, 2022

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So anyway, let’s talk about these reforms, and what they did for Japan.

How Abe surprised me on structural reform

Corporate governance was extremely important — and overlooked by most outside observers — because it held the promise of changing Japan’s hidebound, antiquated corporate culture. In 2015, after meeting with some people at the Financial Services Agency, I wrote:

Japan’s approach to corporate governance has, for the past 40 years, been very different from that of the U.S. Independent directors are very rare and boards are filled with corporate managers. As you might expect, this makes companies focus more on empire-building than on creating shareholder value and boosting low profitability…There is evidence that poor corporate governance is also partly responsible for the drought in business investment…

Since mid-2014, Abe’s government has been talking about a new corporate governance code, which would enhance the number of outside directors and encourage greater concern for shareholders.

Now, a draft of the new guidelines has been released to the public…it’s all very encouraging stuff. Companies are admonished to maintain better communication with shareholders, to value shareholders based on the size of their ownership stake and to focus more on increasing shareholder value. Antitakeover measures are also discouraged, a step I think might be the most important, if it is enforced. There is a provision encouraging diversity and the promotion of women. Another provision mandates the use of neutral external auditors. There is, as expected, a mandate to include outside directors on every board. And there are many admonishments to enhance profitability.

A stewardship code for investors followed shortly afterwards. And the governance code has been expanded and strengthened in the years since its inception.

These reforms rapidly increased the number of independent directors on Japanese corporate boards, and corporate profits rose strongly (boosting tax revenues and helping Japan’s fiscal situation). It was as if a bat-signal had gone out, and managers and executives across the country simply realized that now it was time to focus on profitability. A modest private equity industry arose, mostly oriented around helping family-owned companies get acquired when they ran out of successors. The tendency toward greater profitability was tempered by the Japanese government’s bad habit of bailing out failed companies, which continued under Abe. But overall, we have seen the first stages of a shift in Japan’s dysfunctional, antiquated corporate culture.

Under Abe, Japan — a traditionally protectionist, mercantilist country — became a global crusader for free trade. Just as the U.S. was pulling back from its traditional role as the promoter of global free trade agreements, Abe’s Japan stepped up:

As the U.S. sinks into protectionism, the Land of the Rising Sun is one of the few countries still pushing for trade agreements. Japan recently made a free-trade dealt with the European Union, and is trying to keep the Trans-Pacific Partnership alive even after the U.S. exited the deal.

The country didn’t do this out of altruism — it hoped to reap real material benefits from better market access and strengthened protection of intellectual property. But it led Japan to become a vocal promoter of the kind of liberal internationalism that the U.S. rapidly retreated from under Trump.

But most important of all was the shift in the economic role of women. Before Abe, Japan had persistently lagged in terms of women’s labor force participation, especially among mothers. The country’s sexism was legendary and entrenched. When Abe came to power at the end of 2012, I definitely did not expect him to change this — during his brief, abortive first tenure as PM, his health minister caused a national scandal by referring to women as “birth-giving machines”. Abe’s reputation as a staunch cultural conservative seemed to presage more business-as-usual.

But it was not business-as-usual. As soon as he got into office for the second time, Abe began to talk up the importance of women in the workforce, and to implement some real policies toward this end as well. By 2014, it was clear to me that the national dialogue around the issue had shifted:

[Abe] constantly talks about the need to make women more equal in the workplace -- no small thing in a country where corporations have a reputation for following the government's wishes. Abe's detractors dismiss this as empty talk, but talk is never empty, especially when you say things that no one has said before. And Abe is putting his money where his mouth is, with a raft of measures to improve working women's access to affordable day care.

Already, I can sense a shift. When I lived in Japan 10 years ago, people said that women's situation would never change, and treated women's second-class status as an immutable fact of Japanese culture. Nowadays, when I go back, everyone is talking about women's changing role, and everyone agrees that Abe is the prime mover.

And later that year, I wrote:

Abe's administration continues to push ahead with real, substantive reforms to improve women's status in the workplace. His cabinet just submitted a bill requiring all companies with more than 300 employees to declare numerical targets for women in management positions and/or the number of women hired. Abe is also pushing a proposal to revamp the tax code to eliminate an implicit penalty for two-income households. And Abe's ambitious plan for government-funded day care -- something the U.S. conspicuously lacks -- remains on the agenda.

The late Devin Stewart, an excellent and incisive Japan commentator, had this to say in a 2014 interview:

More women are working in the bureaucracy, and they are bringing about reform to the way Kasumigaseki [Japan’s government district] operates. A group of women who were selected to be trained for management training have created a network for change in Tokyo’s central government. In their spare time (often in pre-dawn hours), these women have put together a proposal for change titled, ‘Towards Sustainable Work Style: Proposals from Female Officials Working in the Japanese Central Government.’ Each ministry is now considering how to adopt their suggestions, such as reducing work hours and allowing workers to telecommute…

We are witnessing a gradual, nascent feminization of the workplace in Japan, and this is a good change. It is coming from the necessity of a globalized market, a shrinking population, and via the innovations of entrepreneurs and other change-makers. Abe’s rhetoric in the past two years has helped to give this change some momentum.

The key number we were all keeping an eye on here was women’s labor force participation, which surpassed the number for the United States for the first time in 2017:

This is obviously not to give Abe sole credit for the shift in Japanese society, of course — there has been a sustained surge of feminist activism and a modest shift in the courts as well. But in Japan as in many countries, ideas matter, rhetoric matters, and the stance of the person at the top matters a lot. Abe’s rhetoric, though sometimes tone-deaf, made it clear that the thumbs of the mighty Japanese bureaucracy and the dominant Liberal Democratic Party were now on the scale in favor of women getting jobs, and Japan, Inc. had to get with the program.

Of course, women’s simple presence in the workforce is just the first step. Maternity harassment has to end, sexist behavior in Japanese offices has to be suppressed, and — most importantly — women need to be hired for more career-track jobs and promoted to more management roles. Progress on the latter front was frustratingly slow under Abe, but it wasn’t nonexistent

So on macroeconomic policy and structural reform, Abe really delivered in a way that I didn’t expect him to. And the results were clear — falling unemployment despite a flood of new workers into the labor force, record profits for small and medium sized businesses, and modestly rising incomes despite rapid aging and a growth in the old-age dependency ratio.

Not everything was rosy about this expansion — entry-level wages grew but overall wages mostly stagnated, due to a wave of retirement of highly paid Baby Boomers. But overall, this was more economic success than Japan had known since the 1980s.

And both the Japanese public and the Japanese bureaucratic and political elites recognized Abe’s fundamental success on the economic front, reelecting Abe and his party consistently despite a scandal involving the funding of a private school, retaining Abe in the top spot for eight years, and keeping Kuroda on at the BOJ.

How Abe surprised me on liberalism

So far, most of what I’ve written about Abe — and most of what I wrote about during his tenure in office — has been about economics. That’s only natural, since I am an economics writer. But he also surprised me by being a much more liberal leader than I had expected.

When Abe came to power in 2012, he was known as an ultra-right-wing nationalist. Part of this was because Abe’s political clique within the (famously faction-ridden) LDP had been the right-wing nationalist faction. Part of it was that his grandfather, former Prime Minister Kishi Nobusuke, had been a fascist and a war criminal in the imperial era. But even more important was the fact that during Abe’s brief first tenure in office, he focused mostly on promoting nationalism. I wrote:

Abe is mainly interested in social and cultural issues. He is the Japanese style of socio-cultural conservative, sort of a Newt Gingrich type . As prime minister in 2006-7, he enacted a law requiring public schools to teach "patriotism",  mounted a vigorous denial of Japan's WW2 "comfort women" sex-slavery, gave gifts to the nationalist Yasukuni Shrine (angering China), and pushed to de-emphasize Japan's WW2 war guilt in school textbooks. His lifelong quest has been the revision of Japan's "pacifist" constitution to allow Japan to have a normal military.

To many in the Western expat press (which receives FAR too much attention and credibility from people in the West), this settled the matter — Abe was a fascist, the Japanese equivalent of Donald Trump or worse, and nothing he ever did would disabuse them of the notion.

But by the second time Abe took power, his approach had changed. Abe visited Yasukuni Shrine — where the ashes of several Japanese war criminals are kept — once at the beginning of his term in office, but did not do so afterwards. This was in contrast to his mentor Koizumi Junichiro, who had made annual visits when he was Prime Minister in the 2000s. That was the first hint that Abe was behaving in a less overtly nationalist manner in his second term.

In 2015, Abe reversed his previous denialist stance on the issue of Korean “comfort women” (WW2-era sex slaves), issuing a formal apology and explicitly laying the blame on the Japanese military for the first time:

Prime Minister Abe expresses anew his most sincere apologies and remorse to all the women who underwent immeasurable and painful experiences and suffered incurable physical and psychological wounds as comfort women…The issue of comfort women, with an involvement of the Japanese military authorities at that time, was a grave affront to the honor and dignity of large numbers of women, and the government of Japan is painfully aware of responsibilities from this perspective.

Abe didn’t just issue an empty apology — in a “Nixon goes to China” moment, he made an agreement with South Korea’s President to create a new fund for reparations to surviving “comfort women”. This didn’t satisfy the South Korean public, and the issue still festers between the two countries. But it was the best Japanese overture on the issue since the Socialist Party’s Prime Minister Murayama had offered a similar apology and compensation in 1994.

Increasing anger from South Korea on comfort women, as well as a territorial dispute over an island, led to a wave of anti-Korean hate in Japan in the early 2010s. But unlike other Japanese administrations, which tended to ignore such outpourings, Abe and his administration cracked down. The government placed the most notorious hate group, Zaitokukai, on a watchlist, and in 2016 Abe passed Japan’s first-ever hate speech law. Under this law, the government fined a prominent member of the Zaitokukai, sending a clear message that the administration was not on the side of the racists. (Unconfirmed rumor has it that the crackdown was even more widespread behind the scenes — basically, police relentlessly harassing the Zaitokukai.)

But Abe’s most liberal actions came in an area that’s not (yet) a hot-button issue in Japan — immigration. Under Abe, Japan opened itself up to immigration in a way that it never has before, with a “guest worker” program that offered a path to permanent residence, and a fast-track permanent residency program for skilled workers. The number of foreigners living and working and settling down in Japan soared:

By the end of the decade the change was ubiquitous and palpable. I wrote about it in 2019:

Tokyo is becoming a much more ethnically diverse city. I encountered black store clerks from the Netherlands and Africa, Chinese waiters at traditional Japanese restaurants, South Asian students staffing convenience stores, a white waitress at Starbucks, a Korean restaurant run by Southeast Asians…In 2018, 1 out of 8 young people turning 20 in Tokyo wasn't born in Japan. That doesn’t even count the people who were born in Japan but aren’t ethnically Japanese.

An early sign of…tensions [over rising diversity] emerged in 2015, when a beauty-pageant winner who was ethnically half Japanese and half black became the center of an online controversy, with some criticizing her for not being Japanese enough and others leaping to her defense. For now, the racial purists have generally been shouted down, and a half-Indian woman won the Miss World Japan pageant in 2016 with little backlash.

The anti-racist wave that beat back the racists online was present in the real world too — anti-racist counter-protesters showed up to shout down the hateful Zaitokukai, usually outnumbering them by a huge margin. Of course, Abe doesn’t get credit for that activism, but unlike Donald Trump — who spent a lot of time attacking “antifa” and ran cover for racist demonstrators — Abe and his administration focused on cracking down on the racists. That kind of leadership makes a difference.

On almost every issue of race and nationhood, therefore, Abe — in his second term — behaved as the polar opposite of Donald Trump. He opened up his country to immigration, tourism, and trade, apologized for past misdeeds, made overtures to old enemies, and cracked down on racism.

It was this liberalism, as much as his economic program, that converted me from an Abe opponent to a full-throated Abe supporter. When he resigned in 2020, I wrote:

So although Abe resuscitated Japan’s economy and laid the groundwork for future economic strength, his biggest accomplishment was to begin the transformation of a nation many observers had concluded would never allow itself to change. It’s now possible to glimpse a future of a very different Japan — a liberal, dynamic, open society that is progressive in both economic and cultural terms.

At a time when many world leaders are retrenching into nationalism, protectionism, racism, and authoritarianism, Abe defied expectations and became a champion of the embattled notion of liberalism. He leaves behind a legacy future Japanese leaders will struggle to match. But for the sake of their country’s continued strength, dynamism, and prosperity, they must try.

Now Abe is gone, tragically cut down by a crazed assassin’s bullet. He will be missed. But the new Japan that he built — and that the Japanese people built during his seminal years in office — will remain.

Leadership is still important in the modern world. And during the 2010s, Japan had it.

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