That loud ticking sound emanating from Tokyo's political clock bodes the imminent explosion of costs resulting from Japan's tepid COVID-19 response.
Up until last week, the world's third-biggest economy seemed to be dealing successfully with the coronavirus. Prime Minister Shinzo Abe basked in global headlines pondering what others could learn from Japan's low infection and death rates. Now, Japan is witnessing 1,000-plus new infections daily, with talk of a second state-of-emergency declaration.
Yes, Japan's 35,000 cases are fewer than New York's Westchester County. And its 126 million population has 16,000 fewer cases than Singapore, population 5.8 million.
Still, outbreaks are relative and Japan is headed the wrong way. Its previous emergency decree, lasting from early April to late May, shoulder-checked an already feeble economy. That prompted Abe to devise a ginormous stimulus jolt amounting to more than $2 trillion, 40% of gross domestic product.
The Bank of Japan, meantime, has already supersized its balance sheet to exceed the nation's $5 trillion economy. It hoarded roughly half of outstanding government bonds and cornered the stock market via exchange-traded funds.
The economic fallout of recent months, though, suggests that Japan Inc. needs more thrust -- and a better, more targeted stimulus. Both Team Abe and the BOJ must act swiftly to devise fresh steps to stabilize growth. The more coordinated the efforts, the better.
Abe must start by dispensing with the denial about Japan's COVID-19 problem. Instead of following U.S. President Donald Trump's playbook, prioritizing stock market stability over underlying growth, Abe should heed Tokyo Governor Yuriko Koike's support for more sweeping lockdowns and a slower reopening.
Abe, right, should heed Tokyo Governor Yuriko Koike's support for more sweeping lockdowns and a slower reopening. (Photo by Akira Kodaka)
Even if the truth lies somewhere in between, Abe's $13 billion "Go To Travel" scheme to incentivize domestic travel may backfire, and end up causing more infections. Hence polls in the Mainichi newspaper showing that 69% of voters want the plan scrapped.
Next, Abe should name a COVID-19 recovery czar. Finance Minister Taro Aso, who turns 80 in September, has been mostly AWOL as Japan's recession deepens. And if you ask the average Japanese on the street, few could name the current economy minister -- Yasutoshi Nishimura, to save a Google search. Strategy needs to be centralized and policymakers empowered to think out of the box.
