Taps Coogan – September 7th, 2020

Enjoy The Sounding Line? Click here to subscribe.

Daniel Lacalle, Chief Economist at Tressis Gestión and author of several books including ‘Escape from the Central Bank Trap‘ and ‘Freedom or Equality,’ recently spoke with NTD News about the failure of ‘Abenomics’ in Japan and what he describes as an attempt to “disguise structural problems with high levels of debt and high levels of government spending.”

 

Some excerpts from Daniel Lacalle:

“If  we look at the different proposals for economic growth in Japan, all of them go down the same unfortunate path which is more debt, more government spending, more so-called stimulus, and the continued problem that we have seen since the real-estate bubble burst in the late 1980s… Japan started a very dangerous path, that the Eurozone followed as well, which is to try to disguise structural problems with high levels of debt and high levels of government spending. It has hurt growth. It has hurt productivity growth and, more importantly, it has massively hurt real wages for workers…”

“Abenomcis was based on the so-called three arrows. The first arrow was higher government spending. The second was higher monetary stimulus and the third one was structural reforms. They completely forgot the third one… The structural reforms to make the economy more competitive and to attract investments to make productivity growth improve, those were completely abandoned, not even implemented…”

Somehow, the tough structural reforms always seem to be forgotten in favor of some combination of print, spend, and tax.

Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.