Abenomics is rewarding those who have assets, widening Japan’s income gap
Tomoko Kawamura, 33, a pharmaceutical company worker in Tokyo, bought a Louis Garneau bicycle costing about 50,000 yen ($510) and a 100,000 yen MacBook Air laptop with proceeds from stock investments this year. She owns a one-bedroom apartment in Tokyo’s well-heeled Meguro district. “I’m enjoying the benefits of Abenomics,” says Kawamura.
Eight hundred kilometers (500 miles) away in Ehime prefecture, Miyoko Yamazaki, 81, struggles to cover the rising cost of gasoline for her regular hospital trips. “Prices are going up, making our lives tougher,” says Yamazaki, a retired taxi driver who owns no stocks or property. “I don’t really feel that the economy is booming.”
In a recent speech in London about his mix of stimulus, loose monetary policy, deregulation, and tax hikes, Japanese Prime Minister Shinzō Abe evoked the late Margaret Thatcher when he repeated her slogan “there is no alternative.” One of the possible byproducts of Abenomics: a Thatcherite division of wealth.
“Abenomics, at least in its initial stage, is rewarding those who have assets, and the gap between the haves and the have-nots is widening,” says Soichi Okuda, chief economist at Sumitomo Shoji Research Institute, a think tank owned by Sumitomo, Japan’s fourth-biggest trading house. Deepening disparities would change a society that has prided itself on income equality.
In a June speech to the Research Institute of Japan, Abe highlighted the observations made a century and a half ago by the first U.S. ambassador to Japan, Townsend Harris. The ambassador wrote in his diary: “They are all fat, well-clad, and happy looking, but there is an equal absence of any appearance of wealth or poverty—a state of things that may perhaps constitute the real happiness of a people.” The average income of Japan’s richest 10 percent is 4.5 times higher than that of the lowest 10 percent, compared with 15.9 times higher in the U.S. and 13.8 in the U.K., according to the United Nations’ 2007-2008 Human Development Report.
