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How Abe Prime Minister Changed Japan

When you hear about Japan's problems, you will mostly hear about the very low birth rate, increasing aging population, debt problems, Industrial competitiveness losing, the working environment and suicide rate, etc.

Let's take a look back to the history before we talked about Abe Prime Minister.

In 1945, Japan was hit Nuclear bomb. After that, they were able to reconstruct with foreign aid and became the first modern Asian country to experience massive sustained economic growth with its own Modern Industrial Revolution with the aid of Allies. In the 1960s, Japan was growing at the rate of 10% a year for a national economy was unheard of at that time. This economic growth continued and Japan was able to ride the wave of globalization as the world low cost manufacturer. Japan Developed a huge car industry. It was at the forefront of consumer electronics and was working so well to make sure that this newfound wealth was investing wisely into infrastructure like high speed rail, airports and metro systems, etc. to make Japan's economy even more efficient. At that time, there was so much wealth in japan that the real estate market of Japan was pretty crazy at that time. In the late 1980s, it was estimated that the imperial palace area of just 3.4 square meters in central Tokyo was greater than the whole California price. This growth was such a crazy level and the people were starting to predict when Japan would overtake the United States as the world economic superpower.(Don’t you think that it is similar to the current situation between China and the United States situation) Then in the early 90s, everything stopped.

Abe Prime Minister is the longest-serving prime minister of Japan since after the war. He has been prime minister for nearly eight consecutive years (from 2012 to 2020) and he has been known for many many different things such as Olympic, Abenomics which has “three arrows”: (i) aggressive monetary policy, (ii) fiscal consolidation, and (iii) growth strategy.

To talk about Abe Prime Minister, we have to talk back for 30 years not for just 8 years. Because the same strategy was initiated 30 years ago, upgrading on the way a little bit and speeding up by Abe Prime Minister. Lets see what has happened from different perspectives.


The GDP of Japan in 1994 was 4.9 Trillion USD and GDP of Japan today 2019 is also 4.9 Trillion USD. It also means that Japan has no growth in GDP in the past 30 years.

Debt to GDP Ratio

Japan already reached the GDP to Debt ratio 200% in 2016 and Japan recorded a government debt equivalent to 236.60% of the country's Gross Domestic Product in 2019. I cannot imagine how much GDP to Debt ratio will be in 2020 because of Coronavirus. No growth in economics, age to young population is increasing and Industrial competitiveness is losing but debt is increasing like insane. Japan is the world biggest GDP to Debt ratio. Yes, Japan is in a debt trap. What has the government focused on in the last 20 to 30 years? Lets see more.

If you are interested in more about the Japan debt issues, please take a look at that YouTube video. You will have better understanding with visualization.

Industrial competitiveness (産業競争力)

According to IMD World Competitiveness, it shows that Japan drops to 30 in 2019.

Red - Japan(日本), Dark Blue - United States(米国), Black - Germany(ドイツ), Light Blue - France (フランス) , Yellow - Sweden (スウェーデン), Orange - China (中国), Green- Singapore( シンガポール)


According to recent Future Investment Conference (未来投資会議) meeting minutes that was on June 2019 , there are discussion that they like to start to make pay pension from 70 years old. Future Investment Conference (未来投資会議) is one of the most important meeting for discussing future japan important matters. Currently, pension payment starts from 60 years old and they are now raising discussion to delay the payment for 10 years.

The same time, Financial Service Agency(金融庁) announce last spring that it will not be possible to live with just pension and it will require additional 180,000 USD ( 2,000万円) in addition. This is the simulation for people who paid high salary people who paid high amounts of pension which mean people who have low salary and less paid pension will require more than Around 180,000 USD ( 2,000万円). I also try to simulate the data and it shows that young people are paying now and are going to get back less than what they are paying now. In addition, it is going to need a big certain amount of savings to survive after retirement. How the government is managing pensions Let's take a look at the data.

I saw those charts for the first time when I researched for my blog. It shocks me that almost 50% of pension Around 1.567 Trillion USD (Total 164兆2,453億円) is buying Foreign Stock and Foreign Government bonds. In the second chart, it looks like it is making a profit in overall but there are also time of big loss such as Around 143 Billion USD (15兆円) in 2018 and Around 210 Billion USD (22兆円) in 2019 within very short time. It indicates that Japan is betting the citizen pension on high risk and high return. Am I the only one who thinks it is crazy?

I can understand that the Japanese youth population will not be bearable to the aging population to support. For recovering the minus, the government needs to take a strategy to recover that. I got it. But It is still too much for me for betting on almost half of the pension fund on high risk, high return foreign stock and bonds. ( I remember somebody Masayoshi Son at this point. He has been betting on High Risk High Return. According to recent news, the end story does not look like a good ending. I want to write about Softbank in future blog post). Let's take a look at the Stock market.

Japan Stock Market

Economists are saying that the stock market is in a bubble by buying the stock by the central bank and the corporation itself to inflate the market. As I mentioned in an earlier GDP section that how GDP is stagnating even though the overall Nikkei stock market is floating.

Look at the Japan Stock Market in the above Nikkei chart. It looks like going to the upper right even regardless of Coronavirus situation. How does it happen even GDP is not growing but on the stock market. It is all about because of Buyback. (I will not explain what Buyback means here.)

Japan share buyback hit a record especially in last year 2019 and take a look at how much the buyback amount of money is increasing in the last 10 years.

This chart is the corporate cash piling chart for the last 20 years. In the above chart, the cash piling reaches to Around 4.3 trillion USD (450兆円). Corporations are gaining benefits in the last 20 years. It is not just because of the inflating market but also other reasons Corporate Taxation policy change. Corporation cash piling up is not a very good sign for the country. We can assume different scenarios that they do not know where to use ,how to use or do not invest enough in terms of long term corporation growth. It is also a sign that the government is giving a way more and more control to the corporation. You might have heard that corporations are also avoiding the tax such as using tax haven offshore accounts regardless of whether the government is reducing corporation tax. Those tax reducing for corporate will be very hard to come back for country growth and it will go to certain pockets.

Let's take a look at how Japan taxation has changed over the last 20 years.


During these 20 years, there have been changed a quite big in taxation. Consumption tax has increased but the total annual tax Revenue does not increase at all. Because there was no annual tax revenue, there was no obvious social welfare spending during the last 30 years. Why is total annual tax Revenue not increasing even though Consumption tax has increased ridiculously. It looks like reducing corporate tax was the pressure from the United States and Japan government has to increase Consumption tax to recover this.

1989  Annual Tax Revenue(税収)      Around 523.9 Billion USD (54.9兆円)

    Income tax (所得税)         Around 204.2 Billion USD (21.4兆円) 

Corporate Tax(法人税) Around 181.2 Billion USD (19兆円) 

Consumption tax(消費税) Around 31.4 Billion USD( 3.3兆円) 

2016 Annual Tax Revenue(税収)      Around 529.5 Billion USD ( 55.5兆円)   

    Income tax (所得税)         Around 167.9 Billion USD (17.6兆円) 

Corporate Tax(法人税) Around 98.27 Billion USD (10.3兆円) 

Consumption tax(消費税) Around 164.12 Billion USD (17.2 兆円)

Blue - Income tax (所得税) 

Orange - Corporate Tax(法人税)

Gray - Consumption tax(消費税)

In the above chart, 2018 and 2019 is an estimated number. The actual Annual Tax Revenue(税収) 2019 is Around 557.3 Billion USD (58.4兆円). (2020 can be the worst year ever because of Corona). So now you see the reason why total annual tax Revenue is not increasing. It means that they are just taking more money from basic citizens and taking less money from profitable corporations. What can be the reason for the government to do such a thing. The government reason was to increase the Industrial competitiveness (産業競争力). Is this strategy really affecting for increasing Industrial competitiveness (産業競争力). As I mentioned in the above section, Industrial competitiveness (産業競争力) is decreasing and hit to No 30.

So overall 30 years makes Corporation makes rich and richer but could not achieve original target of country target to increase Industrial competitiveness (産業競争力). If corporates are happy, corporate backed up investors are also happy. Among the investors, I like to specifically mention about Foreign Investors because they are quite a majority and have a big influence in overall last 30 years strategy.

Foreign Investor

I do not want to go so deep about this section. I just want to zoom out of the shareholder of Japan Biggest Bank ( Mitsubishi UFJ bank). As you seen on chart, quit bit number of percentage is holding by foreign investor. You can imagine how big percentage of foreign investor is also taking a part of the company listed with first section of the Tokyo Stock Exchange (東証一部上場企業) too.

In 2000, the dividends of the company listed with first section of the Tokyo Stock Exchange (東証一部上場企業配当金総額) is 28.6 Billion USD (3兆円)。In 2018, it became 5 times 124 Billion USD (13 兆円). With the last 20 to 30 years strategy, it is obviously benefiting corporations and shareholders including foreign investors

Employment Rate

How are those last 20 to 30 years strategy affecting citizens especially young people, employment of the young people and overall employment?

40% of the workforce are non regular employment. According to the press, the overall job market looks like increasing but those are non regular employment (Part time Job).

According to `Public Opinion Survey on Household Financial Behavior (Single Household Survey)`, it shows that 60% of 20`s years young Japanese savings is zero.

My conclusion

The statistics show that the government has not been investing enough for young people and normal people. In other word, the government could not invest because the overall tax money amount has not increased in the last 30 years.

Young people are not benefiting from over the last 20 to 30 years strategy and their life becomes harder and harder. If government is not investing enough to the young people, of course it will affect Industrial competitiveness and no way to increase it. If a country loses in Industrial competitiveness, GDP will lose. If GDP loses, it will affect the employment rate and wages. If the employment rate and wages will lose, young people cannot pay pension, cannot save money for their dream and for the future. In the same time, current pension does not look promising such as just paying pension will not be enough to live after retirement and in addition they might delay more 10 years too. In result, young people will not have enough motivation to live, chase new dreams, marry someone and raise children. Suicide rate and low birth rate increasing in last decade are interconnected.

Anyway there is still a good side which is Japan is still one of the wealthiest countries in terms of country, corporation and individual.

Japan Net external assets(対外純資産) +3.35 Trillion USD (+350 兆円)

Personal Financial Asset +17.69 Trillion USD(+1,850兆円)

Corporate Cash Piling + 4.3 Trillion USD (+450兆円)

※Net external assets(対外純資産) means the money or asset net money that Japan owe to other countries. By the way, net external asset of United States is -8.6 Trillion USD (-900兆円). The United States is Minus. Except Corporate cash, all are the results of how 20th century Japanese were hardworking. They built the infrastructure, system , education and healthcare system by thinking long long term for future generations. As a foreigner myself living in Japan, I feel the life quality in terms of many aspects. I feel more valuable and grateful living in Japan after living almost 2 years in America in 2018 and 2019. I feel kind of lucky that I have just moved back to Japan from the United States just before the Corona came and I cannot imagine how it would be if I were in the United States not in Japan.

When I talked and discussed about Abe Prime Minister Next Successor with Japanese like minded people, they said there is nobody strong enough to replace Abe Prime Minister and currently we need to choose somebody who can carry on what Abe Prime has done. I can understand that they cannot see anybody to replace the Abe Prime Minister who has been backed up by very strong Media, Corporations and Foreign Allies. That someone from the opposition party who can replace the Abe Prime Minister of the Liberal Democratic Party (自民党) must have had a very dramatical strategy and needs different allies. It will be very very hard road. Nowadays you can only see the government activities on square black mirrors. I rarely see opposition party members coming out and pitching on the Media. I feel like Japanese people start to think that the issues are normal and it looks like they are thinking that they cannot change anyway such as nobody gives a shock or even a blink of an eye when they hear the announcement of suicide on the train.

In my opinion, I do not think that it is a good idea to carry on the strategy that has been done in the last 30 years. We cannot know where it is going to end. If I am Japanese, I might want someone who is able to fix focusing on the reality issues such as increasing real GDP for all citizens' good sake, not just focusing on only financial games.

Now we are in a crisis that is 10 times bigger than 2008 crisis even though some people might not be aware yet about it. Despite CORONA, the economists have already predicted that the crisis will come if Japan keeps going on with the current strategy. CORONA is just speeding up how it would end.

I cannot advise you what to do and how to do. What I can do is share the data what I found that I have researched for my own usage. I wish those are useful for you. Be Safe!


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