"Foreign Affairs" just published an essay by me entitled "Voodoo Abenomics." (I tried for "Broken Arrows," but they figured more people would understand their title). It's at http://www.foreignaffairs.com/articles/141480/richard-k
atz/voodoo-abenomics
It's free to subscribers and non-subscribers can also get it for free it they register at (that gives them three free articles).

The thrust of the piece is that none of the three arrows work without the other two. But Abe has only one
arrow: monetary stimulus. The second arrow-formerly called fiscal stimulus and now called bold and flexible fiscal policy-is just a dart and is now flying in the wrong direction. I.e. Abe's foot on the brake (tax
hikes) is much heavier than hit foot on the fiscal accelerator (spending). And third arrow-pro-growth structural reform-is a violation of the truth in advertising laws. We've seen reforms in the past in Japan-from clean-up of NPLs, reform of the large-scale retail store law, and telecom reform to name a few-and nothing Abe is doing is anything like those.

This is especially true in the latest "third arrow"
release. Having government-controlled pension funds purchase more stocks-in a market that is no higher than it was almost 30 years ago-has more to do with boosting stock prices and thereby Abe's approval rating, than with helping pensioners. The same is true of corporate income tax cuts; firms are hoarding lots of cash which they choose not to invest in Japan. Giving them more cash won't create more investment. In stark contrast, Abe dropped one measure recommended by his advisory council that would have actually helped: abolishing Japan Agriculture, the farm cooperative lobby that blocks reform and trade opening, and uses its exemption from the Anti-Monopoly Act to fix markets and block competition.

The sad fact is that Abe's heart does not beat to the rhythm of reform and revival. Instead, Abenomics is a means to an end: to gain enough popular support to pursue the goals that really move him: security and history issues.

Richard Katz