Victory for Abenomics as Japan's maverick PM gets his pick of governor

Haruhiko Kuroda is expected to be the new governor of the Bank of Japan.

The financial press is reporting that Japan's prime minister Shinzo Abe is expected to nominate former finance-ministry official Haruhiko Kuroda as governor of the Bank of Japan. If Kuroda's nomination goes ahead, it will be a victory for Abe's desire to pursue aggressive unconventional monetary policy in order to boost Japan's economic fortunes.

Abe has been engaged in a low-level squabble with his finance minster, former Prime Minister Taro Aso, over the extent of Japan's efforts to boost growth and weaken the yen. Aso, who favours more conventional economic policy, most recently squashed the prime minister's suggestion that Japan might buy foreign bonds as a general policy.

That rift is arguably one of the most important in economic policy today. Just as Britain has been the site of the most rigorous experiment on the effects of voluntary austerity on growth (spoiler: results were negative), Japan is pushing some of the most aggressively expansionary monetary policy ever — and has ideas to go even further. Abe's government has already eroded central bank independence, forcing the Bank of Japan to actively push for growth and inflation; it has "nationalised" capital stock, allowing the state to pay for nominally private sector investment; and it has set explicit targets for the Nikkei, the country's premier stock index, of over 17 per cent growth in one month.

The tussle between Aso and Abe over the foreign bonds purchase was widely seen as a proxy fight for the right to award the governorship, and with the apparent selection of Kuroda, Abe has taken the lead. The governor-to-be has long been a critic of the BoJ's lack of stimulus and will likely encourage it to follow the government's suit in further aggressive, unorthodox measures to hit the new 2 per cent inflation target.

But Reuters' Leika Kihara and Yuko Yoshikawa inject a note of caution to their reporting:

Abe must go through political maneuvering to close the deal, as the nomination must be approved by both houses of parliament including the upper house, where his ruling coalition lacks a majority.

The government hopes to garner support from either the main opposition Democratic Party of Japan (DPJ) or a group of smaller parties to pass the nomination.

There's likely to be an even bigger fight on Abe's hands with one of his two desired deputy governors, Kazumasa Iwata. Iwata is an academic who has called for Japan to print money to fight deflation; his appointment would suggest large scale monetary expansion is on the cards. He was widely reported to be Abe's first choice as governor, before Kuroda was picked as the compromise candidate.

With an ageing population, and flunked recovery from a financial crisis, Britain's experience over the next decade may be scarily similar to Japan's over the last. If Abenomics lifts the country out of its hole, we should all be hoping Mark Carney and the rest of the Bank of England are paying close attention, and preparing to follow suit in case the worst happens.

Haruhiko Kuroda. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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No, IDS, welfare isn't a path to wealth. Quite the opposite, in fact

Far from being a lifestyle choice, welfare is all too often a struggle for survival.

Iain Duncan Smith really is the gift that keeps on giving. You get one bile-filled giftbag of small-minded, hypocritical nastiness and, just when you think it has no more pain to inflict, off comes another ghastly layer of wrapping paper and out oozes some more. He is a game of Pass the Parcel for people who hate humanity.

For reasons beyond current understanding, the Conservative party not only let him have his own department but set him loose on a stage at their conference, despite the fact that there was both a microphone and an audience and that people might hear and report on what he was going to say. It’s almost like they don’t care that the man in charge of the benefits system displays a fundamental - and, dare I say, deliberate - misunderstanding of what that system is for.

IDS took to the stage to tell the disabled people of Britain - or as he likes to think of us, the not “normal” people of Britain -  “We won’t lift you out of poverty by simply transferring taxpayers’ money to you. With our help, you’ll work your way out of poverty.” It really is fascinating that he was allowed to make such an important speech on Opposite Day.

Iain Duncan Smith is a man possessed by the concept of work. That’s why he put in so many hours and Universal Credit was such a roaring success. Work, when available and suitable and accessible, is a wonderful thing, but for those unable to access it, the welfare system is a crucial safety net that keeps them from becoming totally impoverished.

Benefits absolutely should be the route out of poverty. They are the essential buffer between people and penury. Iain Duncan Smith speaks as though there is a weekly rollover on them, building and building until claimants can skip into the kind of mansion he lives in. They are not that. They are a small stipend to keep body and soul together.

Benefits shouldn’t be a route to wealth and DWP cuts have ensured that, but the notion that we should leave people in poverty astounds me. The people who rely on benefits don’t see it as a quick buck, an easy income. We cannot be the kind of society who is content to leave people destitute because they are unable to work, through long-term illness or short-term job-seeking. Without benefits, people are literally starving. People don’t go to food banks because Waitrose are out of asparagus. They go because the government has snipped away at their benefits until they have become too poor to feed themselves.

The utter hypocrisy of telling disabled people to work themselves out of poverty while cutting Access to Work is so audacious as to be almost impressive. IDS suggests that suitable jobs for disabled workers are constantly popping out of the ground like daisies, despite the fact that his own government closed 36 Remploy factories. If he wants people to work their way out of poverty, he has make it very easy to find that work.

His speech was riddled with odious little snippets digging at those who rely on his department. No one is “simply transferring taxpayers’ money” to claimants, as though every Friday he sits down with his card reader to do some online banking, sneaking into people’s accounts and spiriting their cash away to the scrounging masses. Anyone who has come within ten feet of claiming benefits knows it is far from a simple process.

He is incredulous that if a doctor says you are too sick to work, you get signed off work, as though doctors are untrained apes that somehow gained access to a pen. This is only the latest absurd episode in DWP’s ongoing deep mistrust of the medical profession, whose knowledge of their own patients is often ignored in favour of a brief assessment by an outside agency. IDS implies it is yes-no question that GPs ask; you’re either well enough to work or signed off indefinitely to leech from the state. This is simply not true. GPs can recommend their patients for differing approaches for remaining in work, be it a phased return or adapted circumstances and they do tend to have the advantage over the DWP’s agency of having actually met their patient before.

I have read enough stories of the callous ineptitude of sanctions and cuts starving the people we are meant to be protecting. A robust welfare system is the sign of a society that cares for those in need. We need to provide accessible, suitable jobs for those who can work and accessible, suitable benefits for those who can’t. That truly would be a gift that keeps giving.