Krugman's uncanny accuracy shows why more eyes should be on Japan

Abenomics is more that just a Japanese story.

Noah Smith has a post up examining Paul Krugman's remarkable record of accurate economic predictions. Ask "KrugTron the Invincible", as Smith dubs him, and he will point to his use of Keynesian economics for simple rule-of-thumb guesstimates, which then get cleaned up with his understanding of the problems of a liquidity trap. But Smith wonders if there's a more specific reason for Krugman's hit-rate:

Like Voltron before him, he's borrowing heavily from Japan.

See, I myself am fairly agnostic about Keynesian ideas. But I've expected nothing but low growth, low interest rates, and low inflation since 2008 (though I haven't been as confident about these things as Krugman, and am thus not in his class as a super-robot). I expected these things because of one simple proposition: We are like Japan.

Since its land bubble popped in 1990, Japan has had low inflation and low interest rates and low growth, even as government debt mounted and quantitative easing was tried. Paul Krugman was there. He watched Japan carefully, and he often states that it deeply affected his thinking. In fact, it might not be an exaggeration to say that watching Japan made Krugman the Keynesian he is today.

The comparison is, at the moment, more relevant to the US than the UK. Our problems are pretty clear: we slashed investment coming out of a recession, which put the brakes on recovery. Now that we're (slowly) putting our foot back on the accelerator, we can expect a return to growth – at least until deficit reduction becomes a priority again. Insofar as we have any macroeconomic phenomena confounding economists, it's positive news: our unemployment rate is significantly lower than it should be, given our anaemic recovery. That's been pegged on underemployment, productivity declines, and the government fiddling the figures, but it doesn't call for a wholesale reworking of economic theory.

The Japanese experience, however, does. Its "lost decade" – now well on the way to being twenty years long – has stubbornly resisted everything thrown at it so far. The pessimistic view is that it's just what happens when demographics turn sour: with an ageing society and migration too low to counteract it, the economy is retooling to serve the needs of retirees, for whom long-term growth isn't a priority.

But Abenomics, the name for the broad package of unconventional policy measures brought in by the government of Shinzo Abe, offers a ray of hope. And if any of those tools, which range from monetized nationalisation of industrial stock to explicitly targeting the stock market to performing one of the largest rounds of qualitative easing ever, work, then there's a meaningful plan of action for not just Japan, but the US as well.

If they don't, then hopefully it won't take America the same twenty years it's taken Japan to realise that business as usual just won't cut it.

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.

All photos: India Bourke
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“They cut, we bleed”: activists Sisters Uncut protest closures of women's services

 “Our blood should not pay for our rape.”

Over 500 domestic violence survivors and support workers processed through central London this weekend. The protest, staged by the feminist direct action group Sisters Uncut, mourned the women’s services that are losing out as a result of the government's austerity drive.

Since November 2014 the group has occupied streets, burned copies of the Daily Mail, and hijacked the Suffragette film premiere. But on Saturday the mood was somber. In Soho Square the group staged a symbolic funeral service. Attendees stood in a protective circle, fists raised, while members took turns to read out the names of the scores of women who’ve been killed by men in the past year:  “Anne Dunkley, 67; Nadia Khan, 24; Lisa Anthony, 47…”. The youngest was just 14 years old.

The service culminated in a promise “to never forget” the dead, and also to protect the living: “We must love and support one another; we have nothing to lose but our chains".

As the protestors passed St Martins in the Fields Church, dressed in black veils and funeral attire, the crowd of passers-by broke into spontaneous applause. “It gave me goosebumps”, Caroline, an activist and former victim of abuse told me. “You expect people on the march to be supportive but not the people on the street. I’ve been on other marches and people normally complain about you being selfish and blocking up the streets but this response makes you feel like people do  care.”

The show of public support is especially welcome in the aftermath of the Chancellor’s Autumn Statement. Cuts to local authority budgets have already led to the closure of over 30 domestic violence services since 2010, including Eaves, a charity that provided services for single, low-income and vulnerable women.

Further erosions to local council budgets will only put more services and lives at risk, activists say. Also of concern is Osborne’s decision to devolve responsibility for raising a social care tax (of up to 2 per cent on council tax) to local authorities. This tips hostility to tax increases away from central government to local authorities, and could place greater pressure on women’s services to compete for funding.

The Chancellor offered a supposed silver lining to the cuts with the promise that VAT money raised from the EU’s compulsory tax on sanitary products will be ringfenced for women’s charities, such as the Eve Appeal and Women’s Aid.

The implication, however, that only women are to pay for helping the victims of domestic violence was met with derision from Sisters Uncut. As the marchers approached their final destination in Trafalgar Square, red dye turned the square’s famous fountains the colour of blood. “This blood won’t wash the blood from Osborne’s hands,” read one tampon-draped banner; “Our blood should not pay for our rape”, read another.

For those on the march, the cuts are an affront on many levels. All those I spoke to worked in some form of public service; everything from housing to foster care. But some have had to move out of the women’s services sector for the lack of funding.

Louisa used to work for a domestic violence service in London until it was forced to close last month. “I’m here because I’ve witnessed first hand what the cuts are doing to women and how much the organisations are having to squeeze what they can provide.”

All public services have legitimate claims to support - from the 14-strong police team that escorted the marchers, to the sweepers who were left to dredge the protesters’ roses out of the fountains and brush away the tampons that had fallen from their banners.

The danger, however, according to Caroline, is that the needs of domestic violence victims are all too easy to sideline: “This is by its nature something that goes on behind closed doors,” she says. As funding tightens, these voices musn’t be squeezed out.

Sisters Uncut is an intersectional group open to all who identify as women. The national domestic violence helpline offers help and support on 0808 2000 247. Members of the LGBT communities can also access tailored support from Broken Rainbow on 0800 9995428.

India Bourke is the New Statesman's editorial assistant.