BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Abenomics Vs. Yurimonics: How Japan's Most Powerful Woman Wants To Fix The Country's Economy

This article is more than 6 years old.

Japan's Prime Minister Shinzo Abe is rolling the dice on a snap election on October 22. Undaunted by the hung parliament results from UK's early election, the 63-year-old Abe did not seem to be worried about his gamble backfiring. But what the politician didn't anticipate is a surprise challenger lead by Tokyo Governor Yuriko Koike who came out of left field. After falling out with the ruling coalition, she swiftly created Kibo no To, also known as the Party of Hope -- launched the same day Abe called to dissolve the lower house of parliament on September 28.

A former newscaster, Koike's aims to draw support from two groups of voters. One is from those who have grown frustrated with the LDP, the Liberal Democratic Party headed by the current prime minister. The Party of Hope has also absorbed many backers of the center-left Democratic Party of Japan (DP) -- the main opposition which has been in disarray and struggled to gain confidence since losing power in December 2012. The DP is effectively defunct and a majority of its members have pledged their support to the populist Tokyo governor. Here's a look at her fiscal and economic manifesto, and how it differs from Abenomics. 

Opposition to unseat Abe with Yurinomics

Koike's conservative policy platform is being dubbed as "Yurinomics." "The 12 Zeros" short-lists the troubles that the party aims to eliminate from Japan 's current status quo:

  • Zero nuclear power
  • Zero concealment or corporate cover ups
  • Zero corporate political contributions or donations
  • Zero children waiting for admission to nursery schools/ day care
  • Zero second-hand smoke
  • Zero crowded commuter trains
  • Zero putting down of unwanted pets or stray animals
  • Zero food waste
  • Zero unethical businesses/ violation of labor laws
  • Zero hay fever
  • Zero restrictions of movement for disabled people
  • Zero utility poles

Koike aims to phase out nuclear dependency by 2030 and increase renewables by a third . At one point Japan generated about 30% of its electricity from such reactors, but nuclear power has dramatically decreased following the Fukushima disaster. The new party aspires to reduce some of the troubles plaguing Japan, but some items listed seem impractical and has portrayed the Party of Hope as naive.

Differing tax policies 

Aside from idyllic campaign promises, the right-leaning Koike has outlined a more hard-hitting agenda -- to freeze Abe's planned 2019 consumption tax hike from 8% to 10%, saying it may trigger another recession after two decades of stagnation. Instead the new party proposes alternative streams of revenue from selling state-owned assets and taxing "retained earnings" of major corporations. The strategy hopes to encourage companies to increase investments and raise employee compensation. More money in the hands of workers could mean more spending to help spur the stagnant economy. 

Abe's tax policy is said to have the opposite effect. Higher sales tax could deter buying, but the prime minister has used it to his advantage under more than one occasion. In 2014, the administration raised sales tax from 5% to 8%. A second tax increase slated for late 2015 was then postponed a month ahead of an Upper House election.

But this time, there was no rescheduling to be spoken of by Abe's LDP -- only that part of the proceeds would be diverted for new education programs. Arrangements include free kindergarten and day care for children ages three to five, and financial assistance for disadvantaged youth seeking higher education.

Prior to the early election announcement, the levy was only designated to paying off the nation's growing pile of public debt. The deficit accruing on the back of mounting costs for medical nursing care and pensions for the elderly. With little details released, the Hope Party has proposed the idea of a basic income for low-income households, meant to replace social security benefits over time.

The new spending policy will likely prove popular in the upcoming election for Abe, however the flip side is falling behind on a previously set fiscal target. The shift would mean not being able to reach a budget surplus by 2020 -- a key promise to investors of Japanese government bonds.

Security policies echo LDP

While the new party differs from the LDP on economic policies and the timeline for monetary tapering, both agree that stimulus and easing should still be on the table with inflation still weak. The Hope Party also supports Abe's proposal to revise the country's constitution on Article 9 -- a pacifist law drafted by the U.S. post-war that bans Japan from maintaining armed forces. The amendment comes as Abe takes a hard line stance against North Korean missile threats.

Koike denies PM post

In addition to lacking idealogical differences from the existing ruling coalition, Koike has left the Party of Hope without a prime minister candidate in the event of a slim victory. The self-coined "compassionate conservative" has decided to complete her term governing a city of 14 million people. But she has certainly shook up both the conservative and liberal camps and raised the stakes for Abe's poll numbers on Sunday.

Follow me on Twitter or LinkedInSend me a secure tip