Paper short abstract:

While Abenomics has clearly yielded rich political dividends for both the LDP and Prime Minister Abe, I demonstrate in this paper why and in what way there has been a strong discrepancy between what it proclaimed it will do and achieve and what it has actually accomplished.

Paper long abstract:

Abenomics has clearly yielded rich political dividends for both the LDP and Prime Minister Abe. For the LDP, Abenomics offered to voters who had grown disillusioned with the Democratic Party a seemingly new and bold policy platform that promised to revitalize an economy that had grown stagnant during the three-year period when the DP controlled the Lower House Diet. With Abenomics as the center piece of its campaign platform, the LDP not only defeated the incumbent DPJ and regained control of the Lower House in the December 2012, it also scored key electoral victories in subsequent Upper House and Lower House elections, garnering enough seats in both Houses to put constitutional revision almost within the party's reach.

Despite these political dividends, however, I seek to demonstrate in this paper that Abenomics has not only failed to achieve many of its stated goals, but more importantly though less readily apparent, it has remained wedded to the basic neoliberal economic strategy that the conservative party has generally embraced since Japan entered its "Lost Decades". What this means in terms of macroeconomic policy is that the Abe administration has aggressively pursued expansionary monetary policies consistent with its targeted economic objectives, but its fiscal policies have remained restrained and generally contractionary. Moreover, when labor reform policies are added to the mix, the Abe administration's effort to introduce further "employment flexibility" have weakened job security and perpetuated Japan's high level of income inequality and precarity that is now more comparable to levels found in liberal market economies than in coordinated market economies. In highlighting how these neoliberal policies both reflect and reinforce the underlying political support base of the LDP, I seek to underscore both the challenges and opportunities that opposition parties face in advancing a more progressive alternative to established LDP policies.