New electoral mandate for Abe, same economic mire for Japan

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Each December at a temple outside Kyoto, a priest wields a brush and, with a dramatic flourish, smears a kanji character onto a white sheet. The ritual marks the selection of the Japanese character of the year, done by popular submission, and it's not a bad reflection of the spirit of the times.

Last year was "rin," which means "ring" and had echoes of the 2020 Olympic Games Japan was awarded in September, 2013. It was a hopeful time. The charismatic globe-trotting prime minister Shinzo Abe, and his Abenomics, had given the nation's economy a jolt, and its people the prospect of a release from years of economic melancholy.

This year was "zei," which means tax – a kanji character that not only neatly encapsulates the economic whiplash Japan endured in 2014 after a major consumption-tax hike, but also the much bleaker outlook the country finds itself facing. Whatever hope flourished a year ago has been replaced by a kind of stony apathy. The national snap election on Sunday, hurriedly called by Mr. Abe after two quarters of economic recession, handed a major new mandate to the conservative leader. Exit polls showed the coalition he leads was on course to maintain more than the two-thirds seat count needed to govern without handcuffs.

But the mandate was delivered by the lowest voter turnout in the Japanese post-war era, a signal of a broad public recognition that not even Mr. Abe seems likely to pull the country out of its economic mire.

Statistically, most of his victories have been matched by losses: a long-awaited rise in salaries has been almost equalled by inflation, leaving people little better off. The nose-diving yen has earned exporters a big boost – and importers a major headache. Massive stimulus programs increased consumer spending, only to have it vanquished by a jump in the consumption tax.

Mr. Abe is now expected to use his new mandate in part to issue shopping vouchers for the poor – a far cry from his initial vision of sweeping reform. A central plank of the Abe plan had involved scooping more money into government vaults, largely through consumption-tax increases built on roaring new growth. But the economy is sputtering and a secondary consumption-tax hike has already been pushed to 2017. On Sunday night, Finance Minister Taro Aso, speaking on national public broadcaster NHK, acknowledged the delay will make it "difficult" to balance the country's budget.

It's also unclear how far Mr. Abe will go with more controversial measures, which include pushing for a more competitive agricultural sector in hopes of squeezing out efficiencies that could make real change.

In other words, not even the Abe government is likely to make any headway in slaying Japan's debt dragon. Debt has already grown worse under his leadership, with the total rising last year to a quadrillion yen – that's a number with fifteen zeroes, the kind of word otherwise used to describe the gallons of water in the Great Lakes (six quadrillion). Debt is rising as a percentage of GDP, too. Even in net terms (a measure that ignores the value of borrowing between arms of the state, creating a much small number), Japan's government indebtedness doesn't look much better than that of Greece.

A new electoral mandate is unlikely to change any of that.

Research has suggested that really tackling the debt would require Japan to collect 40 to 60 per cent of GDP as tax — up from 28 per cent today. It's unlikely any democratically elected government anywhere would contemplate prescribing that kind of pain. And even with a new four-year mandate, Mr. Abe only has two years until upper house elections in 2016.

Abenomics has a nice ring to it, and for a while it produced hope that matched nicely with Olympic dreams. But it's no longer clear Mr. Abe will be capable of delivering on those hopes – or even, for that matter, on new taxes. When Japanese submit their suggestions for the 2015 kanji of the year, perhaps they will choose "jo," for "status quo."