30 Dec 2013

But the Progressives Told Us Abenomics Would Be Good for Japan

Austrian School, Dean Baker, Economics, Krugman, Matt Yglesias 11 Comments

Chris S. gave me the idea for my latest post at Mises Canada, by pointing out that Japan’s Cabinet just approved another “stimulus” package to help its faltering economic recovery. Chris reminded me that earlier in the year Krugman had held up Japan’s “Abenomics” as a model for US deficit hawks to follow.

As I point out in the post, despite strong growth early in the year, 3rd quarter real GDP in Japan grew at 1.1 percent. In contrast, in the US it grew at 4.1 percent. Do you remember how many people warned us of the awful impact the budget sequestration, and the shutdown, would have on our tepid recovery?

Look, we can fiddle with these numbers all we want, and I’m not saying the US economy is great right now, by any stretch. What I am saying is that you shouldn’t believe the Keynesian progressives who act like they’ve got a monopoly on empirical evidence. As I document in the Mises Canada post, Krugman, Yglesias, and Dean Baker were really happy when the numbers seemed to be going Abe’s way, and said it showed the success of his deficits and inflation. So are they going to admit they were wrong now? Of course not. This will just prove that Abe didn’t go far enough, and that the US economy was–thank heavens!–on more solid footing than any Keynesian forecaster realized, back when they warned how awful sequestration would be.

11 Responses to “But the Progressives Told Us Abenomics Would Be Good for Japan”

  1. Tel says:

    Well duh! Abenomics wasn’t big enough.

    If you ever find a sickness that leeches can’t cure, I say conclusively that you did not use enough leeches to cure the sickness.

  2. Tel says:

    Let’s not forget how the tsunami and the nuclear disaster were supposedly “expansionary” according to Krugman (I’m presuming he was Very Serious that day, not just joking about it). So we know that Japan already had stimulus before Abenomics got hold. Krugman even claimed victory on his expansionary tsunami prediction:


    See how GDP dips down in 2011 at the time of the disaster? See how it comes back afterwards in late 2011 and early 2012 to about the same as it was previously before the tsunami. Well, yes Krugman claimed that “growth” back to where it was before was empirical proof of the “expansionary” effect of the tsunami. I kid you not, I can find the link if anyone insists.

  3. Blackadder says:
    • Bob Murphy says:

      Blackadder is that a joke? There’s a lot wrong with that chart, but not least of which is that the entire premise of my post here is that yeah, debasing the yen seemed to work for about 6 months, and then it stopped. That’s entirely consistent with your chart.

  4. Matt M (Dude Where's My Freedom) says:

    “Chris S. gave me the idea for my latest post at Mises Canada, by pointing out that Japan’s Cabinet just approved another “stimulus” package to help its faltering economic recovery.”

    For Krugman, a policy that eventually leads to greater stimulus packages would be a feature, not a bug.

  5. joe says:

    To prove they are wrong, you need a counter factual. Without a counter factual, you’re merely making a circular argument.

    It’s not as if they predicted gold 10,000 and gold is now under 1200.

    So perhaps Japan would have seen a contraction without Abenomics and perhaps the US would see 7% real GDP growth for the quarter without the budget reduction.

    Prediction for 2014: gold 800 by the end of the year.

  6. JNCU says:

    “3rd quarter real GDP in Japan grew at 1.1 percent.” Is that one annualized or from quarter to quarter?

    • Jozin says:

      Yeah annualised – they “estimate” the “growth” a multiply by four. If it grows it’s peachy whether it’s a muscle or cancer tumor – but you know it, don’t you.

      Murphy please look into Judy Wood case. Seriously, this blackout in the alternative media isn’t funny, the information she provides have the potential to be a game changer.

      I won’t post any links, maybe it will go through censorship filter.

  7. Anonymous says:

    For years I have been reading that the reason all the borrowing in Japan is not causing a problem is that the pool of domestic savings is so large that they can just borrow from that and thus there is no problem. However, this pool is supposed to dry up eventually and when it does there will be major problems, according to this argument, because then Japan will have to start borrowing from abroad and that they will find that extremely difficult to do because their credit rating is so bad. Of course, I remeber reading an article about this about 4 years ago and they said it would happen in a year and it hasn’t happened yet. But, anyway, what do you think about this scenario, Bob? Thank you.

  8. senyoreconomist says:

    For years I have heard that the reason Japan has been able to go on for so long with the huge debt is that they have been borrowing the money to finance it from their huge pool of domestic savings. (or rather the government has been borrowing it…) However, the pool of domestic savings is supposed to eventually (soon) be exhausted and when that happens there will be major problems because the government of Japan will then have to borrow from abroad and that will be very difficult because their credit rating is so bad. At that point certain things are supposed to hit the fan. (Caveat: I read this in different places about 4 years ago and at least one of those articles said that the savings were supposed to run out in about a year from when that article was written.) If I remember correctly, these articles were in mainstream papers, not “The Tea Party Times.” What do you think of this scenario, Bob? I seems like an analysis that Keynes or Hayek could agree with. Also, what about the timing being off, do you think that it is a plausible scenario but the article’s predictive timing was off or do you think the logic is flawed in some way? Thank you.

Leave a Reply