NYT Finds Economists Without Names to Criticize Japan's Plans for Stimulus and Promote "Free-Trade" Agreement

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Monday, 18 February 2013 22:28

Most economists have names, but the NYT managed to find some without names to give critical comments on the stimulus plans of Japan's prime minister, Shinzo Abe. An article on Mr. Abe's plans told readers:

"Economists say Mr. Abe’s policies so far contain few of the deeper-reaching structural reforms that they say are needed to produce sustainable growth by encouraging competition in Japan’s sclerotic economy. They say the most symbolic step would be joining a Pacific-wide free trade pact that would force Japan to open sheltered domestic markets, like farm products."

It would be interesting to know which economists have this view, because some economists, like Paul Krugman, have argued that the main obstacle to Japan's growth is a lack of demand. They have advocated exactly the sort of expansionary fiscal and monetary policy that Abe is now advocating.

It is also worth noting that the Pacific trade agreement mentioned in this piece cannot properly be described as a "free-trade" agreement. Most of its provisions have nothing to do with trade and some involve increased protectionism, like stronger patent and copyright protections.

The piece also referred to "Japan’s already stifling national debt." It's not clear how it has determined that Japan's debt is "stifling." The interest burden of Japan's debt is roughly 1.0 percent of GDP, roughly two-thirds the current size of the U.S. interest burden and one-third of the burden the U.S. government faced in the early 1990s. The interest rate on long-term Japanese debt is just 1.0 percent. And, it is facing deflation, not inflation.

If the debt is stifling Japan's economy, it is not showing up in the data. If the economists cited in this article had names perhaps people could try to figure out what they meant.