#69 Abe Yaar! Lessons From 'Japanification'

This newsletter is really a public policy&#160;thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question:&#160;how do I think about a particular public policy problem/solution?<br/><br/>Welcome to the mid-week edition in which we write essays on a public policy theme. The usual public policy review comes out on weekends.<br/><br/>PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at&#160;<a href="https://www.ad-auris.com/">Ad-Auris</a>. If you have any feedback, please send it to us. <a href="https://publicpolicy.substack.com/account/add-podcast">Listen in podcast app</a><br/><br/>Shinz&#333; Abe, the longest-serving Japanese PM ever, stepped down from office last week. His second term that began in late 2012 was marked by his prescription for reviving Japanese economy. The world called it Abenomics. <br/><br/>Through a mix of unconventional monetary policy, robust fiscal stimulus, and structural reforms to boost growth, Abenomics was seen as a marked departure from the timid response that characterised the previous regimes. Abe was determined to jolt Japan out of the economic morass it had dug itself in for over a quarter-century since 1990. We will discuss Abenomics and what lessons it holds for us in more detail later. But let&#8217;s go back to the lost decades of Japan that gave us the pejorative term &#8216;Japanification&#8217; and understand what happened during that time.<br/><br/>Bubble, Bust And No Recovery<br/><br/>Japan was the miracle economy following WW2, benefitting from U.S. largesse in infrastructure spending, government investments in technology and research, rise in entrepreneurship and increase in factor productivity for over three decades. Low-interest rates and all-round prosperity in t