A few weeks ago in the JoongAng Daily, I co-authored the following editorial. (My co-author is one of my finest students, who can be found here on Twitter.) The temperature is rising in Korea on Abenomics. The government is coming out strongly against it, but I still think the basic arguments we present below are undamaged.
In brief, Abenomics is important because Japan is the world’s third largest economy and therefore systemically (i.e., globally) important (Korea is not; it’s too small). So Japan’s reflation is about a lot more than just Japan; it impacts the region and the globe. Also, the Korean won is ridiculously undervalued and the Bank of Korea has itself gimmicked the won exchange rate a lot in the past, so it’s not exactly fair for Korea (or China, who is even worse) to complain. Finally, in the medium-term, a functioning Japan is far more in Korea’s interest than Korea’s nationalist japanophia will allow anyone here to admit. That is a shame. I’ve argued this a lot, but no one listens.
So bring on the K-hate-mail, but please do recall that I have already rejected Abe the nationalist. Koreans are absolutely right about the comfort-women and Yasukuni. But Abenomics is not about history; it is a last-ditch, throw-everything-including-the-kitchen-sink effort to get Japan on its feet again so that it can prevent Chinese primacy in Asia. Keep your eye on the big picture of South Korea’s interest, and a few lost sales of Samsung TVs to Canadians pale in comparison.
Just to avoid referencing Abe again – he’s become such a lightning rod in Korea – the picture is Hiruhiko Kuroda, the (awesome) governor of the Japanese central bank. (Someone form the Bank of Japan really ought to be put in charge of the IMF one day soon.) I’d like to think Kuroda’s hand reference in the pic means he wants to dectuple the Japanese money supply. Hah! – ‘Just wait a year, PM Abe, and I will chop down every tree in Japan and print so much cheap yen, that we’ll wallpaper our houses with it!’ Think of Kuroda as the flip side of Paul Volcker. If Japan’s economy weren’t such a mess, it’d actually be kinda funny. But honestly, let’s all – Koreans included – hope Abenomics works.