Pesek on Asia: Piketty Hits Abenomics
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Piketty sees Japaneseinequalityworsening.
Thomas Piketty’s views on Japan are decidedly at odds with the government's narrative about economic revival and fresh wealth creation. Here, the French economist tells the Wall Street Journal why inequality will increase in Asia's second-biggest economy. Drivers include Prime Minister Shinzo Abe's sales-tax increase on consumers as he works to lower corporate tax rates, as well as plans to make it easier for companies to shift workers into part-time positions. Too bad Japanese won't be able to read Piketty's reasoning until 2017, when his best-selling “Capital in the Twenty-First Century” is scheduled to be translated.
Australians yell "rubbish" as Abbott reverses pledges.
Clearly the concept of pre-election promises means something different in Canberra than in other democratic capitals. How else can we explain Prime Minister Tony Abbott's about-face on tax increases, or the depth of his proposed social-welfare cuts? Sold as necessary remedies for a supposed budget emergency, Abbott used his first budget to downsize government in ways be told voters he wouldn't before assuming office in September. Here's a lively look at the backlash Abbott -- one voter calling his position "rubbish" -- and Treasurer Joe Hockey are facing from aggrieved Australians.
Economic fallout from Korea's ferry tragedy?
The sinking of the Sewol and the loss of at least 275 people, mostly high-school kids, is South Korea's worst human tragedy in decades. But is it becoming an economic one, too? Journalist Evan Ramstad tackles this largely-unexplored question in this report for the Center for Strategic and International Studies. Koreans, he concludes, are experiencing effects similar to those of Americans after the Sept. 11, 2001 terrorist attacks. "There’s been shock, shame, anger, outrage, and recrimination," Ramstad says. "But those feelings have been manifest in a collective withdrawal that is producing an economic effect."
India's central bank ups ante for Modi.
Narendra Modi's Bharatiya Janata Party is universally expected to win India's election (we'll find out Friday) and begin restructuring the economy. But the central bank is already taking matters into its own hands, urging the government to cut its stakes in state-controlled banks to below 50 percent. Making India's financial system more efficient and competitive would aid the entire economy and help broaden the benefits of growth beyond the elite to the burgeoning middle class. Let's hope the RBI's campaign here isn’t an aberration. Anything Governor Raghuram Rajan can do to prod the government to upgrade India's financial system is good for global growth.
Jacob Lew should get used to disappointment.
The latest attempt by U.S. Treasury Secretary Jacob Lew to prod China to strengthen the yuan is even more futile than usual. Chinese Premier Li Keqiang went through the motions, respectfully hearing out Lew's call in Beijing for a more market-determined currency system. But Li and his boss President Xi Jinping know full well that a weaker yuan is in the cards as they work to restructure China's rickety economy and financial system. A more competitive exchange rate is the most obvious way to cushion growth as reforms unfold. So thanks for stopping by, Mr. Lew, but no can do.
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