Summary of The Power to Compete

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With its technological inventions and its people’s legendary work ethic, Japan once seemed poised to dominate the global economy. But since the early 1990s, Japan has lagged while the United States, China and other nations have surged ahead. This overview of Japan’s woes explains a litany of ill-informed policies, such as lifetime employment and excessive regulation. The narrative is crafted in the form of a dialogue between father and son: The father is the late Ryoichi Mikitani, once professor emeritus of economics at Kobe University and president and chairman of the Japan Society for Monetary Economics, and the son is Hiroshi Mikitani, founder, chairman and chief executive of Rakuten Inc. Their conversation makes this study of Japanese economic policy an accessible and intriguing read. getAbstract recommends this informed exploration of Japan’s economy to businesspeople and policy makers seeking insight into the limping tiger.

About the Authors

Hiroshi Mikitani is the founder, chairman and chief executive of Rakuten Inc. His father, Ryoichi Mikitani, who died in 2013, was professor emeritus of economics at Kobe University and president of the Japan Society for Monetary Economics, which he chaired from 1994 to 1998. Rakuten is a stockholder in getAbstract.



A Stifling Regulatory Regime

Today Japan finds itself directionless and isolated from the rest of the world. Yet, Japan protects its markets from foreign competition. Innovation, hampered by regulation, is an afterthought. Japanese leaders demonstrate their lack of eagerness to embrace change, especially regarding the innovation revolution. A sclerotic bureaucracy chokes Japan. As the country has shifted toward state-run rather than free-market capitalism, public debt has swelled, followed by tax increases.

In 2013, the Shinzō Abe administration sought to reform Japan’s economy and return the fallen tiger to its former glory. Abe formed councils to suggest fresh ideas. Private sector representation on the Industrial Competitiveness Council ballooned from four people to ten, an apparent pretext for muddying the recommendations and diluting suggestions from reform-minded business leaders. Abenomics has good points but it’s larded with examples of state capitalism, especially hefty public investments in government-favored industries. Japan remains technologically advanced, but its leaders seem determined to squander that advantage.

Japan suffers under a staggering...

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