The Ronald Reagan moment Japan investors have long fantasized about has finally arrived.
Shinzo Abe¡¯s plan to restore Japan¡¯s economic might draws heavily upon principles long associated with the former U.S. president: welfare-spending cuts, debt-swelling tax reductions for the wealthy and corporations, deregulation, a lowering of trade barriers, and reforms that make it easier to fire workers.
Yet while investors have greeted this supply-side shock therapy with enthusiasm, Japan¡¯s 126 million people may not find its side effects quite so pleasing. As in the U.S., Abe¡¯s reforms could hollow out the middle class and create the kind of gulf between rich and poor Japan has long tried to avoid.
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