Another lesson in the limits of economic management

I was startled by some of the information in this article. The most startling thing I learned today might be that Japan is only 39 percent self-sufficient as far as calories. I knew Japan relied on significant imports of fuels given their natural resource limitations. But food? This is a developed country, one that was supposed to rival the economic might of the United States in the 1980s. Relying on imports for such a significant part of food consumption can be a serious issue. Combine this with economic stagnation and an aging population and it hardly seems like a recipe for an economic turnaround.

Abenomics apparently does not believe in income and substitution effects. Rising prices of necessities, such as food, force consumers to scale back purchases of cars, clothes, you name it. This is to say nothing of the distrust and animosity it will inspire in the population. In the end the policy just looks to be self defeating as talking up the prices without generating increases in incomes just makes people poorer.

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