Prime Minister Shinzo Abe is attempting an aggressive reform program in order to revitalize the Japanese economy. Can he succeed? We believe he can, but only if he aims his “third arrow” of structural reform at the right target.
Mr. Abe’s “Three Arrows” program consists of renewed fiscal stimulus, aggressive monetary easing and significant structural reform. We believe he will succeed—if he aims his “third arrow,” structural reform, at Japan’s capital allocation and corporate governance practices.
Losing money is embarrassing. And an embarrassed Jamie Dimon publicly admitted that J.P. Morgan Chase goofed. Three senior executives lost their jobs as a result. But politicians and regulators in Washington are rushing to leverage the bank’s misfortune for their own gain.
There can be an appropriate place for government subsidies to influence the choice of vehicle fuel technology. But such choices should be subject to rigorous cost benefit analysis with a high threshold for approval.
The fiscal stimulus was both so expensive and so badly flawed that it was rendered ineffective; a recent paper that vindicates the plan fails to measure the number of people who found work and the effectiveness with which the Obama stimulus created jobs.
Option B defines a problem as being too serious to ignore and thereby requiring resources, yet commits fewer resources than would guarantee success.
Both America and Britain are going to have to change the way they provide health care–but through evolution, not sudden or drastic reform.
The maze of tax credits that are typically available to low-income individuals under the tax code needs simplifying.
Replacing all of the seven different tax credits allowed under the current tax code with a simple policy holds significant promise.