New Foreign Affairs article: Will Japan choose neoliberalism?

I have a new article at Foreign Affairs, which draws heavily on the ideas in this blog post from a few months back, as well as this earlier post. The article about the monumental economic and social choice facing Japan: Whether to embrace neoliberalism. Some excerpts:

Faced with economic stagnation in the late 1970s and early 1980s, most of the world’s rich countries made a fateful choice. They lowered taxes; slashed government regulation in labor, financial, and other markets; opened their economies to global trade and finance; and privatized government functions...[M]ost [economists] concur that the reforms at least contributed to higher inequality, increased economic insecurity, and, at least temporarily, faster economic growth... 

Buoyed by the last spurt of its postwar catchup growth, Japan managed to sail through the 1980s without having to face hard choices about the structure of its economy... 

Many features of the Japanese economy that are commonly attributed to culture are, in fact, the result of Japan trying to run a modern economy without neoliberal reform: powerful but inefficient corporations, little job mobility, low unemployment, a relatively equal income distribution, and a job market that is heavily rigged against women... 

In order to enact meaningful structural reform, Abe will have to reverse Japan’s most important economic policy decision of the last half century. He will have to embrace neoliberalism... 

[T]he third arrow of Abenomics is not just about lifting Japan out of its long economic slump. It is about making a grave choice that will determine the fabric of Japanese society. The failure of the third arrow means continued corporatism, and the preservation of Japan’s social model even at the cost of a slow slide into economic backwardness. Abe’s trade and labor reforms offer a way out into a frightening and uncertain future -- but one that is potentially freer.

Read the whole thing here!