Japan's New Capitalism

 Following the example of China's Xi Jinping in advocating "common prosperity", the Japanese Prime Minister Fumip Kishida promises to bring a redistribution of wealth by a policy described as "new capitalism".

Kishida said he believes a more equal distribution of wealth is needed to prevent the world’s third-largest economy from sinking into stagnation.

“I’ll be seeking to bring about a new form of capitalism that creates a virtuous cycle of growth and wider wealth distribution.” Japan's new Finance Minister Shunichi Suzuki said.

“We don’t know for sure what he plans to do, but we know his approach will not be that different from ‘Abenomics,’ ” said Hideaki Tanaka, a professor of public policy at Meiji University in Tokyo.

“When the ruling party picked Kishida, they were voting for the status quo,” said economist Masamichi Adachi at UBS Securities. “I have my doubts about what they’re pitching as new policies.” 

It sounded a lot like Abenomics in a slightly different language. 

He announced plans to tax profits on investments, part of his promised effort to distribute wealth more evenly in the country. He has since back-track on his "new capitalism" tax, when the stock market slumped, saying he would hold off until Japan's economy is stronger. 

Although the Bank of Japan’s bond-buying and aggressive monetary easing has been criticized in some corners as widening the wealth gap because it rewards stock owners so heavily,  the administration wants the bank to stay the course.

He now says he will drive growth by cutting corporate taxes — which Abe also did — in the classic “trickle-down" strategy of encouraging companies to raise wages. That approach failed, however, as companies hoarded their earnings. Instead, a growing share of workers are employed part-time or on contracts that don't provide full benefits. 

Despite the Nikkei tripling in value in the last 10 years, Japan's average wages remain among the lowest of the G7 nations, at $38,500 a year compared to $69,400 in the US. Although the disparity of wealth is greater statistically in the U.S. than in Japan, Americans have access to more generous social welfare programs. That means poverty is a growing problem in Japan, especially among single mothers struggling to make a living wage.