What should the European Union learn from Japan to solve its economic crisis?

By Eddy Montilla.

TOKYO

In the European Union, political leaders and economists say that the worst must be over for the Eurozone and many people are hopping like a happy kid. They don’t see that the idea of “the worst is over” does not mean that the best is coming. It just means that you cannot go lower any further. The EU still has a long way to go in its efforts to bring the economy out of its lethargy because a country’s economy can be considered strong when the unemployment rate is low, but when you take a look at Spain, you will find almost five million people who are jobless and constant job destruction. Greek, like Spain, is currently experiencing difficult moments and Portugal, France and Italy also make the list of countries with a lot of economic problems. Then, it is not time to be so happy with news filled with excessive optimism.

     And while these countries will lose their respective position on the list of the world’s largest economies, Japan remains solid in third place. Then, what should the European Union learn from this Asian country? The first time that Shinzo Abe was Prime Minister of Japan, his job fell below mediocre levels to a point that he was moving at the end from his house to hospital and vice versa. But during his second chance, he presented a package of measures based on monetary easing, fiscal stimulus and structural reforms. But people in Europe know the same or perhaps more than Japanese people on these topics, so what European leaders should learn from Abe, in my opinion, is the way he focused his mind on ideas “to rectify mistakes made during his first period”.

     The European Union has spent too much time looking for solutions to its economic crisis, but I am not sure if it has done the same to rectify mistakes. Abe, however, knows that Japan is an exporting country of products that require the most modern technologies and, in order to yield large profits, Japan needs a weak yen that will let get much more money whenever a Japanese car is sold, for example. Shinzo Abe learned from his mistakes and quickly rectified some of them. Months later, after being Abe back as prime minister, the yen weakened as if by magic, Japanese exporting companies are making healthy profits and as a result of all these, the unemployment rate is below 4 per cent today.

     While Shinzo Abe corrected many things in Japan, leaders in the EU keep making the same mistake of trying to find solutions to the European economic crisis reducing costs, budgets and imposing strict control on banks instead of trying to activate their economy and encourage actions to create stable jobs. In Spain, for example, the Government struggles to help as many unemployed people as possible. But what is more important for a person who is unemployed, to receive some euros for some months or a permanent job? When the global crisis broke out, we said that the European Union would need at least a decade to return to normality. More than five years has passed since that prediction, and if mistakes are not rectified, unfortunately, we could get our prediction right.

This article was originally published in the digital newspaper WORLD AND OPINION with Eddy Montilla.

Copyright 2014 littlethings4all.wordpress.com. All rights reserved.

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