OSAKA – Japan is now confronting challenges at home and abroad that are as serious as any it has had to face since World War II’s end. Yet the Japanese public is displaying remarkable apathy. The country’s two major political parties, the governing Democratic Party of Japan (DPJ) and the Liberal Democratic Party (LDP) recently chose their leaders, yet ordinary Japanese responded with a collective shrug. But Japan’s political system is unlikely to remain a matter of popular indifference for much longer.
The DPJ first came to power in September 2009, with an ambitious program promising comprehensive administrative reform, no tax increases, and a freer hand in Japan’s alliance with the United States. But, owing to the party’s inexperience and incompetence at every level of policymaking – shortcomings that were compounded by the unprecedented devastation of the great earthquake of March 11, 2011 – the first two DPJ governments, under Yukio Hatoyama and Naoto Kan, ended with those pledges in tatters. Consequently, several dozen legislators, led by the perpetual rebel Ichiro Ozawa, defected from the DPJ, forming a new rump opposition party.
Will Venezuela be next to stumble into a debt crisis – ironically, a country well endowed with the world’s most sought after resource? In its most recent issue, The Economistraises this question, as rumors swirl that the Bolivarian Republic might not be able to repay its international obligations between 2012 and 2015. The possible default of one of the world’s foremost oil producers should give the international community pause although any crisis is unlikely to materialize immediately. However, as soon as oil prices fall considerably below $100 per barrel, the Venezuelan economy will be deprived of its main foreign income, and a debt crisis might not be far behind – possibly threatening President Hugo Chavez’ long rule.
L’état, c’est Hugo
Despite high oil prices, Venezuelan GDP has been contracting for the last three years and inflation has been over 20 percent since 2007. Exports have been falling steadily and because power and water infrastructure falls short of much needed investment, Venezuelans are often forced to take cold showers. Even productivity in the state-owned oil company PDVSA has decreased by a third since Chavez took power in 1999. Chavez is infamous for his erratic behavior and his dislike of the private sector. During his 12-year rule, he has nationalized hundreds of domestic and foreign companies, closely regulated the economy and eliminated market mechanisms. In this way Chavez has paved the way for widespread corruption and inefficiency. Moreover, he has been governing by decree since December 2010, which grants him almost unlimited power to push through policies without parliamentary control. In Venezuela l’état, c’est Hugo. In this atmosphere of impunity many Venezuelan entrepreneurs have given up their businesses, and foreigners are increasingly reluctant to invest. In a recent country risk assessment Venezuela ranked 93 out of 100 – with civil-war plagued neighbor Colombia ranking a much higher 51.
The Achilles heel
As the government has successfully dismantled the private economy, Venezuela’s dependence on revenues from oil exports has increased, and imports have risen as many goods are no longer produced in Venezuela. Oil production makes up about a third of GDP and generates the lion’s share of the government’s revenue. Fluctuating oil prices are thus the Achilles heel of the whole economy. As soon as oil prices fall, Chavez might find it difficult to keep up public spending and to repay international obligations (net public debt was 29 percent of GDP in 2010). This might not only lead to a debt crisis and hamper economic growth but also to a decline in Chavez’ popularity. With plans to run again for president in 2012, he is in dire need of oil money to subsidize basic goods such as food. Otherwise the poorest will be hit even harder by rising food and living costs, with their incomes eaten up by staggering inflation – perhaps just like Chavez’ personal political future.
Sign of a sickly job market in Chicago, photo: ChiBart/flickr
With unemployment in many parts of the world the worst of the post-World War II era, policymakers are scrambling for solutions. This week the ISN examines the long-term unemployment trends of this ‘Great Recession’ and puts forward some potential policy prescriptions.
An Analysis by Dr Dean Baker, co-director of the Center for Economic and Policy Research, on the worst US unemployment figures in the post-World War II era – and why Europe is faring better.
A Podcast interview with Dr Johannes Jütting of the Organization for Economic Cooperation and Development examines how workers in developing countries are adjusting to increasing job insecurity – namely by moving deeper into the informal labor market.
Security Watch articles about job security crises from Spain to Honduras, the US to India, and much more.
Publications housed in our Digital Library, including an analysis from the US Congressional Research Service on the current trend in long-term unemployment compared with that during previous recessions.
Primary Resources, like the US Bureau of Labor Statistics report on how governments measure unemployment.
Links to relevant websites, such as the International Labor Organization’s Youth Employment Network.
Our IR Directory, featuring Women in Informal Employment: Globalizing and Organizing, a global research-policy network that seeks to improve the status of the working poor, especially women, in the informal economy.
In the wake of the Xinjiang riots, mass casualties and plenty of unwanted press, Chinese leaders were undoubtedly hoping for some good news.
They did not have to wait long. Little more than a week after the Urumqi riots Chinese authorities announced that the Chinese economy had grown by a healthy 7.9 percent in the second quarter of 2009. Compared to the West, this is a spectacular achievement and an encouraging sign for all those that saw the end of the world coming just months ago.
To the surprise of many seasoned China analysts and economists, China’s stimulus package managed to inject much-needed capital into the industrial sector; succeeded in offsetting the worst effects of massive export-industry layoffs by employing migrant workers in government projects, and perhaps most importantly, ensured that government-owned banks continued to lend despite the downturn. Even retail sales rebounded, the government announced, indicating that the Chinese consumer is still feeling confident and secure (unlike the rest of us).
