Why Japan’s Kishida finally called it quits

TOKYO — As Fumio Kishida bows out of Japanese leadership, let’s first dispense with the spin about why.

No, Prime Minister Kishida isn’t falling on his sword because of slush fund scandals. These are about as rare for his Liberal Democratic Party as Tokyoites eating raw fish. What derailed Kishida was an underperforming economy – and his failure to put any major reforms on the scoreboard after 1,045 days in power.

If your biggest upgrade in 34 months is raising the minimum wage to a whopping US$7 an hour, perhaps the premiership of a Group of Seven economy isn’t for you.

Of course, Joe Biden did Kishida no favors by stepping aside. Kishida’s best argument for winning next month’s party leadership election was a strong relationship with the US president. That’s now moot as Kamala Harris replaces Biden as Democratic Party nominee.

Yet Kishida’s plight is its own economic indicator with implications for investors rushing into Tokyo stocks, Bank of Japan policies, Asian geopolitics and US-Japan relations.

The narrative driving waves of capital zooming Tokyo’s way is a “booming” Japan. That epochal reforms over the last dozen years, led by former Prime Minister Shinzo Abe, whipped aging, unproductive, change-averse Japan Inc. into shape.

In one way, this take has merit. It’s true that Abe, Kishida’s mentor, from 2012 to 2020 prodded companies to increase returns on investment and give shareholders a louder voice. Those steps, along with sharp declines in the yen, boosted corporate profits and sent the Nikkei Stock Average above its 1989 highs.

Trouble is, that’s pretty much all so-called “Abenomics” accomplished. Abe’s big talk of loosening labor markets, cutting bureaucracy, supporting startups, empowering women and