Japan Forced to Choose Between Public Health and Economy

By Kota Suzuki ’21

An advertisement for the canceled Tokyo 2020 Olympics (Photo Credit: Time)

Despite a rocky start, Japan has managed to handle the COVID-19 outbreak successfully. The number of total cases places them at a comfortable 48th on the international scale as of August 12th. Furthermore, Japan is at about 1,000 daily new cases compared to the United States’ roughly 50,000 as of late July.

Japan can make a strong case for a coronavirus success story based on these statistics, but many Japanese citizens remain angry at their government’s handling of this virus. What is far more palpable than the new cases or deaths from the virus is the damage the pandemic is inflicting upon Japan’s economy, insinuating a long road to recovery.

Japan has continued to pursue government intervention to revitalize its economy after over two decades of deflation. The Prime Minister of Japan, Shinzo Abe, has produced inconsistent results—his seven-year-old plan dubbed “Abenomics” has yet to provide significant improvements.

He has, however, found success in his aggressive monetary easing, with the Bank of Japan injecting large sums of money into the economy. Pre-COVID, Abe had managed to achieve a remarkable 25% yen depreciation versus the U.S. dollar. To capitalize on this, Japan focused heavily on tourism, advertising its hotspots, and relaxing foreign visa requirements.

With a similar investment in mind, Japan poured money into the 2020 Olympic Games, building the Japan National Stadium in Tokyo for an estimated $1.4 billion along with other ambitious infrastructure projects. Most notably, to counter Japan’s notorious heat and humidity during the summer, the Tokyo 2020 Organizing Committee set out to pave pre-existing roads with heat-shielding material all over Tokyo and other major cities hosting events.

Various Japanese media sources estimated total expenses to be between $26 to $28 billion. With the Olympic Games delayed for a whole year, private economists estimate $6 billion in economic losses.

Coupled with the postponement of the 2020 Olympic Games, the pandemic continues to damage the Japanese economy and has left Prime Minister Abe and his administration in desperate need of a solution. With tourism at an all-time low, Japanese hotels and restaurants are suffering. To fill the vacancy, the Prime Minister has looked towards the Japanese people to spend more money instead of staying home in quarantine, with the aim of boosting domestic tourism.

Abe introduced the controversial Go-To Travel and Go-To Eat initiatives in an attempt to subdue the pandemic and revive the economy, resulting in a massive ¥1.5 trillion budget. Both initiatives function as a government-backed discount program that lulls individuals to, as the name suggests, travel and eat. Go-To Travel ensures that eligible travelers receive an initial 35% discount on their travel expenses along with an additional, separate 15% discount voucher that could be used at their destination, totaling 50% off their total cost. Go-To Eat offers diners up to 25% off their meal for eligible restaurants around the country.

Although absurd at first glance, the initiatives were proposed in early July, when new cases were at 130-150 a day. The Abe administration expected the country to have the pandemic completely under control by September and planned to launch the initiatives by late August.

Unfortunately, though, hotels and restaurants neared the edge of bankruptcy much earlier than the administration predicted. Although COVID-19 cases were rising steadily each day, the Abe administration forced an early beginning to the initiative, starting on July 22nd. This decision split Japan in two, as business owners and young adults rejoiced while others voiced their concerns.

The decision to start the Go-To campaign has taken a toll on Japan’s COVID-19 statistics, with active cases practically doubling from July 22nd to July 30, from 4,663 cases to 9,319. This “second wave” has prompted many organizations and doctors to speak up, begging Abe’s administration to cancel the Go-To campaign until this uptick in new cases calm down.

The campaign has also come under attack on social media, where angry individuals are speaking up about the new increase in cases, dubbing the Go-To Travel campaign Go-To Trouble. Many speculate that the eased travel restrictions on June 19th, which led to some restless Japanese travelers going to other countries and coming back, coupled with the campaign tempting people to travel around Japan, has created a dangerous process of entry and circulation for the virus.

In response to these concerns, Minister of State for Economic and Fiscal Policy Yasutoshi Nishimura claimed that, compared to April, the number of severe cases is much lower in July. His argument did not satisfy many; Mainichi Shimbun, a popular Japanese daily news source, conducted a poll, revealing that 69% of their audience wanted the initiative entirely canceled.

Even with such strong backlash towards their initiative, the Abe administration has held its ground as of yet, sticking with its Go-To plans.

Alarmingly, cases in tourist hotspot Tokyo continue to rise. Tokyo governor Yuriko Koike directly refuted Yasutoshi Nishimura’s claim, warning on Tuesday, July 21st, “The number of serious cases is increasing. It’s important that those with a high risk of becoming seriously ill, such as the elderly and those with pre-existing medical issues, stay inside.”

In what seems like a zero-sum game, the Abe administration is virtually forced to choose between the economy or the public health. The month of August will be critical, as there is sure to be a turning point, for better or for worse, depending on Prime Minister Abe’s decisions.