Reforming Japan: The thicket of reform ONE farmer in central Japan has long kicked against the system. Shigeaki Okamoto, in Aichi prefecture, abandoned the family tradition of growing chrysanthemums - symbol of the imperial family - for market, because it tied him to Japan Agriculture (JA), the giant state-sponsored co-operative that stifles much of farming. Instead Mr Okamoto learned to grow strawberries, which he could sell outside the JA system. But now the government listens less to JA and more to rebels like Mr Okamoto. He has helped design rules on farming for a series of new "special economic zones" that are part of the plans of the prime minister, Shinzo Abe, to revive the economy. These plans have three parts. The first concerns monetary policy. Early this year the prime minister pressed the central bank to ease monetary policy radically so as to drag Japan up out of its long deflation. The second is a burst of government spending to jolt the economy. It is not clear how much the extra money, which adds to Japan's growing debt pile, has achieved. But, rather more clearly, the monetary easing has had an effect. After 15 years, prices are only barely falling, the stockmarket is sharply higher than a year ago, and big exporters" profits are up thanks to a related fall in the yen. When foreign portfolio investors talk about "Abenomics," they increasingly mean simply this radical monetary policy. Yet Mr Abe promised a third part to his plans, which at the time encouraged investors: ambitious structural reforms to the economy. Their consequence would be to overhaul farming, the labour market and the provision of health care. Some investors now profess to care less about such reforms. In the near term, some are deflationary. Only in the long run do supply-side reforms have a chance of boosting the economy's potential rate of growth. Yet whether they are carried out or not will say much about Mr Abe's commitment to turn his country round. The promises fell far short when the first measures were announced in June. At the time Mr Abe's Liberal Democratic Party (LDP) faced a crucial election in July for the upper house of the Diet and was unwilling to take risks. After it won, Mr Abe promised a second attempt at reforms in the autumn, including details of his fancy zones. Agriculture is now emerging as the target of stronger and better-aimed measures. But elsewhere the pace of reforms remains frustratingly slow. The most important element of structural reform, says the chief cabinet secretary, Yoshihide Suga, is Japan's participation in talks on the Trans-Pacific Partnership, a free-trade grouping. Membership will require slashing high import tariffs on farm products (the tariff on rice is over 700%), while prising open other protected industries and services. The LDP swore that it would carry on protecting rice, along with four other "sacred" farm products, but Japan's negotiators have since said they will consider lowering tariffs on any or all of them. This is welcome. But it is slightly dispiriting that the government's chief reform relies on outside pressure rather than home-grown resolve. Another sign of change is the idea of the special zones. These will comprise large urban and rural areas, still to be designated but likely to include the economic heartlands of Tokyo, Nagoya and Osaka. Deregulation will be showcased there before being extended to the country as a whole. Farming will see some of the more significant changes, such as a measure to give local government a say over who may enter farming. At the moment, powerful local agricultural committees keep out many new entrants, including corporations keen to apply economies of scale. Mr Okamoto says the proposed rules would for the first time help him to borrow from banks rather than from JA. He plans to use the money to start producing for export. The next radical step, says Mr Suga, is a review of the so-called gentan policy on rice cultivation. Since 1969 the government has held down the number of acres devoted to rice, so keeping domestic prices high for the benefit of farmers and JA. Should Mr Abe let rice-growers produce as much as they wanted, prices would fall. Japanese rice could compete more effectively at home against imports, and overseas, too, where its quality is prized. Small-scale, part-time farmers, whose presence makes much of agriculture inefficient, would be squeezed out. Scrapping gentan would be historic, says Takeshi Niinami, head of Lawson, a chain of convenience stores, who advises Mr Abe on agriculture. From farmer to pharma Yet beyond farming, the government's efforts are faltering. On November 6th Hiroshi Mikitani, the boss of Rakuten, an internet firm, threatened to resign from one of the several panels advising the prime minister on structural reforms, citing his disappointment at Mr Abe's retreat from an important health-care reform. In June Mr Abe had made much of his government's promise to lift a ban on online sales of over-the-counter medicines. Yet traditional sellers of pharmaceuticals, backed by the health ministry, forced an about-turn. The ban will continue for some key products for three years or more. Mr Suga says it was politically impossible to override the health ministry and its panel of medical experts. It makes Mr Abe look weak and raises doubts about his authority over the cabinet. Opposition to reform now comes directly from ministers, as well as from LDP lawmakers backed by vested interests. The farm ministry, seeing a precipitous decline in agriculture, seems to have stopped resisting. But the labour and health ministry carries on determinedly. The cabinet, aside from Mr Abe, Mr Suga and the farm minister, Yoshimasa Hayashi, contains precious little reform zeal, or indeed talent. Even Mr Suga, who understands the need for deregulation, is ready to retreat from changes that would provoke a political backlash. The most sensitive change of all would be meaningful reform to the labour market. Allowing large firms to lay off regular employees more easily would in the long run make them readier to hire than they are today. That one reform could have a broader impact on the economy than even radical changes to agriculture, which contributes just over 1% to GDP. Oh, Abe, where is thy bowstring? The government plans to tweak some employment rules, so that, for instance, firms will be able to employ part-time or contract workers for twice as long as they may now before offering them full-time positions. But the special zones will not, after all, introduce sweeping changes to labour rules. Nowhere in the world, says the labour minister, Norihisa Tamura, are "core" labour regulations altered only in certain places. In all, says Robert Feldman of Morgan Stanley, who has generally been positive about Abenomics, the measures for the zones are "acceptable, but not great." Far more will be done in the zones beyond this autumn's measures, Mr Suga promises, and all deregulation there will later be applied to the rest of the country. Mr Abe's business friends are convinced that labour reform will be back on the agenda late next year and that reform will be politically easier if the job market tightens as the economy recovers. According to this argument, it will take time and patience for Mr Abe to tackle so-called "bedrock" regulations in sensitive areas such as health care and the labour market. Yet the recovery has slowed. In the third quarter, annualised growth was 1.9%, down from 4.1% and 3.8% in the first and second quarters. Mr Abe, for his part, badly wants his business backers to take their profits from a lower yen and pay them out as higher wages to workers. But they are reluctant, and if wages do not somehow keep pace with any rise in prices (and bear in mind that the consumption, ie, sales, tax is going up next year), then the economy's cheer could fade. Meanwhile, on the reform front, with a nearly unprecedented popular mandate and a majority in the Diet's two chambers, Mr Abe should by now have achieved much more.