Japanese Prime minister Shinzo Abe opened up a trip to the US to meet President Barack Obama amid regional diplomatic tensions and domestic economic inconvenience.

Recently Prime minister Abe left Tokyo on his way to meet President Obama and arrived at Andrews Air Force Base outside of Washington, D.C.

Japan is currently crumbling by an ailing economy measured in terms of consistent deflation from the past 20 years, a territorial dispute with China and being disturbed by North Korean missile mission that automatically placed Japan under its axis.

PM Abe said after his White House visit at a Washington think tank, that “they (North Korea) have increased the range of their missile immensely and have attained the ability to reach even the mainland United States.”

Japan has been jammed into a dispute with China over sovereignty of islands located in the East China Sea and lost sleep over the situation as North Korean missile strength has expanded too dramatically.

Over the years, the North Korean missile program expansion became a major problem, terrifying its neighbours. During the picture session at the Oval Office with President Obama, PM Abe said, “We just cannot tolerate the actions of North Korea, such as launching missiles and conducting nuclear tests.”

President Obama’s Asia advisor, Danny Russel, said that the president “remains supportive of the peaceful efforts to diplomatic resolution to outstanding issues of territorial claims,” BBC reports.

The Japanese economy is the third largest in the world, but its currency is persistently declining in value against the US dollar.

Abe proposes to help set off the otherwise grounded economy with the help of Monetarist and Keynesian tools that may support growth in future. According to the BBC news, PM Abe has outlined two plans to revitalize the weak economy: firstly to print a lot of money and secondly to spend a lot of money. Plan A can be categorized under Monetarism and plan B is from the Keynesian School of Thought.

According to Keynesian economic thought, if the pace of economic activity is slow with falling investment rates and fading employment combined with decreasing consumer spending, then the only thing that can restart economy is public intervention through spending.

On the other hand, Monetarist believe that it is the supply of money that makes the economy move back and forth and not government spending. However, if both of these schools of thought can bring life to Japanese economy, then there may be a possibility of progress.

According to the BBC News, in an interview with the Washington Post, Abe said that improving ties with the US were at the top of his agenda and that their support is key. Both leaders are expected to discuss Trans-Pacific Partnership (Free Trade Agreement between North American, South American and Asian nations) among other issues during his visit.

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Let’s talk about James Buchanan. No, not the last American president born in the 18th century. About James McGill Buchanan. Why him? He was a Nobel Prize laureate and American economist who got recognized for his study on public choice theory, and who just recently passed away (January 9, 2013).

So why is his work still relevant today? Mainly because Buchanan initiated research on how non-economic forces and politicians’ personal interests affect economic policy.

His research includes extensive writings on macroeconomics, constitutional economics, the public debt, public finance and voting – all that is very important especially now, at the time of global economic crisis.

What is even more important, looking at the entire government “struggle against the economy,” is that in his studies Buchanan rejects “any organic concept of the state as superior in wisdom, to the citizens of this state.” This is where the interesting part begins.

Thanks to his philosophical position the basis of constitutional economics can be formed. According to Buchanan, every constitution is created for the time period of at least several generations and therefore, it should be able to balance interests of the society, state and each individual.

Unfortunately we don’t see this happening all around us. There are, of course, exclusions, but in whole we see just the opposite. The rich are getting richer or at least are well off anyways. And middle class is getting the full blow of the recession.

It is interesting that Buchanan’s ideas were always seen as a challenge to John Maynard Keynes. And Keynes is recognized to be one of the most influential economists of the last century and founder of modern macroeconomics. He was among those who advocated the use of monetary and fiscal measures to reduce the negative effects of economic recessions.

Once Keynes’s ideas became widespread, they were adopted by leading economies. Even though the outburst of the global financial crisis in 2007 caused degradation in Keynesian thought, the principals of Keynesian economics are still used to give response to the crisis. Unfortunately, neither the administration of George W. Bush or Barack Obama developed new approaches.

In his works Buchanan poses a question, “What do individuals seek in politics if they do not seek to maximize their own expected net wealth?” Which seems to make perfect sense, doesn’t it?

The main point is that modern politics can be adjusted only through the change to the constitution. In this way individuals will be able to act according to the long-term interest of the community and not their own short-term interests.

James M. Buchanan says, “Until and unless we begin to take the long-term perspective in our private and in our public capacities, including the adoption of new and binding constitutional constraints on the fiscal and monetary powers of government, we are doomed to remain mired in the muck of modern politics.”

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