Author Topic: The Myth of Japan's Failure  (Read 1728 times)

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Offline Super Dude

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The Myth of Japan's Failure
« on: January 08, 2012, 11:57:08 AM »
Just an interesting article I turned up on the NYT homepage. It's kind of a long read so I'll just post some of the first page here:

https://www.nytimes.com/2012/01/08/opinion/sunday/the-true-story-of-japans-economic-success.html

Quote
The Myth of Japan’s Failure

By EAMONN FINGLETON
Published: January 6, 2012

DESPITE some small signs of optimism about the United States economy, unemployment is still high, and the country seems stalled.

Time and again, Americans are told to look to Japan as a warning of what the country might become if the right path is not followed, although there is intense disagreement about what that path might be. Here, for instance, is how the CNN analyst David Gergen has described Japan: “It’s now a very demoralized country and it has really been set back.”

But that presentation of Japan is a myth. By many measures, the Japanese economy has done very well during the so-called lost decades, which started with a stock market crash in January 1990. By some of the most important measures, it has done a lot better than the United States.

Japan has succeeded in delivering an increasingly affluent lifestyle to its people despite the financial crash. In the fullness of time, it is likely that this era will be viewed as an outstanding success story.

How can the reality and the image be so different? And can the United States learn from Japan’s experience?

It is true that Japanese housing prices have never returned to the ludicrous highs they briefly touched in the wild final stage of the boom. Neither has the Tokyo stock market.

But the strength of Japan’s economy and its people is evident in many ways. There are a number of facts and figures that don’t quite square with Japan’s image as the laughingstock of the business pages:

• Japan’s average life expectancy at birth grew by 4.2 years — to 83 years from 78.8 years — between 1989 and 2009. This means the Japanese now typically live 4.8 years longer than Americans. The progress, moreover, was achieved in spite of, rather than because of, diet. The Japanese people are eating more Western food than ever. The key driver has been better health care.

• Japan has made remarkable strides in Internet infrastructure. Although as late as the mid-1990s it was ridiculed as lagging, it has now turned the tables. In a recent survey by Akamai Technologies, of the 50 cities in the world with the fastest Internet service, 38 were in Japan, compared to only 3 in the United States.

• Measured from the end of 1989, the yen has risen 87 percent against the U.S. dollar and 94 percent against the British pound. It has even risen against that traditional icon of monetary rectitude, the Swiss franc.

• The unemployment rate is 4.2 percent, about half of that in the United States.

• According to skyscraperpage.com, a Web site that tracks major buildings around the world, 81 high-rise buildings taller than 500 feet have been constructed in Tokyo since the “lost decades” began. That compares with 64 in New York, 48 in Chicago, and 7 in Los Angeles.

• Japan’s current account surplus — the widest measure of its trade — totaled $196 billion in 2010, up more than threefold since 1989. By comparison, America’s current account deficit ballooned to $471 billion from $99 billion in that time. Although in the 1990s the conventional wisdom was that as a result of China’s rise Japan would be a major loser and the United States a major winner, it has not turned out that way. Japan has increased its exports to China more than 14-fold since 1989 and Chinese-Japanese bilateral trade remains in broad balance.

As longtime Japan watchers like Ivan P. Hall and Clyde V. Prestowitz Jr. point out, the fallacy of the “lost decades” story is apparent to American visitors the moment they set foot in the country. Typically starting their journeys at such potent symbols of American infrastructural decay as Kennedy or Dulles airports, they land at Japanese airports that have been extensively expanded and modernized in recent years.

William J. Holstein, a prominent Japan watcher since the early 1980s, recently visited the country for the first time in some years. “There’s a dramatic gap between what one reads in the United States and what one sees on the ground in Japan,” he said. “The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets. And the physical infrastructure of the country keeps improving and evolving.”

Continued on the Next Page

:superdude: says: I have no idea whether this guy's research is sound, but if he's right, it's always good to hear good news. I put this in P/R because it talks about Japan's heavily regulated economy vs. American right-wing love for laissez faire capitalism and how it could have to do with the economic upturn.
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Offline Scheavo

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Re: The Myth of Japan's Failure
« Reply #1 on: January 08, 2012, 12:10:51 PM »
I think it just goes to show you how we economically value speculation and ridiculously high prices. Oh no! The stock market isn't good! Oh no! The housing market isn't good! But what are those? Two area's prim for speculation / investment by rich people. If you have money, buy some houses, sit on them, make money. If you have money, buy some stocks, sit on them, make money. They're not true signs of economic health at all, yet it seems to be a very important factor when people decide the "health" of an economy.


Offline Super Dude

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Re: The Myth of Japan's Failure
« Reply #2 on: January 08, 2012, 12:15:27 PM »
Maybe this is the wrong thread to discuss this in, but what in your opinion is a sign of a healthy economy? I don't know much about economics but I would say low unemployment and high GDP. But as I said, I know next to nothing about macro.
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Offline Scheavo

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Re: The Myth of Japan's Failure
« Reply #3 on: January 08, 2012, 12:22:01 PM »
I don't know if it can really be whittled down to one thing, but I'm really just throwing out somewhat educated/informed guesses on this. I do remember a study that showed economic signs basically become meaningless after a set period of time. GDP used to be a fairly good way to look at an economy, but that the stock market has basically fucked that all of. GDP is supposed to be a sign of productivity, but that is hardly the case anymore, with our stock market. Production itself is very important, but it depends upon what you're producing as much as if you are producing.

It's probably a combination of things, unemployment, production, distribution of wealth, health of the citizens, state of the infrastructure, etc.

Offline Super Dude

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Re: The Myth of Japan's Failure
« Reply #4 on: January 08, 2012, 12:27:58 PM »
Interesting. Yeah, if the article is any indication, Japan has the unemployment, production, and health things all down nowadays. I can personally vouch for their infrastructure.
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Offline Riceball

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Re: The Myth of Japan's Failure
« Reply #5 on: January 08, 2012, 05:12:21 PM »
The stock market is a barometer of an economy to a certain extent, because it represents (in normal circumstances) the profitability of the private sector, which is the locus of economic activity. However, day to day swings in stock prices really don't matter a great deal, its just fund managers, analysts etc playing the market...far too much attention is paid to it.

As for the article, I will have a read now.
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Offline Riceball

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Re: The Myth of Japan's Failure
« Reply #6 on: January 08, 2012, 05:25:54 PM »
Well, without looking at the numbers and going from memory, the figures that he cites are correct. On GDP, Japan has been very weak over the past couple of decades, while its inflation rate has also been pretty much zero (a figure the monetarists like to bandy about as evidence of a liquidity trap). Japan's ability to create new infrastructure, both public and private, in my mind reflects strength in productivity growth as well as the accumulation of debt that is being used for productivity-enhancing purposes. GDP may be weak relative to the US largely due to the differential in inflation rates - the US was inflating at a much higher rate than Japan which would, somewhat, be reflected in exogenously stronger growth figures.
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Offline Nekov

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Re: The Myth of Japan's Failure
« Reply #7 on: January 09, 2012, 05:12:23 AM »
I might be wrong but hasn't Japan been one of the top 3 economies for the past couple of years? To be honest, I had never heard about this "Lost Decades" until I read that article but as far as I can remember Japan has always been looking good.
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Offline Super Dude

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Re: The Myth of Japan's Failure
« Reply #8 on: January 09, 2012, 05:14:28 AM »
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Offline Nekov

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Re: The Myth of Japan's Failure
« Reply #9 on: January 09, 2012, 05:42:39 AM »
https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

It took place in the '90s.

Thanks. That will make for a good read  :)


So basically 20 years ago Japan had a bubble crisis exactly like the one the US had a couple of years ago? WTF? I just can't believe that knowing this could happen they just maintained the economic model the way it was instead of doing something to prevent it  :-\
« Last Edit: January 09, 2012, 05:48:34 AM by Nekov »
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Offline Super Dude

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Re: The Myth of Japan's Failure
« Reply #10 on: January 09, 2012, 05:56:58 AM »
Read the Myth of Japan article itself and you see that commentators, economists and the like chalked it up to "because they're Japanese."
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Offline Riceball

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Re: The Myth of Japan's Failure
« Reply #11 on: January 09, 2012, 05:04:07 PM »
So basically 20 years ago Japan had a bubble crisis exactly like the one the US had a couple of years ago? WTF? I just can't believe that knowing this could happen they just maintained the economic model the way it was instead of doing something to prevent it  :-\

There is property bubbles, and there is property bubbles; if you catch my drift. While its not property, look at share prices (which behave in a similar way in a bubble, so I'm led to believe):

On 4/01/1984, Japan's Nikkei 225 was at 9,927
On 29/12/1989, it was at 38,916 (this was the peak)
At close of trade yesterday, it was at 8,390

As in company valuations are less now than they were in 1984 - 27 years ago.
I punch those numbers into my calculator and they make a happy face.

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