Japan's Past = Our Future? 21 comments
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A WSJ article on Japanese elections comes with the following table.
Japan has spent 20 years fighting deflation with loose monetary policy and deficit spending. To what end?
Keynesians point to Japan’s experience as evidence that the U.S. government can borrow much more before interest rates rise. I suspect they’re right. But what’s the point if, at the end of all of that, we’re saddled with unpayable debts?
Sure, deficit spending prevented more violent economic upheaval last year. But the more debts we build up, the longer and deeper the downturn will prove to be over time.
The article has many interesting details…
- The party that’s been in power for 59 years will likely lose the elections to another, which promises “ambitious spending programs” despite Japan’s huge debt.
- Incomes continue to fall. Inflated artificially by a credit bubble, Japan’s per capita income once ranked 4th in the world, but has since fallen to 14th.
- Declining birth rates mean younger Japanese don’t have the voting power to reduce entitlement spending that’s asphyxiating the economy.
My hope is that America finds the political will to deal with debt. If we don’t, even matching Japan’s sorry trajectory will be tough.
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The problem lies not with the stars, but with ourselves. First demand services/benefits, then elect weak and easily swayed representatives, and finally fear the future.
It is all our doing. We need to accept the facts and clean house in Washington but only after we decide to do with less for some time.
On Aug 28 10:43 AM whidbey wrote:
> Excellent comparison.
>
> The problem lies not with the stars, but with ourselves. First demand
> services/benefits, then elect weak and easily swayed representatives,
> and finally fear the future.
>
> It is all our doing. We need to accept the facts and clean house
> in Washington but only after we decide to do with less for some time.
Two differences: 1) We are not yet on the glidepath to demographic suicide. 2) We haven't yet developed the "public/private" cooperation that was the model for Japanese industrial policy.
Basically you get all the ships going in the same direction and for a while, you are the marvel of the world until the tsunami hits and you need some flexibility. The Chinese come to mind.
It's curious that when you wrote: "Declining birth rates mean younger Japanese don’t have the voting power to reduce entitlement spending that’s asphyxiating the economy."
I would have thought of demographic suicide as reducing the number of strong backs. Entitlement spending can be adjusted.
- because the US businessmen are more imaginative and skrewed
- because US businesses were and are willing o diversify more globaly and to understand the nuances/differences of different local markets
- because, as much I respect the Japanese for their technical abilities, they are no match to the American marketing machine (this is pretty much the BORG)
I can probably remember other good points but I already gave you an idea. America cannot be judged solely in terms of debt (public or private). America is more then just that.
On Aug 28 10:42 AM Donald Ingram wrote:
> Agreed. "Matching Japan's trajectory will be tough" or almost impossible.
> Remember Japan is a nation of net savers, and little debt at the
> outset of the so called lost decade.
> The US has entered this period as a nation of non-savers who are
> in massive debt. Big difference.
but only in the sense that we here in palookaville...
are fighting deflation with loose monetary policy and deficit spending...
oh and have zombie banks...
and state controled capitalism...
and are bailing out the vested interests...
But even thinking about this hurts my head. Too many variables. The balance of power, spending and production, is going to change things so much that it's hard to fathom.
japan entered the 1970's with an undervalued currency & a rebuilt industrial infrastructure courtesy of the u.s taxpayer, grabbed market share from everybody, especially detroit who insisted on building klutzmobiles.
today japan suffers from low birthrate and an aging population.
might not happen here, we can just import more mexicans, guatemalans, bolivianos, etc/
> jack
www.bloomberg.com/apps...
On Aug 28 01:22 PM Mistrofan wrote:
> US is different then Japan:
> - because the US businessmen are more imaginative and skrewed
> - because US businesses were and are willing o diversify more globaly
> and to understand the nuances/differences of different local markets
>
> - because, as much I respect the Japanese for their technical abilities,
> they are no match to the American marketing machine (this is pretty
> much the BORG)
They actually still believe that everyone else's success is entirely down to them. Just how deluded can you get?
On Aug 29 10:32 AM john s. gordon wrote:
> situations are not really that comparable,
> japan entered the 1970's with an undervalued currency & a rebuilt
> industrial infrastructure courtesy of the u.s taxpayer, grabbed market
> share from everybody, especially detroit who insisted on building
> klutzmobiles.
> today japan suffers from low birthrate and an aging population.<br/>...
> not happen here, we can just import more mexicans, guatemalans, bolivianos,
> etc/
I'm sure we will.
Chances are real good it will be monetized.