October 17, 2010

"Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way."

Japan in decline.

29 comments:

1jpb said...

It sucks to have our debt at around 55% of our GDP. But, being a bit below 200% of GDP must really suck for Japan. At least they still have Zimbabwe (though no others) w/ a higher ratio.

Almost Ali said...

Who says, Maureen Dowd?

Almost Ali said...

Oh, wait, Mo is after Sarah & Company. Again.

ricpic said...

The Times being the Times of course never uses the word stimulus in describing Japan's malaise. Repeat after me: stimulus works, stimulus works, stimulus works as it worked in Japan, NOT.

downtownlad said...

Be prepared for it to happen here. The Republicans are winning the economic arguments with the public - and that means we are doomed to follow Japan's example.

The Republicans are concerned about inflation and deficits and spending, and promise to raise interest rates and cut government spending. That's pretty much the recipe for a deflationary spiral - and yes - a higher debt as a percentage of GDP. Because with deflation, nominal GDP can still shrink even if it's growing in real-terms. And even if you have no deficit, your debt as a percentage of GDP will grow.

Don't say I didn't warn you.

downtownlad said...

That's completely wrong ricpic - Japan never really had a surplus of any significant size.

Try again.

EDH said...

Jonah Goldberg:

[In the 1980s] James Fallows of The Atlantic insisted that America had to emulate Japan's policies while pursuing a policy of "containing" Japan. Chalmers Johnson insisted that the Cold War was over and "Japan won." He also argued that the failure of free-market economics was so complete that, "If America were a well-run country, neoclassical economists would be hanging from the Capitol dome."

Today we hear similar stuff about China. Indeed, when it comes to China, New York Times columnist Thomas Friedman often seems like one of the hypnotized acolytes of the snake god Thulsa Doom from the movie "Conan the Barbarian."

In fairness, China's rulers haven't hung their free-market economists from the politburo's balcony (at least not recently). In fact, they've listened to them...

What's remarkable, however, is what unites China and Japan. As the editors of The Wall Street Journal recently noted, Japan's economic rise coincided with a small government, and its economic fall has coincided with the growth of government. In 1984, in terms of spending and taxing, Japan had just about the smallest government of the top 23 developed countries. Since the early '90s, when its "lost decade" began, it has pursued a vast Keynesian spending spree, and the government has grown to European size.

China followed the opposite path. Starting from the abject poverty only doctrinaire communism and feudalism can create, it has imposed market-based reforms, lifting hundreds of millions out of economic squalor.

Yet the Friedman and Fallows crowd looks at both examples and bizarrely concludes that the secret to success is more statism, and the source of failure is more freedom.

China still has big problems -- and without democracy, a free press and the rule of law, we can't know what all of the problems are until they explode.

But all of this misses the most important point. Economic "competitiveness" is a con. It assumes that when other countries prosper, America loses. That's nonsense.

If the average Chinese worker were as rich as the average Japanese worker, it would be an economic windfall for America. Conversely, if China's economy imploded tomorrow, we'd "gain" competitively but suffer economically. The cult of competitiveness is just a ruse used to justify the ambitions of economic planners and the pundits who worship them.

edutcher said...

The Gray Lady talks about a recovery in this country. She must mean Recovery Summer.

downtownlad said...

Be prepared for it to happen here. The Republicans are winning the economic arguments with the public - and that means we are doomed to follow Japan's example

As always, dtl gets it backwards. The Republicans' winning means an end to stimuli and all the other Euro-socialist, small c communist Demo spending. That was Dai Nippon's downfall.

That's completely wrong ricpic - Japan never really had a surplus of any significant size.

Note he never addresses ricpic's point. And, if dtl means that "surplus" we supposedly had under Willie, that, like everything else about him, was a lie, too.

1jpb said...

"In 1984, in terms of spending and taxing, Japan had just about the smallest government of the top 23 developed countries."

So, the 80's bubble was concurrent w/ a very small government. If it suited his cause Jonah would conclude that small government caused the bubble.

1jpb said...

"an end to stimuli"

Silly talk. They're going to end something that's already ending.

1jpb said...

"stimulus works, stimulus works, stimulus works"

Wall Street folks think that China's stimulus, which was much larger than ours (as a percentage of GDP), worked.

Michael said...

Japan's "lost decade" is now approaching its 30th birthday. The failure to quickly and orderly clear bad transactions from the banking system is the principal cause of the long malaise. The current "problem" with foreclosures on home loans coupled with a populist theme amongst the politicos will create a similar long term problem here. The manufactured "problem" with loan foreclosures only puts off the inevitable.

There would not, of course, be an economic crisis of the current magnitude if borrowers did as they agreed and paid their debts when due.

rcocean said...

Yes, its so sad. All those poor Japanese - what with almost no unemployment, interest rates near zero, the Yen at an all time high, record trade surplus vs. the USA and no crime.

If only they'd followed the USA model they'd have millions of illegal immigrants, massive crime, 9 percent unemployment, a housing crisis, a bank crisis, record trade deficits, and a collapsing currency.

But no matter what we can still beat Afghanistan and Iraq - so we're still number 1! USA!

Chase said...

Funny how often dire predictions - such as the 1980's call that Japan will surely rule the world economy -don't come true, ain't it?

EDH said...

1jpb said...

So, the 80's bubble was concurrent w/ a very small government. If it suited his cause Jonah would conclude that small government caused the bubble.

I'm interested to hear your economic argument.

Nothing but ad hominem here, however.

Michael said...

Chase: The media and the "pundits" were aghast that the Japanese were "buying America" (remember this when we hear that the Chinese are doing the very thing.) including prime pieces of real estate like Rock Center. A few years later we bought it back for pennies on the dollar.

roesch-voltaire said...

This article is at least a slight exaggeration that does touch on trends. For example,the intro course in Japanese language at UW has over a hundred students enrolled--hardly and empty classroom. Some small business owners that I know still vacation in Paris, but I grant there is a new frugality. Last time I visited, I saw more folks shopping at Seiyu, owned by Wal-Mart, and found price cuts common at all stores. But frankly I think this anti-consumption attitude both in Japan and here can be a good thing causing us to focus our energies.

t-man said...

Japanese leaders at first denied the severity of their nation’s problems and then spent heavily on job-creating public works projects that only postponed painful but necessary structural changes, economists say.

“We’re not Japan,” said Robert E. Hall, a professor of economics at Stanford.


Only a NYT writer could put those two sentences next to each other!

1jpb said...

"There would not, of course, be an economic crisis of the current magnitude if borrowers did as they agreed and paid their debts when due."

I'm surprised that more folks don't walk away from their underwater homes. There are many folks for whom (after considering everything, e.g. the hit to credit ratings) it would be financially wise to walk away. American corporations would need to walk away from such debt to best serve their owners (as the Mortgage Bankers did w/ their DC building, or this)

Thankful (for those of us who own properties w/o mortgages, so we are guaranteed to suffer as the market crashes around us) people feel more obligated to not be deadbeats than corporations do.


EDH,

I think, like Michael said, that the resistance to unwinding the debt from the bubble was a problem. But, I also think that stimulus was wasteful and ineffective.

They went w/ the stimulus because it seemed like a cheaper way to solve the problem because they thought they were buying space to unwind the bad debt. Instead they were indefinitely propping up the bad debt with indefinite stimulus.

We've been taking really big hits to our real estate market, so we're doing better than Japan. And, our stimulus (about a third of which was tax cuts, a third infrastructure type stuff, and a third payments to the States) was not really that large (especially when compared to China), and it helped to smooth out the thrashing that we've allowed in our real estate market. Our housing values are back to where they should be based on historical appreciation as evaluated by the Case-Shiller index. So, we've taken the punishment. But, we may end up over correcting on the downside. Our circumstances are very different than the Japanese experience.

Plus, we've still got vast physical resources in addition to the best intellectual and cultural resources in the world (as long as we can keep the Chinese from stealing it). So, I'm guardedly optimistic. But, I think it's a great American strength that we're always freaking out about our inevitable doom--keeps us on our toes.

1jpb said...
This comment has been removed by the author.
1jpb said...
This comment has been removed by the author.
1jpb said...
This comment has been removed by the author.
Pat Moffitt said...

Flashy or a return to the norm?
"All human beings are born from the state, sustained by the state and brought up in the history and traditions of the state. Individuals can only exist as links in an infinite and vast chain of life called the state… ANONYMOUS, The Way of the Subject, 1941, quoted in Tokyo Record (Otto Tolischus), 1943."

lemondog said...

Starting at about the 10 minute point, you can listen to interview with Rob Arnot of Research Affliates discussing US deficit and debt levels.

Concludes our national debt level is 8 times our annual income

Expects future inflation in double digits. Thinks there will be a double dip recession in next year or so.

Not a pretty picture.

former law student said...

There would not, of course, be an economic crisis of the current magnitude if borrowers did as they agreed and paid their debts when due.


The National Debt would be $9 Trillion dollars less had Reagan and GHW Bush matched spending cuts with tax cuts:

http://zfacts.com/p/318.html

Revenant said...

Wall Street folks think that China's stimulus, which was much larger than ours (as a percentage of GDP), worked.

I'm sure there is at least one person on Wall Street dippy enough to believe that, so, sure. Your statement is probably true.

Revenant said...

The National Debt would be $9 Trillion dollars less had Reagan and GHW Bush matched spending cuts with tax cuts: http://zfacts.com/p/318.html

Presidents don't set spending or tax levels, FLS. Congress does.

Unless you meant to add "had established a dictatorship and then" in between "Bush" and "matched", your claim is wrong.

Balfegor said...

Yes, its so sad. All those poor Japanese - what with almost no unemployment, interest rates near zero, the Yen at an all time high, record trade surplus vs. the USA and no crime.

I've been in Tokyo for the past month or so. Japan is still, by my lights, one of the pleasantest countries in the world, and Tokyo far nicer, from the ground level, than any American city I've ever lived in, BUT, it's certainly not like things are going well for the Japanese. Low crime, yes, and low unemployment -- but those just mean the Japanese have done a good job at ameliorating the effects of decline, not that they're not in decline. The unemployment figures, for example, count people who are marginally employed as temp workers (haken). Work as a haken is real work, and draws a wage, so it's not like there's anything misleading about including it in the employment statistics. But it offers no prospects for career development, unlike formal employment in a corporation. There's been a shift -- not limited to the haken -- in which the sense of the prospects of personal advancement have, I think, contracted.

The yen at an all time high (or rather, approaching it -- I think it's still about 1 yen off its high vis-a-vis the dollar) is catastrophic for the Japanese economy. It is not a positive development at all, which is why the government is trying to intervene. All their export industries (i.e. all their leading industries) are getting strangled by the horrific exchange rate with the dollar.

All that said, I think we'll be lucky if year after year of gigantic budget deficits leaves us in the position of Japan, just muddling through, rather than something more catastrophic. It's not the future they dreamed of in the 80s, perhaps -- it's a "grey" future now -- but there are worse things.

Mick said...

Here is the idiocy of the NYT and the elitist, leftist academia establishment on full display:

“We’re not Japan,” said Robert E. Hall, a professor of economics at Stanford. “In America, the bet is still that we will somehow find ways to get people spending and investing again.”

No we are certainly not Japan. We have outsourced most of our industrial production, There is NO PRODUCTION to fall back on. The same amount of workers as in 1945 work in the industrial production sector. The Natural Law that all debts get repaid (no such thing as a free lunch) will force the deleveraging that is already apparent with the HISTORIC crash in Consumer Credit, and the current real estate debacle. Americans are tapped, businesses are tapped. Any "stimulous" goes to paying down the debt, the interest on which takes up 75% of the nations receipts (which is the true balance sheet, not debt to GDP, which is debt to spending), and that is before the massive entitlements, which Obama only wants to make bigger.
The insanity of chasing debt w/ more debt can be visualized by a Banker, whose client has an income of $30K, and has a credit card w/ 60K balance that he can't pay. So the banker gives him $100K more credit!
Debt based money is the root of all of this. The debt masters at the Fed (Primary Banks) are as federal as FEDEX, and their existence is unconstitutional. We the people pay these private central bankers to create money from debt (Treasury Bonds) on which We the People pay interest.
Debt Saturation has been reached. The marginal productivity of $1 of government debt TAKES AWAY $.45 cents from the economy. A new monetary system is coming, be ready.

As for the "economics professor" quoted above, he got his econ degree from a Cracker Jacks box, just like Krugman, and all the other Keyensian idiots.