If you pay attention to any traditional media outlets, everything is all doom and gloom in Japan. Leaf through the pages of any newspaper or cruise around any news site and you find article after article about how Japan is screwed.
Japan’s economy is floundering. The population is shrinking. China is growing and is going to eat Japan’s lunch. And so on and so on.
China will take over the world! . . . as soon as this toxic cloud lifts.
Aside from the fact that Japan, unlike China, doesn’t have a perpetual cloud of haze above it at all times, more and more people are saying that things ain’t so bad in Japan after all. Things might even be looking up!
I’ve written before about how Japan’s doing a hell of a lot better than most people assume it is, but since last year’s election, more and more people are saying that Japan’s on the up and up.
Here’s what’s been happening:
The Situation in Japan
In Japan’s most recent elections, the Liberal Democratic Party (LDP) won a majority in parliament, pushing the Democratic Party of Japan (DPJ) out of power.
The relatively conservative LDP has elected a new prime minister, Shinzo Abe, and has started really experimenting with Japan’s economy.
Since they’ve gained power, they’ve started tinkering with the Yen. It’s been slowly, but surely, dropping in value since December. That sounds bad, but it’s actually kind of good for Japan.
A weak Yen means that foreign products are more expensive for Japanese people, but it also means that it’s more attractive for other countries to buy things from Japan and, more importantly, that the exchange rate is pretty good while I’m over here.
The government has also considered a super stimulus — pumping over $100 billion into the Japanese economy to kickstart the whole thing.
Will it work? Economists are cautious, but optimistic. Japan is trying something different from the rest of the world, but that’s probably a good thing, since the policies tried by the rest of the world are generally failing.
One of Japan’s biggest defenders has been Nobel laureate Paul Krugman. Krugman, who writes regularly for the New York Times, has defended Japan’s economy. He’s written that while Japan’s economic history has been “a lousy story
,” it’s still much better than other places in the world.
And more recently, he’s been saying that Japan might once again be the “country of the future.”
What Could Go Wrong?
But there’s a lot of things that could derail Japan’s climb to the top. Japan’s importing more than it’s exporting, racking up a huge trade deficit.
And the declining Yen has ruffled some feathers abroad. Other countries have threatened a currency war if the Japanese don’t stop so blatantly manipulating their currency.
Plus, not everything’s good news with the LDP — they’ve hinted at basically retracting any apologies that Japan has given for its wartime actions, and been hawkish about other East Asian policies.
Still, you have to root for them to succeed economically. These economic policies could help Japan – and maybe the world – turn things around.