Japan on the Rise Again

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.

beijing-smog

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.

jpyusdeur

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.

  • Koyuki

    I’m no economist, but haven’t they tried to kickstart the economy before in the past years? Thought I read that somewhere. Also isn’t there a chance it will only work in the short term? And yeah growing amount of elderly people (compared to youth) is obviously an issue, something we in Europe will be facing as well. Anyway, it’s a lot easier to be negative than positive.

  • Koyuki

    Hmm, my earlier post doesn’t seem to work.
    I’m not economist, but didn’t they already try to kickstart the economy in the past 10-15 years or so? That’s what I read somewhere I believe. Also isn’t there a big change that it will only work in the short term? And yeah, aging population is obviously a huge issue, something we’ll be facing here in Europe as well.

  • http://twitter.com/VXLbeast VXLbeast

    Honestly one of the mains reasons they are in the mess they are in.

  • http://twitter.com/VXLbeast VXLbeast

    Paul Krugman is a fool, honestly. Sorry, but his Nobel Prize is no more than a chocolate watch. That man backs the “Trillion Dollar” coin nonsense and other value distorting policies. Who’s going to direct where that $100 Billion stimulus money goes to? The government, right? A small group of planners has no feasible way of knowing where that cash would best be directed. Only the “invisible hand” of a free market has that sort of power. Yet they won’t let it do it’s job. In fact they seem intent on keeping it from doing its job by unbalancing it with a huge influx of cash from…where? You cannot simply pull value out of the air. That money has to come from some source of value. And it is. Japan is borrowing it from their future by way of national debt, like a maddened credit card user digging themselves into a hole. All that influx of $100B is going to do is to dig the hole deeper and throw the value of their currency even further out of whack with the rest of the world.
    I’m sorry, but Japan–and the rest of the world–have tried Keynsian economics before. They don’t work, they never have. Even Keynes himself abandoned his own theories after a series of debates with Friedman.
    After reading this article, i’m more worried for Japan than ever.

  • Helio Perroni Filho

    “[the LDP] hinted at basically retracting any apologies that Japan has given for its wartime actions (…)”

    You do have to wonder, however, why should Japan keep making apologies that gather no favor from its recipients, and only serve to portray the country as weak – this while their neighbors show no quarrels about employing military pressure to further their own territorial agendas, no matter how petty they might look.

    The crimes committed by the Japanese Imperial Armed Forces in WWII are real and should never be forgotten, but reasonably you can only ask for so much retribution. Most Japanese living today did not take any part in those crimes, and many weren’t even born at the time they were committed; how many more generations should lay prostrated under the weight of its guilt?

  • http://www.facebook.com/meg.datsameh Meg Datsameh

    Glad to hear they’re doing well so far, let’s hope for the best. :)

  • http://twitter.com/shollum Shollum

    “The crimes committed by the Japanese Imperial Armed Forces in WWII are
    real and should never be forgotten, but reasonably you can only ask for
    so much retribution. Most Japanese living today did not take any part in
    those crimes, and many weren’t even born at the time they were
    committed; how many more generations should lay prostrated under the
    weight of its guilt?”

    Yep, sounds about as stupid as all the butt kissing some people expect any white US citizen to do to blacks just because they happen to be the same skin color (or related to) as the idiots who went about treating them like animals. Not to mention all the crap still going on about ‘racism’ in the US, which is almost non-existent. If they’d shut up, it’d all go well, but no, they have to have something to put on the news.

    But you know, there’s a difference between international shows of ‘apology’ and such local matters. It’d be different if they just left it alone, but retracting it suggests that they, as a country, show no shame or remorse for the things they did during the war. That’s not such a good thing for international relationship.
    International politics are full of these kinds of showings. Think of it kind of like some of the absurd politeness rituals that every culture has.

    By retracting such apologies, they will do harm to their international standing. It’s just not wise for them to do such a thing.

  • http://www.facebook.com/YeOldTshirtGuy Felix Nelson

    I’m don’t know much about economics, but I myself thought Japan’s economy would recover I also think they should stick to their hard working Japanese principles. After all their expectations are high and they are hard working so thing will definitely improve.

  • Koyuki

    You have to wonder if they will ever open up to immigration. Can’t see it happening soon though.

  • Koyuki

    Isn’t that just a ‘cliché’ (of course there is some truth in it) from the ‘good old days’ though? The 70s and 80s. You can’t think the future will be the same just because of the past. Demographics are changing.

  • Mescale

    The problem is that countries / governments have been borrowing money from the future for quite a while now. Always deciding that we’ll worry about that money we borrowed later, in the future.

    Well its the future now, and all the money those gits in the past borrowed, now needs to be repayed, only with interest.

    The answer is not to borrow more money from the future, its to pay the past and find a way to live now which doesn’t involve using money that doesn’t exist yet to get by.

    Still as a politician, these kinds of tactics of borrowing money from the future, are great because they produce short term improvements, people think you’re great, and some politician in 10 years can deal with the mess thats made now.

    So right now maybe Japan is improving but in 50 years Japan will be even more intercoursed.

  • http://www.totorotimes.com/ Jordy Meow • Totoro Times

    The real issue is not really about forex though it could ease the pain. It’s more a mentality, demographic and geographic issue emphasized by financial constraints. Flooding fresh blood in is a requirement… I believe we need to open the gates.

  • 古戸ヱリカ

    Solution: Use the elderly as currency.

  • flyingcar

    Yes there is no racism in the US at all anymore , minorities in the US have an equal oppurtunity on the jobmarket compared to white Americans everyone knows that I mean jeez you guys we elected obama racism does not exist anymore let alone radical groups like the KKK and the Neo Nazis, and lets not forget the hate crimes that stopped happing.

    Anyhow,I do not agree the current generation carries the burden to make sure something like that never happens again and part of it is accepting the fact that an apology is in its place.

    Also you should see it from the perspective of the countries who went through the war crimes their citizin were no victims either but they want to an respectfull end to the deaths of their relatives that might have suffered in the war. Its not weird to feel a connection between yourself and for example your grandparents who were in te war. If you respect them you are even willing to represent them. The current generation of the suffered countries might think ”This apology is important to my dead grampa so I will treasure it for him”.

    It Absurd to think that the war no longer lives amongst the current generation, everyone has a connection to it some way or an other.

    but that is just my humble opinion as a warzone refugee….

  • http://twitter.com/VXLbeast VXLbeast

    It’s hard to say. They don’t seem to learn well, unfortunately. They have the highest corporate taxes in the world, and they hemorage businesses because of it. Korea is set to overtake them if their isn’t some serious tax reform soon.

  • http://twitter.com/VXLbeast VXLbeast

    A good half of my friends are black. I owe them no apology, and they wouldn’t want one from me anyways. I think that sort of attitude is the one that will get us real progress.

  • http://twitter.com/VXLbeast VXLbeast

    Glad someone else can see past this madness.

  • Flora

    I’m no economist, so I can’t comment on whether or not this is a good idea. What I can say for certain, however, is that any policies they enact will be short-term solutions at best. Perhaps it can keep things afloat for another 15, 20 years, but nothing is going to change for the long-term until they grow enough hair to face the birth deficit problem.

    Really, that’s the biggest threat to Japan’s future: they have more people cashing out of the gov’t than putting in (reason behind insane tax hikes); if China makes good on their threat to attack Japan, old people generally don’t make good soldiers; and the elderly are notoriously tight-fisted, bad news for a consumer economy. The only industries that stand to grow in the future are funerary services.

    I guess in that way, Japan is still the country of the future; America & many other European countries are also going through aging societies, Japan is just farther along than we are. No one says anything but we’re all watching them to see what happens.

  • Eduardo

    Well I hardly see anything new in Japan’s economic policy…
    Keynesian Economics, backed by Krugman, has always been the strategy out of recessions for all developed countries, including Japan. It’s difficult to imagine how issuing more debt or expanding the money supply on the economy could help lift the economy. As for the competitive depreciation of the yen, I don’t think it is such a good idea….

  • http://twitter.com/shollum Shollum

    By ‘almost non-existent’ I did actually mean almost. Take a random sample of people from the past two generations (three generations back is pushing it a bit, since that’s just how things were and all the people from three generations ago are all foggy, thinking that’s still how the world is, or, sadly, departed) and only a small percentage of them will be racist. In fact, there are far more sexists and discriminators of homosexuals (sexualists?) than racists.

    And you know what? I’m taking my example from the south east US, which is supposedly the most racist area in the country. Just to be clear, all the racists live in the same place and whites aren’t the great majority they are in the rest of the country. As for equal opportunity, I see just as many blacks and Latinos at work as whites (granted, most of the latter work as laborers, but I’ve seen them elsewhere. Generally, the laborers weren’t born in the US, so maybe they haven’t acquired a GED yet). I want you to go back even just twenty or thirty years ago and tell me that the US of today is racist. Racism is almost completely dead here. Stereotyping and stereotypical jokes still survive, but those are hardly hurtful. Real racism is almost completely confined to those lunatic colonies where all the white supremacists gather.

    As for the revocation of the apology, think of it this way; most people today don’t think about the war crimes committed by Japan during the war. Apologies have been given; the war is over; just leave it alone.

    However, by taking it back, they are saying that, as a country, they don’t think their past actions warranted an apology. They are saying to the world that they don’t give a damn about it. They are essentially being the brat that says “B-b-but, It wasn’t my fault!” long after the fight is over. When one gives an apology, even as a country, they express humility and generally make the recipient of the apology think “Hmm. They’ve reflected on their actions and can now advance. This is someone I’d be happy to do business with in the future”. It doesn’t matter what you think of the situation once the whole deal has quieted down, because taking back that apology will only make you look bad, whether you’re an individual or a country. It will make you look like a brat and bratty countries are just as bad as bratty people as everyone has learned from the US over the past few decades.

    The only way you can advance is to remember the past. Remembering is distinctly different from reliving though.

    As for “We are all connected to the war somehow”, my grandfather served during the Korean war, while the US was still involved in it. His relatives served during WWII. Sure, I’m related to all of them. Sure, I was pretty much raised by my grandparents, but that still doesn’t mean I was involved in it. Reading about the Korean war does piss me off, but only because the textbooks and most ‘historical books’ lie about it and tend to gloss over just why General MacArthur was pulled for ‘insubordination’ (apparently what they called “coming up with an effective plan of attack that the politicians worried about relations with China didn’t like” back in the day). But you know what? I didn’t serve then. It didn’t affect me directly. Why should I be bothered either way by it? Answer: I shouldn’t. The world will go on even if people don’t bitch about things finished decades ago. We should work for today and tomorrow instead. Bitching about old wars just unsettles what peace finally got after the war ended.

    However, I don’t care about personal opinions on the matter of the apology. The reason I’m saying that recalling it is wrong is completely based in the politics. That’s what I’m trying to get across. I’ve studied politics to a point and I’ve gotten a bit of experience in debates. However, I would never want to be a politician for the very reason this whole thing is even an issue in the first place. The only reason this is becoming anything is because politicians world wide love sensationalism. The media is just as bad and loves to cover these absurd political moves while almost completely ignoring anything important and generally not even getting facts right on what they do cover.

    Basically, if it weren’t for someone thinking that this would get them a lot of recognition and the so-called ‘news reporters’ thinking it would boost ratings, this wouldn’t even be a thing. Japan has better things to worry about than whether a show of peace should be recalled in its entirety. In fact, it wouldn’t be wrong to say that this is just a complete waste of everyone’s time. Japan will not benefit in the slightest by this move. In fact, it may hurt them. And for what? Political recognition and ratings? That’s just BS politics right there.

    Once again, I hate politics. It’s never for the common good and it irks me every time I have to explain that something they are undoubtedly spending a lot of time and money on is completely worthless for all the people paying for it.

    So, in my humble opinion as an observer of the world, I think this whole thing is complete BS and a waste of time.

    Now, let me apologize for this absurdly long response. And don’t worry, I won’t be taking my apology back, because there’s no reason to.

  • Groovy Space Princess

    There’s a 3 episode NHK drama sp ‘Made in Japan’ that gives a good look at Japan’s current economy. I think it’s a very good sign that the Japanese are starting to become very aware of the root of their problem. One of it being, relying too much on China for cheap labors.

  • http://www.facebook.com/profile.php?id=1356807896 Maximilian Quéripel

    Came down to the comments section to type basically the same thing. Glad to see other people with an understanding of good economics! Austrian economics is the only real way to improve economic conditions. Cheers.

  • http://twitter.com/VXLbeast VXLbeast

    Thank you for replying, as you encouraged me as well. It’s seems like the world is going absolutely mad, so it is good to see some people hang on to what sanity we have left.

  • http://twitter.com/VXLbeast VXLbeast

    Brother, you know a thing or two. Well written response.

  • http://twitter.com/VXLbeast VXLbeast

    Currency fiddling leads almost always to disastrous ends, I’m afraid. I agree, probably not a very good idea.
    I would replace your word “difficult” with the word “impossible”, and then I’ll agree wholeheartedly with your statement.