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But the growth problems of Japan is largely an illusion and myth caused by population decline. Growth per capita in Japan has been completely normal in the supp

But the growth problems of Japan is largely an illusion and myth caused by population decline. Growth per capita in Japan has been completely normal in the supposed terrible years. It is the population decline which causes the overall GDP growth to look anemic. Naturally it is growth per capita which matters as this is what improves the living conditions of people. There are many countries with high GDP growth but which also has higher population growth causing everybody actually to get poorer. That is not something anybody should want to emulate. But of course low total GDP growth looks bad to business because the markets for their goods does not expand.

jessriedel 11y ago
What time period are you talking about? In 1991, per capita GDP in US and Japan were both ~$32k in 2005 USD. But now it's ~$38k for Japan and $47k for US. http://www.tradingeconomics.com/united-states/gdp-per-capita http://www.tradingeconomics.com/united-states/gdp-per-capita http://www.tradingeconomics.com/japan/gdp-per-capita http://www.tradingeconomics.com/japan/gdp-per-capita
- tosseraccount 11y ago
  "A look at the underlying accounting, however, suggests that, far from underperforming, Japan may have outperformed. For a start, in a little noticed change, United States statisticians in the 1980s embarked on an increasingly aggressive use of the so-called hedonic method of adjusting for inflation, an approach that in the view of many experts artificially boosts a nation’s apparent growth rate. http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-story-of-japans-economic-success.html http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-st... Japan was the "bad guy" in 1990, they had a lot incentive to downplay their position in subsequent years. [ dang, is that you? chill, dude ]
- sitkack 11y ago
  Per capita statistics encourage a false assumption of sharing. It isn't measuring what most people think it is.
  - jessriedel 11y ago
    I was responding to this claim by jernfrost: "Growth per capita in Japan has been completely normal in the supposed terrible years. It is the population decline which causes the overall GDP growth to look anemic."
- hawkice 11y ago
  Or, looking at even tighter bounds of GDP per working-age person, today the US is at ~$82k/year, and Japan ~$64k/year -- a slightly larger gap. I prefer this metric when talking about "the economy" in the sense that most people interact with it.
- jahnu 11y ago
  Household disposable income looks normal enough https://data.oecd.org/hha/household-disposable-income.htm https://data.oecd.org/hha/household-disposable-income.htm
  - jessriedel 11y ago
    Zoom out to include 1995 (the limits of Japanese data for your source). Japan is mid-tier for growth in household disposable income 2010-2014, but consistently among the very slowest growing countries from 1995-2009. This is a difference of 1% average growth vs. 3% average growth across 15 years. That is a huge difference (16% vs. 56% cumulative growth), and very consistent with my claims about the stark disparity between the US and Japan in per capita GDP today.
ddeck 11y ago
>But the growth problems of Japan is largely an illusion and myth caused by population decline. The piece that many miss when discussing Japan's high quality of life despite lack of growth is that in order to maintain 0% growth over the last 20 years, the central government had to borrow and spend nearly 10% of GDP every single year.
- jahnu 11y ago
  They borrowed it mostly from themselves though which makes it more complicated and much less of a problem than it might at first appear.
  - ddeck 11y ago
    I doubt the average Japanese saver would see it that way. I agree, we're not talking about an external default, but monetization is still likely to severely impact the wealth of the middle class.
    - toomuchtodo 11y ago
      Compound interest isn't a physical system law though, its a human law. Just because it has worked previously because you could continue to extract productivity from labor does not mean that rule will continue. What if capital loses its value and no longer earns interest? You can't say its not happening, when central banks are charging interest on capital.
      - ddeck 11y ago
        I'm not entirely sure what you're referring to, but to clarify, I was discussing the potential impact of sustained deficit monetization on Japan's middle class savers via its effects on the monetary base and inflation.
        toomuchtodo 11y ago
        My understanding of your comment was you pointing out the average Japanese saver would be upset about their savings rate being non-existent due to the debt owed to them being internal (and therefore, dependent on central bank monetary policy). My comment insinuated that Japanese savers may have no other options other than an insignificant savings rate due to internal monetary policy and a bleak worldwide investing landscape. I should've expounded! My apologies!
deleted 11y ago
[deleted]
Shivetya 11y ago
the only illusion is that they have a good fiscal policy and are willing to change. they got in this mess by having one of the least transparent lending systems, where the government "chose" winners or hid things by lending to preferred groups; does this remind you of China at all? Hence they could fake things for a while. Eventually that large budget deficit versus GDP (nearly triple the US) combined over the years with even more taxation just sucks the life out of an economy. Throw in a shrinking population and an adverse look at immigrants and its not fun. So you have their central bank playing with the quantitative easing game for nearly ten years and not getting anywhere. This is mostly because government is borrowing all the money leaving corporate investment to occur mostly as a product of spending their own profits. Japan is simply proof government cannot buy its way out of a problem, they have been trying for years. Classic money trap that certain economist love to ignore or worse claim the opposite by saying if they just went further, spent more... etc etc. Oh well, China is similar but the US is too, the difference is the US has quite a bit of immigration to take jobs the locals won't
ArkyBeagle 11y ago
Population decline is here or in the near future, depending on where you stand on the planet. Overall GDP growth is needed because it's the fundamental assumption behind both government and private debt. The US has both had population growth and anemic growth since 2008. So it's not all population bust.

jessriedel 11y ago

What time period are you talking about? In 1991, per capita GDP in US and Japan were both ~$32k in 2005 USD. But now it's ~$38k for Japan and $47k for US. http://www.tradingeconomics.com/united-states/gdp-per-capita http://www.tradingeconomics.com/united-states/gdp-per-capita http://www.tradingeconomics.com/japan/gdp-per-capita http://www.tradingeconomics.com/japan/gdp-per-capita

tosseraccount 11y ago
"A look at the underlying accounting, however, suggests that, far from underperforming, Japan may have outperformed. For a start, in a little noticed change, United States statisticians in the 1980s embarked on an increasingly aggressive use of the so-called hedonic method of adjusting for inflation, an approach that in the view of many experts artificially boosts a nation’s apparent growth rate. http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-story-of-japans-economic-success.html http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-st... Japan was the "bad guy" in 1990, they had a lot incentive to downplay their position in subsequent years. [ dang, is that you? chill, dude ]
sitkack 11y ago
Per capita statistics encourage a false assumption of sharing. It isn't measuring what most people think it is.
- jessriedel 11y ago
  I was responding to this claim by jernfrost: "Growth per capita in Japan has been completely normal in the supposed terrible years. It is the population decline which causes the overall GDP growth to look anemic."
hawkice 11y ago
Or, looking at even tighter bounds of GDP per working-age person, today the US is at ~$82k/year, and Japan ~$64k/year -- a slightly larger gap. I prefer this metric when talking about "the economy" in the sense that most people interact with it.
jahnu 11y ago
Household disposable income looks normal enough https://data.oecd.org/hha/household-disposable-income.htm https://data.oecd.org/hha/household-disposable-income.htm
- jessriedel 11y ago
  Zoom out to include 1995 (the limits of Japanese data for your source). Japan is mid-tier for growth in household disposable income 2010-2014, but consistently among the very slowest growing countries from 1995-2009. This is a difference of 1% average growth vs. 3% average growth across 15 years. That is a huge difference (16% vs. 56% cumulative growth), and very consistent with my claims about the stark disparity between the US and Japan in per capita GDP today.

ddeck 11y ago

>But the growth problems of Japan is largely an illusion and myth caused by population decline. The piece that many miss when discussing Japan's high quality of life despite lack of growth is that in order to maintain 0% growth over the last 20 years, the central government had to borrow and spend nearly 10% of GDP every single year.

jahnu 11y ago
They borrowed it mostly from themselves though which makes it more complicated and much less of a problem than it might at first appear.
- ddeck 11y ago
  I doubt the average Japanese saver would see it that way. I agree, we're not talking about an external default, but monetization is still likely to severely impact the wealth of the middle class.
  - toomuchtodo 11y ago
    Compound interest isn't a physical system law though, its a human law. Just because it has worked previously because you could continue to extract productivity from labor does not mean that rule will continue. What if capital loses its value and no longer earns interest? You can't say its not happening, when central banks are charging interest on capital.
    - ddeck 11y ago
      I'm not entirely sure what you're referring to, but to clarify, I was discussing the potential impact of sustained deficit monetization on Japan's middle class savers via its effects on the monetary base and inflation.
      - toomuchtodo 11y ago
        My understanding of your comment was you pointing out the average Japanese saver would be upset about their savings rate being non-existent due to the debt owed to them being internal (and therefore, dependent on central bank monetary policy). My comment insinuated that Japanese savers may have no other options other than an insignificant savings rate due to internal monetary policy and a bleak worldwide investing landscape. I should've expounded! My apologies!

deleted 11y ago

[deleted]

Shivetya 11y ago

the only illusion is that they have a good fiscal policy and are willing to change. they got in this mess by having one of the least transparent lending systems, where the government "chose" winners or hid things by lending to preferred groups; does this remind you of China at all? Hence they could fake things for a while. Eventually that large budget deficit versus GDP (nearly triple the US) combined over the years with even more taxation just sucks the life out of an economy. Throw in a shrinking population and an adverse look at immigrants and its not fun. So you have their central bank playing with the quantitative easing game for nearly ten years and not getting anywhere. This is mostly because government is borrowing all the money leaving corporate investment to occur mostly as a product of spending their own profits. Japan is simply proof government cannot buy its way out of a problem, they have been trying for years. Classic money trap that certain economist love to ignore or worse claim the opposite by saying if they just went further, spent more... etc etc. Oh well, China is similar but the US is too, the difference is the US has quite a bit of immigration to take jobs the locals won't

ArkyBeagle 11y ago

Population decline is here or in the near future, depending on where you stand on the planet. Overall GDP growth is needed because it's the fundamental assumption behind both government and private debt. The US has both had population growth and anemic growth since 2008. So it's not all population bust.