10 ms·

The myth of Japan's failure

139 points by sajid 15y ago

Yrlec 15y ago
One of the most important lessons that we have learned from the past years is that you cannot look at a country's standard of living in isolation. You also have to look at the debt levels to see if it is sustainable in the long run. Japan has the highest government debt-to-gdp ratio in the world: http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub... (higher than Greece!). I suspect that they have a huge hangover coming their way.
- tobylane 15y ago
  They have a uniquely high level of internal debtors, the government bonds were bought by Japanese people much more so than other citizens buying their countries' bonds. I didn't understand why this made a difference though.
  - Yrlec 15y ago
    Indeed. That helps them postponing the problems but it doesn't make the debt-levels any more sustainable. http://www.youtube.com/watch?v=-quUyId2WZ0 http://www.youtube.com/watch?v=-quUyId2WZ0
    - more_later 15y ago
      Japanese debt is Yen denominated and, if they want, they can extinguish it by printing money. This option is not available to Greece/Italy/Spain/Portugal/Ireland.
      - daydream 15y ago
        But by printing money they'd wipe out (or at least reduce) the real value of their peoples' savings - basically all those bonds the Japanese people bought. The consequences would be borne by their own people, not some foreign banks. This may be politically unpalatable.
      - Yrlec 15y ago
        There are limits to how much you can print without creating a currency crisis. http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...
        rayiner 15y ago
        You can pursue an economic policy that creates high levels of inflation without necessarily triggering hyperinflation. The goal of course would be to gradually inflate away the value of the debt, not to pay it all back immediately.
        alexmat 15y ago
        Wouldn't that wipe out the very same people who invested in Japan? There are a lot of regular Japanese people who hold Japanese debt. Wiping it out via inflation is equivalent to wiping out the wealth of regular Japanese people to save the Japanese government.
  - blumentopf 15y ago
    It does make a difference in that Japan could finance the public debt entirely by itself. The country has a trade account surplus, it's not them being indebted to others, but others are indebted to them. That makes it unattractive for speculators to bet against the country. Countries like China or Germany are in a similar position.
    - rmrm 15y ago
      They have had a historically high internal savings rate that allowed this. One thing to keep an eye on is their terrible demographics. I believe Japanese citizens as well as the largest institutional buyers (Japan Post etc) have just recently become net sellers of JGBs as they move towards liquidation to fund retirements. Japan currently funds more than half of their gov't via borrowing, with the demographic shift and the internal demand for JGB turning towards net negative, they will increasingly rely on external buyers of their debt. I believe China has been a buyer of late. What has worked for Japan historically may not work so well going forward.
      - muraiki 15y ago
        I've read that most of this money came from retiree savings, which are rapidly running out. Furthermore, the younger generation doesn't have such savings, yet alone the population, to keep such a thing going. In a sense, this system of internal borrowing in a hidden tax. While it of course is not mandated, it's required in order to keep things going smoothly.
- ppk 15y ago
  I doubt it, take a look at this, http://www.wolframalpha.com/input/?i=japan+public+debt http://www.wolframalpha.com/input/?i=japan+public+debt change the time scale to 10 years, it looks pretty sustainable to me... It's close to the lowest it has been in 10 years.
  - Yrlec 15y ago
    Wolfram Alpha displays the debt in your local currency (SEK to me). Which currency did it show to you? Look at this video and tell me how that is sustainable: http://www.youtube.com/watch?v=-quUyId2WZ0#t=0m13s http://www.youtube.com/watch?v=-quUyId2WZ0#t=0m13s
    - Retric 15y ago
      If I citizen of a country buys that country's bonds then a portion of their interest is collected back as capital gains. Thus the country actually pays (interest rate * (1- capital gains rate) - inflation rate). So because the overwhelming majority of Japan's debt is owned by it's own citizens and it's in it's own currency they can easily drive their loan servicing costs below zero at fairly modest inflation rates. They can also achieve the same effect by slightly bumping the capital gains tax which is currently set at 15%.
      - Yrlec 15y ago
        Great arguments! I still don't think that paying 50% of your tax revenues in interest rate is sustainable (especially not when the interest rates are as low as they already are). However, your point about capital gains combined with high level of domestic creditors certainly changes the math.
      - alexmat 15y ago
        "they can easily drive their loan servicing costs below zero at fairly modest inflation rates" Why will Japanese people buy government bonds that return a negative interest? Stuffing cash in a mattress seems like a better option at that point.
danmaz74 15y ago
I remember a recent article on the same wavelength, here on HN - but I can't find it. Anyway, I agree that GDP shouldn't be idolized, just like no single metric should be.
- heydenberk 15y ago
  I do too -- if you find it, leave a comment here please!
  - heydenberk 15y ago
    Rather, here it is: http://news.ycombinator.com/item?id=3389678 http://news.ycombinator.com/item?id=3389678
    - JamesNelson 15y ago
      Both articles are actually by the same author. His blog is at http://www.fingleton.net/ http://www.fingleton.net/
    - danmaz74 15y ago
      Thanks!
  - Tycho 15y ago
    http://www.theatlantic.com/international/archive/2011/02/the-myth-of-japans-lost-decades/71741/ http://www.theatlantic.com/international/archive/2011/02/the...
mbesto 15y ago
Let's look at one metric that supersedes all (in my opinion): According to, Japan's unemployment rate has been no higher than 6% over the last 32 years (1980-2012).It's currently at 4.5%[1] Compare that to the US, who's unemployment rate has been at worst 10% over the last 32 years (1980-2012). It's currently at 8.5%[2] Why does this supersede most other stats? Because we simply need to keep people busy "doing things", otherwise (as you're seeing in the US) riots/protests break out, crime goes up (crime is largely a result of poverty), and people don't have the means to keep themselves healthy. What more do you need from a society? I understand people will say "but we need growth". I ask why? What is the end result of growth that makes societies "better"? [1]http://www.tradingeconomics.com/japan/unemployment-rate http://www.tradingeconomics.com/japan/unemployment-rate [2]http://www.tradingeconomics.com/united-states/unemployment-rate http://www.tradingeconomics.com/united-states/unemployment-r... edit: 32 years...doh!
- deleted 15y ago
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- kiba 15y ago
  Because we simply need to keep people busy "doing things" I suppose we could employ people to dig holes and pay them for the job of digging holes for no purpose. That's not productive or is a good use of their time, unless it is spent digging useful holes. That's because we have a million other things that people could do help and help out. All we need to do is figure out how to employ people. I ask why? What is the end result of growth that makes societies "better"? Less time spent on farming, manufacturing, servicing, and generally working. More time for leisure and family, increased well being, increased lifespan(more is always better), supposedly. However, we're not good at figuring out what we want in life and thus not spend time on leisure, family, hobbies, and things that are fun. Instead, we seeks certain job because they're prestigious, buy things merely for status symbol effect, and so on.
  - mbesto 15y ago
    "Doing things" was mildly oversimplified. That's because we have a million other things that people could do help and help out. We do? Like what?
surrealize 15y ago
The overall point of the editorial might be right, but some of the metrics that it mentions are random or problematic. The number of high-rise buildings constructed? That says more about how little buildable land Japan has than it says about the strength of the Japanese economy. The article also mentions electricity "output" (a.k.a. consumption), which has grown faster in Japan than in the US. The article spins it as an indicator of the strength of the Japanese economy, but you could just as easily describe it as a success story about US conservation efforts. And some of it is just strange. Michelin ratings as a measure of the strength of an economy? Cultural factors matter as much as economic strength, there. Japan might actually be doing better than people in the US think, but this article isn't a good argument for that position.
- gwern 15y ago
  > And some of it is just strange. Michelin ratings as a measure of the strength of an economy? Cultural factors matter as much as economic strength, there. I was in a theater on the 4th to watch _Nausicaa_, and one of the previews was for a documentary about some sushi chef. Breathlessly it mentioned that he was the first Japanese restaurant to receive 3 Michelin stars. I was a little astonished. 'Yes, I know 3 Michelin stars is very hard to get, but this must've been in the last 20 or 30 years - how could Michelin have deprived Japan of any 3-star rankings for so long after WWII? Their restaurants are not unusually better these days than they were over the last century or two.' The obvious answer is that Michelin didn't have any real presence but began ramping up relatively recently (perhaps during the bubble). So it wouldn't be surprising if the coverage continued to increase despite whatever the true trend of Japanese restaurant quality is (up or down).
  - learc83 15y ago
    From what I've been able to find, it looks like Michelin didn't review Japan at all until around 2007-2008.
    - gwern 15y ago
      That would make sense.
aycangulez 15y ago
I have been following Fingleton, the author of this article for quite a while. His main thesis that "Japan's lost decade is an illusion" has not changed much over the years. In fact, he was among the group "Japan bashers" in the 90s, and their main argument was that Japan's Ministry of Finance (MOF) was intentionally trying to paint a grim image of Japan to gain advantage in trade negotiations. This argument holds little water these days: it is next to impossible to hide information about the true state of a country when access to information is so easy thanks to the Internet. Fingleton also claims that Japanese are early adopters in technology, which is only partly true. Japanese, in general, prefer to excel in something by using manual skills and they take great pride in that. They resort to technology only when manual skill is not enough. Making good cars require industrial robots so they have plenty of them, but in other parts of the industry, adoption of advanced technology can be quite limited. In other words, Japanese companies often find themselves at local maximums as compared to their American counterparts. Just look at the current state of Japan's once great electronics companies: Sony, Panasonic, Sanyo, NEC, Hitachi, etc. Only Canon seems to be doing fine these days.
- yummyfajitas 15y ago
  This argument holds little water these days: it is next to impossible to hide information about the true state of a country when access to information is so easy thanks to the Internet. It's actually quite easy: Step 1: recognize that gathering macroeconomic statistics is really hard. One example: if people previously spent $3 on salsa, but now they spend $5 on guacamole, what is the inflation rate for mexican dips? Step 2: come up with a catchy title for a statistic, and make sure reporters know all about it. E.g., "the burrito index, which measures how much good mexican food costs." Step 3: tweak the definition of the statistic until you get the result you want. Want more inflation? All mexican dips are equal, so inflation is up 66%. Want less inflation? Guacamole is 2x better than salsa, hence dips have actually dropped in price 17%.
  - borism 15y ago
    except salsa and guacamole are interchangeable. it doesn't seem to me you can easily exchange one component of CPI with another?
mark_l_watson 15y ago
I have some friends who don't travel internationally and who have totally bought into the propaganda that the USA is better than any other country using any metric. Love of one's own country and mild forms of nationalism are good things, but they should be tempered with a realistic view of the world. In the USA we have a clear and present danger to the economic health of our country: spending too much money on "defense."
- drumdance 15y ago
  I know a lot of people like that where I grew up. My sister jokes that if nothing else the USA is number one in self esteem.
abracat1 15y ago
It is easy and popular for westerners to romantacize Japan - but it has serious and structural problems. When analyzed on its own (instead of comparing it to the USA) it becomes readily apparent. I will just say a few observations which show that the picture the article paints is not quite accurate. Firstly, yes there are many people with fancy clothes. What the author does not say is that a lot of those people live with their parents - and their whole income is expendible. I don't know if this phenomeneon started after the bubble economy, but it is quite shocking. Then there is the fancy cars - what is the percentage of car ownership? About employment - finding permanent employment for young people has become almost impossible. Many young people now have short term contracts or do so called "arebeito" (extremely short term work with hourly wage). This is clearly not optimal and is a new in this generation. Japanese health care is a joke. They spent a lot on the last years of life (everywhere you look is AED machines), but nothing on the quality of life. Japanese dental care is below third world country! The majority of people do not get orthodontal treatment even when clearly necessary. Take a look next time you walk around. Another example of the quality of health care - I've spoken to two dermatologists (from national health care in Japan) and they don't even know about ruaccutane (isotretonion). This surely is a basic treatment that in some cases are necessary? Japanese banking is pathetic. It seems they do everything by hand - which is nice but inefficient. With my non-japanese banking I get internet banking for free and ATMs are open 24/7. Good luck getting that in Japan. Typed on iPhone so sorry for typos.
- philwelch 15y ago
  > What the author does not say is that a lot of those people live with their parents - and their whole income is expendible. I don't know if this phenomeneon started after the bubble economy, but it is quite shocking. In many cultures, it's customary, even expected to live with one's parents at least until marriage, and possibly longer. Extended families are an important social resource, and the American model of immediate familial alienation upon reaching age 18 followed by a detached nuclear family is in many ways weaker. I won't argue with your other points, though at the very least, a forum like Hacker News should have skeptical attitudes about such ideas as "permanent employment".
  - 15y ago
bjornsing 15y ago
I think a major factor determining your opinion on Japan's "lost decade(s)" is how you view inflation. Those who stand to benefit from more (stealth) inflation (politicians / bankers with access to the fed discount window / those with highly mortgaged real-estate) will see those decades as truly lost, but those that generally stand to benefit from less inflation (savers / "main street") will view those decades in a more positive light.
tryitnow 15y ago
My main takeaway from this article and these comments is that it's devilishly difficult to make international economic comparisons. As one commenter mentioned such activities quickly disintegrate into highly subjective "meaning of life" debates. This is incredibly important because a lot of policy analysis depends on making international comparisons. If such comparisons are really intractable problems then what does that say about the potential for effective policy making?
JamisonM 15y ago
I think this "lost decade" talk is mostly a matter of perspective, Japan is the nation in the world that, of any I can think of, could most afford to "lose a decade". An older population, a shrinking population, and a very high savings rate means that deflation was not as hard on its economy as it would be on an economy like the United States. In the US and many other economies inflation helps consumers with their debt, population growth requires that the overall GDP grow significantly to keep pace, and a younger population means many young people need meaningful work to sustain themselves while an older population can live on savings and supplement with poorly-paid employment to hobble through to retirement. Some of the arguments may also be unfair: The author breaks down GDP on a per capita basis to make the argument that Japan might have grown faster than the United States since 1989 - but Japan is 2 decades our from their financial collapse and the US only some 4 years after a similar event. Unemployment in Japan has always been much lower than the US, so comparing them now as some sort of evidence regarding a "lost decade" is not meaningful. It may also be that, since the population is shrinking, the life-expectancy gains are more of a collection of a dividend from past public health improvements than any reflection of recent health care system improvements. (I.e. all those old people living longer from better care in the past vs. relatively younger people dying from other causes to lower the average.)
beefman 15y ago
Words do not exist to explain errors in this article. The world's most populous island improved internet infrastructure? Wow! Life expectancy increased, just like in every other OECD nation? Wow! The appreciation of the yen is a result of the deflationary pressure that crippled the Japanese economy from 1995-2005. He links to shadowstats, a known internet cook hangout. It's like linking to a global-warming denial site. "Japan leapfrogged the United States in the space of a few years in the late 1990s and it has stayed ahead ever since, with consumers moving exceptionally rapidly to ever more advanced devices." On what planet does the author live? The smartphone was invented here and the US leads the world in smartphone adoption. The Japanese are still texting on 9-keys. I can't go on.
- blrgeek 15y ago
  Re: phones - In 2005 my friend had a Japanese phone which had high speed Internet, video calling, and an ssh client among other things. The US had the Razr. Don't change history, smartphones were widely popular in Japan well before anywhere else in the world. The iPhone was just the first usable smartphone for the rest of us.
dev_jim 15y ago
There's a lot to admin about Japan, but this article is hackery at best and deceptive at worst. The article is almost solely focused on Tokyo. Yes, Tokyo is still doing well. It's still one of the richest cities in the world. But Tokyo cannot be held up as "Japan", just as New York cannot be used as representative of the entire U.S. Life expectancy in the U.S. has gone up by 4.43 years since 1980. All rich-world countries has seen a similar increase. [1] Unemployment is lower in Japan because labor force participation rate is (much) lower. The popular is older, far fewer women choose to work, and many men have dropped out of the workforce (a similar phenomenon is happening in the recovery here). [2] Cell phone supremacy? You mean the iPhone which is designed in California? [3] He links to Shadowstats which is a conspiracy theorist website about understanding CPI. CPI is one of the most scrutinized measurements out there. [1] http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:USA&dl=en&hl=en&q=us+life+expectancy#ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=country&idim=country:USA&ifdim=country&tstart=316155600000&tend=1231390800000&hl=en&dl=en http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#... [2] http://research.stlouisfed.org/fred2/series/JPNLFPRNA http://research.stlouisfed.org/fred2/series/JPNLFPRNA [3] http://techcrunch.com/2011/05/18/the-iphone-4-tops-handset-sales-ranking-in-japan/ http://techcrunch.com/2011/05/18/the-iphone-4-tops-handset-s...
- loso 15y ago
  I thought something was off when reading the article. You pretty much put it in words for me. The focusing on Tokyo was especially blatant.
- wisty 15y ago
  It also has wonderful quotes like: "The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets." Americans do the same crazy stuff, but they do it in a way that looks unremarkable to other Americans.
  - recoil 15y ago
    That sentence made me wonder if the author had never been to California. Speaking as a Brit, that sentence could so easily apply to any non-American's perspective on people in that state (I've only really spent time in NY and CA, BTW, so I acknowledge that my perception of life in the US is just as skewed as the author's pereception of life in Japan, but in a sense that's exactly my point).
tsotha 15y ago
Japan has the highest debt/GDP ratio in the world. It's true most of that money was lent by Japanese people, but as the population gets older people will start draw down their savings. The government will be forced to go to international markets to service the debt, and then the wheels are going to come off. If they had to roll over that massive debt at 3% interest service on the debt would consume the entire budget. They'll have to impoverish the savers through inflation of the yen, assuming that's a political possibility. Is this the sign of a healthy economy? The "lost decades" are not a myth. Japan has been able to preserve the appearance of wealth by borrowing it. Of course the country has great infrastructure. It was all built on borrowed yen in a futile attempt to stimulate growth. But the bill is coming due.

139 points by sajid 15y ago

Yrlec 15y ago

One of the most important lessons that we have learned from the past years is that you cannot look at a country's standard of living in isolation. You also have to look at the debt levels to see if it is sustainable in the long run. Japan has the highest government debt-to-gdp ratio in the world: http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub... (higher than Greece!). I suspect that they have a huge hangover coming their way.

tobylane 15y ago
They have a uniquely high level of internal debtors, the government bonds were bought by Japanese people much more so than other citizens buying their countries' bonds. I didn't understand why this made a difference though.
- Yrlec 15y ago
  Indeed. That helps them postponing the problems but it doesn't make the debt-levels any more sustainable. http://www.youtube.com/watch?v=-quUyId2WZ0 http://www.youtube.com/watch?v=-quUyId2WZ0
  - more_later 15y ago
    Japanese debt is Yen denominated and, if they want, they can extinguish it by printing money. This option is not available to Greece/Italy/Spain/Portugal/Ireland.
    - daydream 15y ago
      But by printing money they'd wipe out (or at least reduce) the real value of their peoples' savings - basically all those bonds the Japanese people bought. The consequences would be borne by their own people, not some foreign banks. This may be politically unpalatable.
    - Yrlec 15y ago
      There are limits to how much you can print without creating a currency crisis. http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...
      - rayiner 15y ago
        You can pursue an economic policy that creates high levels of inflation without necessarily triggering hyperinflation. The goal of course would be to gradually inflate away the value of the debt, not to pay it all back immediately.
        alexmat 15y ago
        Wouldn't that wipe out the very same people who invested in Japan? There are a lot of regular Japanese people who hold Japanese debt. Wiping it out via inflation is equivalent to wiping out the wealth of regular Japanese people to save the Japanese government.
- blumentopf 15y ago
  It does make a difference in that Japan could finance the public debt entirely by itself. The country has a trade account surplus, it's not them being indebted to others, but others are indebted to them. That makes it unattractive for speculators to bet against the country. Countries like China or Germany are in a similar position.
  - rmrm 15y ago
    They have had a historically high internal savings rate that allowed this. One thing to keep an eye on is their terrible demographics. I believe Japanese citizens as well as the largest institutional buyers (Japan Post etc) have just recently become net sellers of JGBs as they move towards liquidation to fund retirements. Japan currently funds more than half of their gov't via borrowing, with the demographic shift and the internal demand for JGB turning towards net negative, they will increasingly rely on external buyers of their debt. I believe China has been a buyer of late. What has worked for Japan historically may not work so well going forward.
    - muraiki 15y ago
      I've read that most of this money came from retiree savings, which are rapidly running out. Furthermore, the younger generation doesn't have such savings, yet alone the population, to keep such a thing going. In a sense, this system of internal borrowing in a hidden tax. While it of course is not mandated, it's required in order to keep things going smoothly.
ppk 15y ago
I doubt it, take a look at this, http://www.wolframalpha.com/input/?i=japan+public+debt http://www.wolframalpha.com/input/?i=japan+public+debt change the time scale to 10 years, it looks pretty sustainable to me... It's close to the lowest it has been in 10 years.
- Yrlec 15y ago
  Wolfram Alpha displays the debt in your local currency (SEK to me). Which currency did it show to you? Look at this video and tell me how that is sustainable: http://www.youtube.com/watch?v=-quUyId2WZ0#t=0m13s http://www.youtube.com/watch?v=-quUyId2WZ0#t=0m13s
  - Retric 15y ago
    If I citizen of a country buys that country's bonds then a portion of their interest is collected back as capital gains. Thus the country actually pays (interest rate * (1- capital gains rate) - inflation rate). So because the overwhelming majority of Japan's debt is owned by it's own citizens and it's in it's own currency they can easily drive their loan servicing costs below zero at fairly modest inflation rates. They can also achieve the same effect by slightly bumping the capital gains tax which is currently set at 15%.
    - Yrlec 15y ago
      Great arguments! I still don't think that paying 50% of your tax revenues in interest rate is sustainable (especially not when the interest rates are as low as they already are). However, your point about capital gains combined with high level of domestic creditors certainly changes the math.
    - alexmat 15y ago
      "they can easily drive their loan servicing costs below zero at fairly modest inflation rates" Why will Japanese people buy government bonds that return a negative interest? Stuffing cash in a mattress seems like a better option at that point.

danmaz74 15y ago

I remember a recent article on the same wavelength, here on HN - but I can't find it. Anyway, I agree that GDP shouldn't be idolized, just like no single metric should be.

heydenberk 15y ago
I do too -- if you find it, leave a comment here please!
- heydenberk 15y ago
  Rather, here it is: http://news.ycombinator.com/item?id=3389678 http://news.ycombinator.com/item?id=3389678
  - JamesNelson 15y ago
    Both articles are actually by the same author. His blog is at http://www.fingleton.net/ http://www.fingleton.net/
  - danmaz74 15y ago
    Thanks!
- Tycho 15y ago
  http://www.theatlantic.com/international/archive/2011/02/the-myth-of-japans-lost-decades/71741/ http://www.theatlantic.com/international/archive/2011/02/the...

mbesto 15y ago

Let's look at one metric that supersedes all (in my opinion): According to, Japan's unemployment rate has been no higher than 6% over the last 32 years (1980-2012).It's currently at 4.5%[1] Compare that to the US, who's unemployment rate has been at worst 10% over the last 32 years (1980-2012). It's currently at 8.5%[2] Why does this supersede most other stats? Because we simply need to keep people busy "doing things", otherwise (as you're seeing in the US) riots/protests break out, crime goes up (crime is largely a result of poverty), and people don't have the means to keep themselves healthy. What more do you need from a society? I understand people will say "but we need growth". I ask why? What is the end result of growth that makes societies "better"? [1]http://www.tradingeconomics.com/japan/unemployment-rate http://www.tradingeconomics.com/japan/unemployment-rate [2]http://www.tradingeconomics.com/united-states/unemployment-rate http://www.tradingeconomics.com/united-states/unemployment-r... edit: 32 years...doh!

deleted 15y ago
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kiba 15y ago
Because we simply need to keep people busy "doing things" I suppose we could employ people to dig holes and pay them for the job of digging holes for no purpose. That's not productive or is a good use of their time, unless it is spent digging useful holes. That's because we have a million other things that people could do help and help out. All we need to do is figure out how to employ people. I ask why? What is the end result of growth that makes societies "better"? Less time spent on farming, manufacturing, servicing, and generally working. More time for leisure and family, increased well being, increased lifespan(more is always better), supposedly. However, we're not good at figuring out what we want in life and thus not spend time on leisure, family, hobbies, and things that are fun. Instead, we seeks certain job because they're prestigious, buy things merely for status symbol effect, and so on.
- mbesto 15y ago
  "Doing things" was mildly oversimplified. That's because we have a million other things that people could do help and help out. We do? Like what?

surrealize 15y ago

The overall point of the editorial might be right, but some of the metrics that it mentions are random or problematic. The number of high-rise buildings constructed? That says more about how little buildable land Japan has than it says about the strength of the Japanese economy. The article also mentions electricity "output" (a.k.a. consumption), which has grown faster in Japan than in the US. The article spins it as an indicator of the strength of the Japanese economy, but you could just as easily describe it as a success story about US conservation efforts. And some of it is just strange. Michelin ratings as a measure of the strength of an economy? Cultural factors matter as much as economic strength, there. Japan might actually be doing better than people in the US think, but this article isn't a good argument for that position.

gwern 15y ago
> And some of it is just strange. Michelin ratings as a measure of the strength of an economy? Cultural factors matter as much as economic strength, there. I was in a theater on the 4th to watch _Nausicaa_, and one of the previews was for a documentary about some sushi chef. Breathlessly it mentioned that he was the first Japanese restaurant to receive 3 Michelin stars. I was a little astonished. 'Yes, I know 3 Michelin stars is very hard to get, but this must've been in the last 20 or 30 years - how could Michelin have deprived Japan of any 3-star rankings for so long after WWII? Their restaurants are not unusually better these days than they were over the last century or two.' The obvious answer is that Michelin didn't have any real presence but began ramping up relatively recently (perhaps during the bubble). So it wouldn't be surprising if the coverage continued to increase despite whatever the true trend of Japanese restaurant quality is (up or down).
- learc83 15y ago
  From what I've been able to find, it looks like Michelin didn't review Japan at all until around 2007-2008.
  - gwern 15y ago
    That would make sense.

aycangulez 15y ago

I have been following Fingleton, the author of this article for quite a while. His main thesis that "Japan's lost decade is an illusion" has not changed much over the years. In fact, he was among the group "Japan bashers" in the 90s, and their main argument was that Japan's Ministry of Finance (MOF) was intentionally trying to paint a grim image of Japan to gain advantage in trade negotiations. This argument holds little water these days: it is next to impossible to hide information about the true state of a country when access to information is so easy thanks to the Internet. Fingleton also claims that Japanese are early adopters in technology, which is only partly true. Japanese, in general, prefer to excel in something by using manual skills and they take great pride in that. They resort to technology only when manual skill is not enough. Making good cars require industrial robots so they have plenty of them, but in other parts of the industry, adoption of advanced technology can be quite limited. In other words, Japanese companies often find themselves at local maximums as compared to their American counterparts. Just look at the current state of Japan's once great electronics companies: Sony, Panasonic, Sanyo, NEC, Hitachi, etc. Only Canon seems to be doing fine these days.

yummyfajitas 15y ago
This argument holds little water these days: it is next to impossible to hide information about the true state of a country when access to information is so easy thanks to the Internet. It's actually quite easy: Step 1: recognize that gathering macroeconomic statistics is really hard. One example: if people previously spent $3 on salsa, but now they spend $5 on guacamole, what is the inflation rate for mexican dips? Step 2: come up with a catchy title for a statistic, and make sure reporters know all about it. E.g., "the burrito index, which measures how much good mexican food costs." Step 3: tweak the definition of the statistic until you get the result you want. Want more inflation? All mexican dips are equal, so inflation is up 66%. Want less inflation? Guacamole is 2x better than salsa, hence dips have actually dropped in price 17%.
- borism 15y ago
  except salsa and guacamole are interchangeable. it doesn't seem to me you can easily exchange one component of CPI with another?

mark_l_watson 15y ago

I have some friends who don't travel internationally and who have totally bought into the propaganda that the USA is better than any other country using any metric. Love of one's own country and mild forms of nationalism are good things, but they should be tempered with a realistic view of the world. In the USA we have a clear and present danger to the economic health of our country: spending too much money on "defense."

drumdance 15y ago
I know a lot of people like that where I grew up. My sister jokes that if nothing else the USA is number one in self esteem.

abracat1 15y ago

It is easy and popular for westerners to romantacize Japan - but it has serious and structural problems. When analyzed on its own (instead of comparing it to the USA) it becomes readily apparent. I will just say a few observations which show that the picture the article paints is not quite accurate. Firstly, yes there are many people with fancy clothes. What the author does not say is that a lot of those people live with their parents - and their whole income is expendible. I don't know if this phenomeneon started after the bubble economy, but it is quite shocking. Then there is the fancy cars - what is the percentage of car ownership? About employment - finding permanent employment for young people has become almost impossible. Many young people now have short term contracts or do so called "arebeito" (extremely short term work with hourly wage). This is clearly not optimal and is a new in this generation. Japanese health care is a joke. They spent a lot on the last years of life (everywhere you look is AED machines), but nothing on the quality of life. Japanese dental care is below third world country! The majority of people do not get orthodontal treatment even when clearly necessary. Take a look next time you walk around. Another example of the quality of health care - I've spoken to two dermatologists (from national health care in Japan) and they don't even know about ruaccutane (isotretonion). This surely is a basic treatment that in some cases are necessary? Japanese banking is pathetic. It seems they do everything by hand - which is nice but inefficient. With my non-japanese banking I get internet banking for free and ATMs are open 24/7. Good luck getting that in Japan. Typed on iPhone so sorry for typos.

philwelch 15y ago
> What the author does not say is that a lot of those people live with their parents - and their whole income is expendible. I don't know if this phenomeneon started after the bubble economy, but it is quite shocking. In many cultures, it's customary, even expected to live with one's parents at least until marriage, and possibly longer. Extended families are an important social resource, and the American model of immediate familial alienation upon reaching age 18 followed by a detached nuclear family is in many ways weaker. I won't argue with your other points, though at the very least, a forum like Hacker News should have skeptical attitudes about such ideas as "permanent employment".
- 15y ago

bjornsing 15y ago

I think a major factor determining your opinion on Japan's "lost decade(s)" is how you view inflation. Those who stand to benefit from more (stealth) inflation (politicians / bankers with access to the fed discount window / those with highly mortgaged real-estate) will see those decades as truly lost, but those that generally stand to benefit from less inflation (savers / "main street") will view those decades in a more positive light.

tryitnow 15y ago

My main takeaway from this article and these comments is that it's devilishly difficult to make international economic comparisons. As one commenter mentioned such activities quickly disintegrate into highly subjective "meaning of life" debates. This is incredibly important because a lot of policy analysis depends on making international comparisons. If such comparisons are really intractable problems then what does that say about the potential for effective policy making?

JamisonM 15y ago

I think this "lost decade" talk is mostly a matter of perspective, Japan is the nation in the world that, of any I can think of, could most afford to "lose a decade". An older population, a shrinking population, and a very high savings rate means that deflation was not as hard on its economy as it would be on an economy like the United States. In the US and many other economies inflation helps consumers with their debt, population growth requires that the overall GDP grow significantly to keep pace, and a younger population means many young people need meaningful work to sustain themselves while an older population can live on savings and supplement with poorly-paid employment to hobble through to retirement. Some of the arguments may also be unfair: The author breaks down GDP on a per capita basis to make the argument that Japan might have grown faster than the United States since 1989 - but Japan is 2 decades our from their financial collapse and the US only some 4 years after a similar event. Unemployment in Japan has always been much lower than the US, so comparing them now as some sort of evidence regarding a "lost decade" is not meaningful. It may also be that, since the population is shrinking, the life-expectancy gains are more of a collection of a dividend from past public health improvements than any reflection of recent health care system improvements. (I.e. all those old people living longer from better care in the past vs. relatively younger people dying from other causes to lower the average.)

beefman 15y ago

Words do not exist to explain errors in this article. The world's most populous island improved internet infrastructure? Wow! Life expectancy increased, just like in every other OECD nation? Wow! The appreciation of the yen is a result of the deflationary pressure that crippled the Japanese economy from 1995-2005. He links to shadowstats, a known internet cook hangout. It's like linking to a global-warming denial site. "Japan leapfrogged the United States in the space of a few years in the late 1990s and it has stayed ahead ever since, with consumers moving exceptionally rapidly to ever more advanced devices." On what planet does the author live? The smartphone was invented here and the US leads the world in smartphone adoption. The Japanese are still texting on 9-keys. I can't go on.

blrgeek 15y ago
Re: phones - In 2005 my friend had a Japanese phone which had high speed Internet, video calling, and an ssh client among other things. The US had the Razr. Don't change history, smartphones were widely popular in Japan well before anywhere else in the world. The iPhone was just the first usable smartphone for the rest of us.

dev_jim 15y ago

There's a lot to admin about Japan, but this article is hackery at best and deceptive at worst. The article is almost solely focused on Tokyo. Yes, Tokyo is still doing well. It's still one of the richest cities in the world. But Tokyo cannot be held up as "Japan", just as New York cannot be used as representative of the entire U.S. Life expectancy in the U.S. has gone up by 4.43 years since 1980. All rich-world countries has seen a similar increase. [1] Unemployment is lower in Japan because labor force participation rate is (much) lower. The popular is older, far fewer women choose to work, and many men have dropped out of the workforce (a similar phenomenon is happening in the recovery here). [2] Cell phone supremacy? You mean the iPhone which is designed in California? [3] He links to Shadowstats which is a conspiracy theorist website about understanding CPI. CPI is one of the most scrutinized measurements out there. [1] http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:USA&dl=en&hl=en&q=us+life+expectancy#ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=country&idim=country:USA&ifdim=country&tstart=316155600000&tend=1231390800000&hl=en&dl=en http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#... [2] http://research.stlouisfed.org/fred2/series/JPNLFPRNA http://research.stlouisfed.org/fred2/series/JPNLFPRNA [3] http://techcrunch.com/2011/05/18/the-iphone-4-tops-handset-sales-ranking-in-japan/ http://techcrunch.com/2011/05/18/the-iphone-4-tops-handset-s...

loso 15y ago
I thought something was off when reading the article. You pretty much put it in words for me. The focusing on Tokyo was especially blatant.
wisty 15y ago
It also has wonderful quotes like: "The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets." Americans do the same crazy stuff, but they do it in a way that looks unremarkable to other Americans.
- recoil 15y ago
  That sentence made me wonder if the author had never been to California. Speaking as a Brit, that sentence could so easily apply to any non-American's perspective on people in that state (I've only really spent time in NY and CA, BTW, so I acknowledge that my perception of life in the US is just as skewed as the author's pereception of life in Japan, but in a sense that's exactly my point).

tsotha 15y ago

Japan has the highest debt/GDP ratio in the world. It's true most of that money was lent by Japanese people, but as the population gets older people will start draw down their savings. The government will be forced to go to international markets to service the debt, and then the wheels are going to come off. If they had to roll over that massive debt at 3% interest service on the debt would consume the entire budget. They'll have to impoverish the savers through inflation of the yen, assuming that's a political possibility. Is this the sign of a healthy economy? The "lost decades" are not a myth. Japan has been able to preserve the appearance of wealth by borrowing it. Of course the country has great infrastructure. It was all built on borrowed yen in a futile attempt to stimulate growth. But the bill is coming due.