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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 ov

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?
  - kijin 15y ago
    What Americans typically refer to as "salsa" is not interchangeable with guacamole.
    - anamax 15y ago
      > What Americans typically refer to as "salsa" is not interchangeable with guacamole. It is for people who don't want either one. This effect explains why different people see different amounts of inflation.
  - muraiki 15y ago
    Actually, substitution is used in the CPI basket of goods. Fresh fish can be replaced by canned tuna, for instance. More amusing is the application of "hedonics." This is perhaps best explained by an example. Consider that the cost of gasoline went up when certain additives were made required by the government. This cost is not fully reflected in the CPI, because there is a "hedonic thrill" associated with the perceived improved environmental friendliness (or similar nonsense) of the new required formulation of gasoline. Basically, the new gas should make you "feel better" about using it, so there is an improvement of quality that offsets the full increase in cost. Does this make sense given that fresh fish can be replaced by canned tuna? No... Substition and hedonics are very useful for keeping the CPI from rising, which has a number of benefits for the government, as various welfare payments and wage structures are based off of it.
    - yummyfajitas 15y ago
      Substitution is not very useful for keeping CPI down. We substitute from steak to spam, then from spam to cat food, and then there is nothing more to do. It's a trick you can only do once. Substitution does, however, keep CPI stable, and rightly so. My food bill hasn't changed much in spite of the recent peanut butter price spike - I just substitute other goods for peanut butter.

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?
- kijin 15y ago
  What Americans typically refer to as "salsa" is not interchangeable with guacamole.
  - anamax 15y ago
    > What Americans typically refer to as "salsa" is not interchangeable with guacamole. It is for people who don't want either one. This effect explains why different people see different amounts of inflation.
- muraiki 15y ago
  Actually, substitution is used in the CPI basket of goods. Fresh fish can be replaced by canned tuna, for instance. More amusing is the application of "hedonics." This is perhaps best explained by an example. Consider that the cost of gasoline went up when certain additives were made required by the government. This cost is not fully reflected in the CPI, because there is a "hedonic thrill" associated with the perceived improved environmental friendliness (or similar nonsense) of the new required formulation of gasoline. Basically, the new gas should make you "feel better" about using it, so there is an improvement of quality that offsets the full increase in cost. Does this make sense given that fresh fish can be replaced by canned tuna? No... Substition and hedonics are very useful for keeping the CPI from rising, which has a number of benefits for the government, as various welfare payments and wage structures are based off of it.
  - yummyfajitas 15y ago
    Substitution is not very useful for keeping CPI down. We substitute from steak to spam, then from spam to cat food, and then there is nothing more to do. It's a trick you can only do once. Substitution does, however, keep CPI stable, and rightly so. My food bill hasn't changed much in spite of the recent peanut butter price spike - I just substitute other goods for peanut butter.