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This observation runs quite deep. This two-tier economy is the price Japan paid for its export obsession and its long post-war tradition of mercantalist trade p

This observation runs quite deep. This two-tier economy is the price Japan paid for its export obsession and its long post-war tradition of mercantalist trade policies (export good, import bad ...) Here is approximately how it happened: Japan exported heavily, piling up trade surpluses. Eventually the currency appreciated sharply (250 yen to dollar in 1980 to 100 yen to dollar by 1990), making Japan a first-world nation in terms of per-capita GDP. Yet, Japan's overall economic structure wasn't and still isn't as balanced as more mature industrial economies like Germany. Imagine a kid who has been trained and trained from age 4 to be a world-class chess player (with no exposure to anything else). He/she could achieve world-champion chess player at 25, but would be a highly imbalanced individual. Japan's economic story in a nutshell. You can see this when you travel to Japan: their service sector productivity sucks. Over-staffing is rampant. As a society they have chosen to redistribute the enormous surplus from exports to sustain inefficient employment in a lot of far-less-than-world-class businesses. Their totally undeveloped software sector shows the real cost of their mercantalism. Their woefully tiny housing (NOT to be attributed to population - Singapore has higher population density, has lower per-capita GDP than Japan, yet Singaporeans enjoy larger apartments and overall live better than the Japanese) is an everyday reminder of the cost. On balance Japan has done fine, but considering that they are the hardest working people on the planet, they could have lived better, and could live better today, if they hadn't developed that export obsession. They gifted the rest of the world a lot of their hard work, while denying themselves those fruits. As an outsider, I can't complain, I love my Japanese luxury car ;)

litewulf 18y ago
I think some of this rampant over-staffing is more cultural than the product of a funny economic buildup. If you've been to other Asian countries, you'll see people doing ridiculous jobs (sidenote: many people in Taiwan have someone else wash their hair, there are people who have never washed their own hair before and don't know how). Also the second to last paragraph is so true. Japanese people are somewhat crazy about their savings. They tend not to invest but instead put it in banks (sometimes at rates below inflation).
- bootload 18y ago
  "... Japanese people are somewhat crazy about their savings. They tend not to invest but instead put it in banks ..." Maybe because they are more experienced with an older culture. It makes sense to have cash in hand with larger, older populations. You can see the consequences of not doing this reading the quote below... "... the deteriorating financial condition of our federal government in the face of skyrocketing health-care costs and the baby-boom retirement could fairly be described as a super-subprime crisis ..." This is the reality of US retirees who will hit the US economy very soon ~ http://news.ycombinator.com/item?id=351351 http://news.ycombinator.com/item?id=351351
ntoshev 18y ago
I would rather blame their protectionist policies, not the success in exports.

litewulf 18y ago

I think some of this rampant over-staffing is more cultural than the product of a funny economic buildup. If you've been to other Asian countries, you'll see people doing ridiculous jobs (sidenote: many people in Taiwan have someone else wash their hair, there are people who have never washed their own hair before and don't know how). Also the second to last paragraph is so true. Japanese people are somewhat crazy about their savings. They tend not to invest but instead put it in banks (sometimes at rates below inflation).

bootload 18y ago
"... Japanese people are somewhat crazy about their savings. They tend not to invest but instead put it in banks ..." Maybe because they are more experienced with an older culture. It makes sense to have cash in hand with larger, older populations. You can see the consequences of not doing this reading the quote below... "... the deteriorating financial condition of our federal government in the face of skyrocketing health-care costs and the baby-boom retirement could fairly be described as a super-subprime crisis ..." This is the reality of US retirees who will hit the US economy very soon ~ http://news.ycombinator.com/item?id=351351 http://news.ycombinator.com/item?id=351351

ntoshev 18y ago

I would rather blame their protectionist policies, not the success in exports.