The Myth of Japan's lost Decade

http://www.theatlantic.com/international/archive/2011/02/the-myth-of-japans-lost-decades/71741/

by tim_sw • 15 years ago

99 78 15 years ago

tokenadult2• 15 years ago

I would really like to hear the reaction of patio11 and any other HN participant who lives in Japan to this story. The author of the submitted article links to his one blog in the article, and there he has an open letter to Clinton administration government official

http://www.fingleton.net/an-open-letter-to-professor-edward-...

with more details of his basis for saying that Japan's economy has been growing steadily for the last two decades.

AFTER EDIT:

In one of the funniest comment-and-reply exchanges I have ever seen on HN, three years ago biohacker42 asked, "Anyone here lived through the Japan depression care to share their experiences with us?"

http://news.ycombinator.com/item?id=328819

and then hugh replied, "It was terrible. People were forced to eat raw fish for sustenance. They couldn't get full-sized electronics, so they were forced to make tiny ones. Unable to afford proper entertainment, folks would make do by taking turns to get up and sing songs."

Since then, I've been much less worried about Japan, which continues to be a very prosperous country. But today I'd glad to be updated on the situation in Japan, and what the "lost decades" really mean for people who live there, if anything.

sounds• 15 years ago

I don't live in Japan. I would be happy to be proved wrong.

So for me the article presents a non-falsifiable claim: Japan is doing better than ever. However, his claims could be checked by someone in a Japanese manufacturing company.

In the meantime, I don't see why it is surprising that Japan is doing well. As a nation they have positioned themselves well. The major challenge they face -- lack of natural resources -- has not materially affected their growth in the last 20 years. Instead, they are continuing to focus on the entire manufacturing vertical. Not just steel mills and consumer brands (ok, I'm making the U.S. seem dumber than they are).

andrewpi• 15 years ago

I would argue that the major challenge Japan faces is the demographic trends in that country. Japan is rapidly getting older and is very hesitant to allow immigration to fill the gap. Eventually a very small number of workers will be forced to support a massive number of retired citizens.

po3• 15 years ago

I live in Tokyo and my business partner Jason and I organize Hacker News meetups every month or so. Usually patio11 takes the time to jump on a shinkansen and make the trip to join us. I myself have been coming to Japan to visit relatives for a while but have only been living here for two years now.

Keep in mind that this article was written right before the earthquake/tsunami. I read this article when it came out and it seemed plausible to me at the time. One big reason is that Japanese people are not the 'toot my own horn' type and if they were doing quite well, they would probably just tell you that they're only getting by. Not in an attempt to fool you, but because it isn't respected to speak about yourself that way.

Of course, there are also a lot of problems in Japan as well. The demographics are not great (in my town they will pay you a subsidy if you have kids), the younger generation is doing a lot more temp work and doesn't have the security that their parents had, and people are showing frustration toward politicians in ways they haven't before. The rural parts of Japan have seen decline as younger people wish to move to the city. I have a friend out in the country who says that half of the buildings in his town are empty and will never be filled again. I think many places in the world are facing these kinds of pressures though.

I live in a nice part of tokyo so I can't speak for all of Japan but I find the living conditions to be quite nice. It is young, energetic, and lively. Everyone talks about how much debt Japan has but at least they use it to build nice things. The train system is absolutely amazing. Everything is earthquake-proof and bolted down. They have been working on the road by my house for almost six years and when you realize what they are doing it's quite amazing. They're putting several lanes of traffic underground (boston big-dig style) and while the total work is slow, everyday there is activity, traffic is rerouted, people are moving things around, and the quality of work is absolutely stunning.

I am always shocked by stores that sell services that I can't imagine being profitable. A small shop selling house slippers. A store selling tatami mats. A little gift shop. I don't really understand how they stay in business but here they are. It's one of the biggest metropolis areas in the world and it still has a small-town feel. I still can't say I understand it all.

Overall, I think viewing Japan through a western lens can be hard. I would be pretty suspicious of any foreign reporting on the state of the country just because the measuring stick will be different. You could say that there were 'lost decades' in that it is obvious that Japan will not be leading the world economies the way they were in the past. However, as an island nation, I don't think there is much sense of disappointment that they haven't expanded their economic reach. I think the people here seem pretty satisfied with the slow growth they have seen. I think when Japanese people dream of success, they want to be well known and respected in Japan. I think playing on the world stage is less of a concern.

But then again, I don't know. My view on all of this changes all the time. Macroeconomics are complex so the lessons learned from one country don't always apply to another.

nu23• 15 years ago

> It's one of the biggest metropolis areas in the world and it still has a small-town feel.

Offtopic, but this is something that was very striking when I watched, what is one of my favorite TV shows, http://wiki.d-addicts.com/Haikei,_Chichiue-sama. The show is set in Tokyo, and centers around the lives of people who run a ryotei restauarant. It has beautiful shots of the streets, and it feels very much like a small town. The whole atmosphere feels so classical that at some point in the show when some of the characters are inside a car with a modern GPS system, it feels bit surprising and one realizes that this is actually happening sometime around 2005.

momo-reina• 15 years ago

Where do you guys organize the meetups? I'll be moving to Osaka in February but would love to come down and hang every now and then.

muyuu2• 15 years ago

I think the demographics bit is another point taken backwards.

At some point, all societies will have to face a stable/decreasing population pattern. The later, the more severely they will have to face this situation. Japan has done it without falling to pieces.

From my point of view the demographics of Japan ARE great.

In 1, 2 or 3 generations time we will see (whoever lives to see it) what happens to ever-rapidly-growing demographic areas. I suspect it isn't going to be pretty if they wait until they hit a hard limit to stop.

minikomi3• 15 years ago

Sorry..off topic .. Do you speak of yamate-dori? I have a hunch we may live close by.

MikeMacMan• 15 years ago

- The recession disproportionately affected rural Japan. In Tokyo you see lots of shopping and commerce. However, prefectures in places like Kyushu have unemployment rates above 10%

- An entire generation of baby-boomers working as middle-manager types got highly-inflated mortgages during the bubble, only to be downsized or have their pay/benefits cut in the aftermath. These people have been hit very hard.

- I'm not sure of the latest numbers, but Japan has a deficit problem that rivals the US. As a % of GDP it might be worse.

cdavid• 15 years ago

I don't think living in Japan makes you especially more able to comment on the issue. Most foreigners are concentrated in a few areas, and it tends to be mostly anecdotal. It does help you to avoid having misconceptions for things that cannot be easily measured, though (this was especially striking during the march 2011 tsunami and Fukushima events).

As mentioned by others, trade surplus or worse currency "power" are about as meaningless as you can be. Those are related to typical misconceptions and bias (mercantilism, etc...). About one year ago, there was a much more convincing article about the Japan myth: http://www.project-syndicate.org/commentary/gros18/English. The gdp growth figures show a much better story than they do if you only take into account the workforce (it basically outdid both Europe and the US). Also, there is still a largely unused part of the population for economical growth: women.

dshaw002• 15 years ago

I lived in Japan for two years in a rural/semi-urban area. It was only about 2 hours from Tokyo, so I have seen the difference between urban and rural life.

Two things come to mind with this:

1) The huge divide between big business and small business. There are so many small businesses in Japan that don't scale. They run from small run-down shops run by old people to super-trendy, artisan shops run by young people. Most of these younger people just want to run a small artisan-type business, they're not interested in being a part of the next big thing, or going public, looking for investor backing, etc.. These businesses are essentially confined to a community and neighborhood. The largest I've seen is one that spreads across the prefecture.

On the other end, you have the zaibatsu/keiretsu, which are run by oligarchies (Mitsubishi, etc.). A lot of young businesses talent is driven to these companies because they run essentially everything. I feel like this is what's driving the economy, and it's also not a part of the consciousness of the everyday Japanese person.

2) Japan's global stance. Japan is very traditional and modern in very awkward and confusing ways. People may have high definition TVs, but they live in hundred-year old houses with antiquated heating systems.

A friend once told me that Japan may be inefficient or wrong in some ways, but Japanese people like it and want it that way, and they are willing to work hard for it.

I feel like maybe the whole Japanese economic boom was some type of fluke. It was an odd advantage that a naturally introverted society had, and the economy is just going back to the way it was always supposed to be. I don't know if they're supposed to have a large economy, or really want one if it comes with a certain price.

Do you guys get what I'm saying?

kevingadd• 15 years ago

I thought unemployment/underemployment (especially among the young who are new to the workforce) is a big factor in the 'Lost Decade', but I don't see it addressed in this article. I wonder how that fits into the picture?

csomar• 15 years ago

The unemployment rate in Japan was last reported at 4.5 percent in October of 2011. From 1953 until 2010, Japan's Unemployment Rate averaged 2.60 percent reaching an historical high of 5.60 percent in July of 2009 and a record low of 1.00 percent in November of 1968.

Although unemployment increased compared to the past, seems pretty good to me compared to the USA and some EU countries.

Source: http://www.tradingeconomics.com/japan/unemployment-rate

barrkel• 15 years ago

The devil is in the details of how it's measured.

An unemployment rate of below 5% isn't very achievable outside of extremes like slave labour; in a healthy economy, there will be people moving from job to job as they find a good fit; this turnover should show up as unemployment. If it doesn't, it either means huge numbers of people are "trapped" inside corporations, or the unemployment statistics are not very comparable. 5% in most Western economies is considered a very tight market with potential problems of overheating and wage inflation. I'd put my money on a different accounting method.

wpietri• 15 years ago

Am I missing something? It seems like he's saying, "Sure, the most relevant numbers happen to agree with all the experts, but I'm pretty sure both are wrong, because this place looks pretty swell to me. And I'm so sad that nobody takes me seriously that I'll pay $5k just to get a higher profile."

The only evidence he really pushes is the trade balance, but that seems unsurprising to my amateur eyes: if domestic demand is low, then wouldn't imports drop and export industries do better (due to cheaper labor, cheaper materials, cheaper money)?

yummyfajitas3• 15 years ago

He's saying that the standard methods of calculating economic statistics don't capture consumer surplus very well.

I've made similar arguments in the past claiming that US growth is also understated. According to official statistics, for example, US real wages have stagnated since the 70's. Yet would anyone be willing to trade in their 2010 basket of consumer goods for a 1970's basket of consumer goods? If real wages truly did not go up, then most people should be indifferent.

lrhot9• 15 years ago

A classic take from 2004: http://www.paecon.net/PAEReview/issue23/Locke23.htm

cynicalkane• 15 years ago

This is a troll story.

He talks a lot about a strong currency, about a trade surplus, and some other numbers that, if GDP is meaningless, then these numbers are meaningless squared. Impressive trade numbers could be a sign that Japan is undervaluing consuming its own goods, as people lately have been saying about Germany. Or these numbers could be a sign of a number of other things. They don't really tell us much, by themselves; they need to be interpreted in some context. He tells us the true fact that Japan's growth has been stagnant for a long time, but the author claims despite this Japan has some growth in real prosperity, an increase in living standards... then never tells us how. It's a bunch of talk and bluster with some useless numbers thrown in that never answer the crucial question of, if Japan really is doing better, how real standards of living have increased for the Japanese.

Furthermore, the concluding lines about a $5000 offer for invitees to "debate" him smells trollish, as well as his shameless plug of his blog.

mc323• 15 years ago

Yeah, this Fingleton guy, he seems to like being an antagonist. Whereas even Japanese manufacturers themselves fear a "hollowing out" of Japanese manufacturing, due in part to decreasing domestic demand and also Yen valuation[1], he says there is little to fear and presents some trade numbers to support his assertion.

[1] http://www.straitstimes.com/BreakingNews/Money/Story/STIStor...

"'The yen's historic rise, coupled with catch-ups by emerging nations, has caused a crisis of unprecedented industrial hollowing-out,' Yoshihiko Noda told lawmakers in his first major policy speech."

and http://academic.csuohio.edu/makelaa/history/courses/his373/N... "A survey last summer for the financial newspaper Nihon Keizai Shimbun found that half of Japan's largest companies planned to increase production overseas — and 71 percent of those planned to do it in China. At the same time, in a second poll, 65 percent of people surveyed believed that imports from China threatened the Japanese economy."

joe_the_user• 15 years ago

Yes, a well NYTime article on the effects of the lost decade:

http://www.nytimes.com/2009/02/22/business/worldbusiness/22j...

Quote: "And the nation is losing interest in cars; sales have fallen by half since 1990."

Another article about the Japanese youth sleeping in Internet cafes:

http://www.reuters.com/article/2007/05/07/us-japan-cyberhome...

"A by-product of the economic crisis that hit Japan and its lifelong employment guarantees in the 1990s, freeters drift between odd jobs.

"Earning around 1,000 yen ($8) per hour, they often struggle to pay the rent in Tokyo, one of the most expensive cities in the world where a modest 30 square meter (320 square foot) flat in a central location can easily cost 150,000 yen ($1,250) a month."

drumdance2• 15 years ago

James Fallows may be wrong, but he's certainly not a troll. He's been writing about these issues for at least 25 years. I've been reading him for twenty of them. He's one of my favorite writers, so I'm biased a bit, but he's been doing a lot of good journalism about a lot of topics (not just Japan) for a long time.

Plus, he's excellent about responding to email. Send him a note with your comment and I guarantee you'll get a respectful reply.

jessriedel• 15 years ago

Maybe I'm confused, but this is written by Eamonn Fingleton, not James Fallows. I see Fallows' picture at the top, but I don't know how he's connected.

nandemo• 15 years ago

> It's a bunch of talk and bluster with some useless numbers thrown in that never answer the crucial question of, if Japan really is doing better, how real standards of living have increased for the Japanese.

We could start by comparing the average household income in 1991 and 2011, in 2011 yens. However, that doesn't account for certain increases in the standard of living that can't be captured by the usual inflation indices: better cars, computers, cell phones, cheaper international travel, etc.

ido3• 15 years ago

    However, that doesn't account for certain increases 
    in the standard of living that can't be captured by 
    the usual inflation indices: better cars, computers, 
    cell phones, cheaper international travel, etc.

But those aren't Japan-specific, are they?

"Quality of life" is always relative to the rest of the world.

fauigerzigerk2• 15 years ago

Comparing GDP without accounting for changing population sizes is indeed meaningless. Using GDP per person and median disposable income would tell us something.

angus772• 15 years ago

Isn't it weird that this article is trying to squash the myth of the "lost decade"--the 1990's--by Japan's affluence since 2000? Big screen TVs, advanced cellphones, high-speed internet, etc etc.

mathattack2• 15 years ago

He misses some key statistics... The Japanese government is wallowing in debt. Much of the current standard of living is based on borrowed dollars. Their debt to GDP ratio is worse than any of the European countries in crisis and much worse than the US. This is despite having outsourced most of their military to the US.

I find Japan endlessly facinating, and cringe when I see one dimensional reporting in any direction. There is much more subtlty involved.

paganel• 15 years ago

> Their debt to GDP ratio is worse than any of the European countries in crisis and much worse than the US. This is despite having outsourced most of their military to the US.

I read somewhere that most of that debt is owed to local companies though (like Japanese banks, mutual funds etc.), not foreigners, so that should provide them with a small safety cushion.

One thing that I'm curious about and too lazy to search for right now is to know what happened to the proposed privatization of the Japan Post? Some say that it's the largest holder of personal savings worldwide, it would be really interesting to see how that turns out.

mathattack2• 15 years ago

Yes - their debt is held locally. And they own a huge chunk of ours. This means that they have less currency risk in the case of deflatiOn. Perversely, the citizens are loaning the govt hundreds of billions to buy loans whose value depreciates as their currency strengthens.

The Japanese deflation was good for consumers and tourists alike. Unfortunately the exchange rates are making it expensive to visit again. Too bad - it's such a fascinating place.

acslater00• 15 years ago

Actually, there's a very good explanation for how net exports can increase substantially even though official GDP measures decrease; it represents less than 5% of the japanese economy.

Japan's GDP is about $4T right now. Net exports have increased to 200B. Which is, by the author's estimation "a lot". Japan has had an export policy for the past 30 years. The fact that it's managed to create 4 GDP points worth of net exports in the past 20 years is not exactly a ringing endorsement.

What's happened in Japan is that net exports have become a somewhat larger component of a not-rising-very-quickly GDP. Part of that is because exports have increased. But mostly it's because imports have increased more slowly than exports [remember, we're talking net here].

Here are some contextual data points for you:

Incomes in Japan have decreased in nominal [yen] terms. http://research.stlouisfed.org/fred2/series/JPNCOMPQDSNAQ?ci...

Domestic Consumption has basically not moved since 1995: http://research.stlouisfed.org/fred2/series/JPNPFCEADSMEI?ci...

Manufacturing has basically not changed since 1990 http://research.stlouisfed.org/fred2/series/JPNOTPT?cid=3228...

Exports didn't do much for the first "lost decade", but then exploded in the 2000s , then crashed nighmarishly, then picked up again in the last 2 years. http://research.stlouisfed.org/fred2/series/JPNEXPORTQDSNAQ?...

The government has run deficits up from 50% of GDP in 1990 to 220% (!) today, which some might say is questionably sustainable http://research.stlouisfed.org/fred2/series/GGGDTAJPA188N?ci...

Fewer people work: http://research.stlouisfed.org/fred2/series/JPNLFPRNA?cid=32...

And finally, the way that you know things aren't "quite right" is that the currency has been deflating since 1995. http://research.stlouisfed.org/fred2/series/JPNGDPDEFQISMEI?...

That, among other things, is what led to the stronger yen, which is actually something that constrains japan's net exports, not helps it.

On a more general note, you can't go to tokyo and say "ooh, look at all the shops, the economy must be doing great" any more than you can go to 5th avenue in new york and say, "wow, tiffany's is full of people, the US economy is gangbusters!" Making that argument is just really, really stupid.

the-cakeboss• 15 years ago

Perhaps this question is beyond your area of knowledge, but has the much talked about aging of Japan proved to be a significant detriment its economy? Could you see it being one in the future?

gkanai4• 15 years ago

I live in Japan.

Fingleton is misguided. There is no real increase in living standards since the bubble was popped. Goods are getting cheaper, and Japanese people are increasingly consuming cheaper goods. If you only visit the major cities, you won't see the urban decay. If you travel outside of the urban cities, you'll see the decay in full bloom (a la Spike Japan blog.)

http://spikejapan.wordpress.com/

impendia• 15 years ago

I dunno about this.

I'm sure that what you say is true in many places, but I lived in Fukuchiyama, northern Kyoto, from 2001-2003 which seemed to be a fairly average city of 70,000, about 90 km from any substantially larger city. I happened to visit again recently, and I was struck by all the gleaming new construction, and the impressively rebuilt train station.

angus772• 15 years ago

I think that definitely depends on where you live. Here in Shizuoka, in the 90s, pretty much all big public works projects came to a standstill. Roads they were building just stopped being built partway through construction. A few years into the 2000s, and they revved things up again, at a pace that makes it look like they were trying to catch up on all the projects that were abandoned in the 90s. A few years ago, the papers announced that rent downtown had bounced back up to Bubble-era rates, and construction downtown has been particularly active.

yummyfajitas3• 15 years ago

There is no real increase in living standards...Japanese people are increasingly consuming cheaper goods.

These two statements contradict each other.

mc323• 15 years ago

He means that instead of consuming name-brand goods, they increasingly look to knock-offs or non-premium brands (instead of French and Italian, maybe Uniqlo or low-rent brands). It's not only in the consumer goods sector either. Japanese are now buying more produce from China --which tend to be cheaper.

Now, it all depends, some of this choice could increase living standards (more PP) or it could decrease them (subpar goods).

gwern• 15 years ago

A relevant example:

> In the case of Japan over the last decade, we have seen a significant rise in popularity of inferior goods and a decrease in demand for premium goods. Japan’s most notable inferior good of the moment is “third-category beer” — a beer-like beverage with nearly zero malt content that sells for slightly less than real beer. Japanese consumers facing no economic constraint would choose Japan’s most iconic (and not particularly expensive) mass market beers such as Asahi Super Dry or Kirin Ichiban Shibori over third-category beer. So what does it say about the consumer market when Japan will soon have a majority “fake beer” market for malt-flavored beverages? Even with falling demand for beer-like drinks, third category beer is seeing growth. This is a sign that the consumer living standard considered normal just a decade ago has fallen dramatically into a new “basket of goods” that would once have be seen as only appropriate for the relatively destitute.

http://neojaponisme.com/2011/11/28/the-great-shift-in-japane... linking to http://www.cnngo.com/tokyo/drink/2010-looks-bad-real-beer-62...

rayiner• 15 years ago

While the article doesn't offer a lot of hard facts, I think it touches on a larger point that bears repeating: GDP is a completely arbitrary number that does not merit the sort of reverence it gets in the media and political process.

Here's a good example: http://www.google.com/url?sa=t&rct=j&q=does%20the%20...

The paper, among other things, describes how the GDP of the oil-producing nations is dramatically overstated, because most of their oil revenue should really be counted as conversion of capital rather than accessions to wealth.

Not directly relevant to Japan, but part of the overall debate of getting past the use of GDP as a touchstone metric.

jaggederest• 15 years ago

It's great because the very statistics he cites are proof that Japanese consumption has fallen and deflation is still happening. A strong yen is terrible for Japan, they want inflation. A high current account surplus means that they can't find enough demand domestically to sell all their stuff.

tsotha• 15 years ago

Myth my ass. Japanese public debt has gone from about 50% GDP in 1980 to over 200% today. Just like the US (but in spades) the Japanese have maintained the illusion of growth by borrowing it, and the moment they have to go outside the home islands to roll over that debt interest rates will rise and render the illusion unsustainable.

DilipJ• 15 years ago

exactly, plus their once double-digit savings rate dipped into negative territory just recently. As the bulk of their population retires and draws down on their savings, Japan is going to resemble a giant retirement home: serene and crime-free, but isolated and inactive.

danteembermage3• 15 years ago

While I'm sensitive to the overall point of this article the currency appreciation part is an inevitable consequence of domestic interest rates there.

To see why, suppose I have 0 Yen in the form of a 100 Yen note and a 100 Yen loan. Further suppose that the domestic real interest rate is 0 (this is approximately true and will make the math easier, but know this follows even if the interest rate is positive but smaller). As holder of Yen debt and cash, if I invest in a 10 year Yen CD I'd have 100 - 100 = 0 Yen after 10 years time. Alternatively, suppose I convert to dollars at $1 per 100 Yen, invest the $1 in a 10 year CD paying 10% every decade compounded every decade (interest rates are usually quoted in different units but again this will make the math easier). I will owe 100 Yen and I will have $1.10. I can lock in all these transactions today, and other than counter-party risk I will have $1.10 and 100 Yen. If I enter into a contract promising to trade dollars for Yen in the future (this would be a "forward" contract but that's just terminology) the agreed upon future exchange rate had better be $1.10 for 100 Yen for some hedge fundie is about to make free money. So the easy way to make your currency rise 65% is to pay no interest.

This seems like an impossible contradiction until you think though what you would have to do to capitalize on this, slash interest rates. So while this would lead to currency appreciation against other currencies in the long term, it would cause a drastic drop in the short term.

tl;dr; the easiest way to rapidly increase your elevation is to dig a hole with some stairs

Natsu• 15 years ago

> tl;dr; the easiest way to rapidly increase your elevation is to dig a hole with some stairs

Your explanation was interesting, but you totally lost me with that analogy.

meric2• 15 years ago

I'd have thought raising interest rates would increase the currency's price.

Higher interest rate - more money converted to the currency to take advantage of the interest rate, and so the currency becomes more expensive.

danteembermage3• 15 years ago

That is correct, if you raise interest rates you get a sudden and immediate increase in the value of your currency, followed by a slow decline, instead of a sudden decline followed by a long term increase. That's why the increase could be misleading, if XYZ currency goes from trading at the same price as the $US to trading at 1/10 the price and slowly increase up to 1/2 it is true that at some point over the life of the currency it has increased 500% but I wouldn't call that an argument in favor of the economic health of the country. That's essentially what would happen if you drastically slash interest rates as Japan did.

justincormack2• 15 years ago

Just because forward rates are calculated as a risk free arbitrage does not mean the yen has to appreciate.

danteembermage3• 15 years ago

I know it's surprising but it kinda does. If the forward exchange rates were always higher and the spot rates were always flat you could: Promise to sell 100 Yen for in the future $1.10 Wait Buy 100 Yen for $1.00 since the rate didn't change Sell 100 Yen for $1.10 and pocket $0.10 This strategy is by no means arbitrage but given those assumptions it would be profitable on average given those assumptions. So in general, currencies with low interest rates appreciate against currencies with high interest rates over time once the expectations about that currency's rate have reached a stable equilibrium. That last part is important as new information about lower rates would drastically drop the value of a currency just like you'd expect it to.

flocial2• 15 years ago

The problem with this article and any like it is that it equates appearances with substance. To any casual visitor or even resident, Japan looks affluent. The city is clean and safe. People are dressed nicely. However, the truth is that Japan is propping up its economy with soaring debt, funded by the extremely high savings from the better years. The reality is that the economic growth is stagnant and population is declining.

Unemployment is artificially low but the labor market is skewed. There is a substantial number of people seeking full-time employment without success. Many able workers are trapped in contract employment or part-time jobs with low pay (in Japan it's prohibitively hard to fire people once they are "full-time" for whatever reason short of sever economic loss or extremely gross incompetence). If you ever put out an ad for a job opening you'll likely be surprised by the number of over-qualified applicants who have ended up "off the rails" of Japanese society for whatever reason.

One thing the article does get right, is that many Japanese probably feel that the lost decade is a myth as well. That is mostly because people have also learned to downgrade their lifestyles gradually (no need for a car in the cities thanks to public transport, no need for TV thanks to YouTube, NicoNico, piracy, no need to buy video games thanks to mobile gaming/social gaming, etc.).

However, the day of reckoning is approaching on many fronts such as the withering competitive advantage of flagship industries (especially electronics), the rapidly aging population, and soaring national debt. Japan has the highest suicide rate among youth across all industrialized nations and a declining birth rate, whether people acknowledge it or not, there is a large segment of the population that doesn't feel confident about Japan's future prospects.

tokenadult2• 15 years ago

Japan has the highest suicide rate among youth across all industrialized nations

I'd like to know what source you have for this statement, because the last time I checked the issue with World Health Organization figures, the statement you just made was incorrect. The WHO figures are stratified by age groups (which, if followed over time in WHO annual reports, can be tracked as age cohorts), and although Japan has long had a higher AGGREGATE suicide rate than the United States, manifested especially in a high rate of suicide by the elderly (age cohorts born before World War II), it has often in my lifetime had a lower YOUTH suicide rate than the United States. Moreover, in many of the postwar decades the youth suicide rate in Japan was declining while the youth suicide rate in the United States was rising.

Here's a little snippet of a FAQ I prepared in the 1990s to show the youth suicide trend for the United States to that decade: "In the United States, recent studies suggest that between 5 and 10 percent of adolescents have made suicide attempts . . . Suicide is currently the third leading cause of death among 15-to-24-year-olds, . . . Moreover, this incidence has increased threefold from the 1950s to the 1980s (Berman & Jobes, 1991; Fingerhut & Kleinman, 1988) . . ." -- James Zimmerman, "Treating Suicidal Adolescents: Is It Really Worth It?" in Treatment Approaches with Suicidal Adolescents (1995).

As in all such matters, if any participant here can point to current officially gathered statistics by an internationally comparable methodology (for suicide, that is the WHO statistics) with age stratification and a time series for each country, I would be glad to check the details.

flocial2• 15 years ago

"Suicide was the leading cause of death among men age 20–44."

http://en.wikipedia.org/wiki/Suicide_in_Japan

My main source was from this blog (in Japanese) which uses statistics derived from OECD.

http://ameblo.jp/kokkoippan/entry-10238629843.html

VaedaStrike2• 15 years ago

Rather than 'The Myth of Japan's lost Decade' it should be seen as 'The Myth of Japan's Economic Miracle'. Japan is a clipped beauty that, sadly, will eventually wither in the vase of socio-economi-demographic delusion.

Japan is the first major example of a culture that got so caught up in technological, economic, and social success that it forgot to insure it's own cultural perpetuation.

It's success comes from the fact that it's been among the most successful at efficiently consuming it's seed harvest.

Or to put it another way it has what can be termed "Cut Flower Syndrome"

You can cut a flower in a certain way, place it in a well formulated solution and then stick it in a strictly kept cool environment with the right humidity and light levels and a cut rose will last for quite a long time, in fact for the near future it's virtually guaranteed to outshine any flower kept in the field on the plant. It's protected from excesses in sun, rain and wind, from the ravaging risk of the pest or happen-chance calamity.

Look at the numbers.

Total Fertility Rate of between 1.2 and 1.4 (depending on what source you feel like believing the CIA or Worldbank respectively).

Cultures don't survive that kind of fertility rate. The math just doesn't work. Not when you've been below replacement fertility for now coming on four decades. In another four decades their population is set to be what it was four decades back, only this time with a population that, on average, is much older.

Then there's the whole 4-2-1 dilemma that accompanies this. Four grandparents and two parents for one worker to support. Look at a family and you've got up to 8 grand parents, four parents, and then the kids to boot, all supported by, at most, two incomes. If you keep the kids at just one then you're just perpetuating the problem, if you support two kids then you're still in some trouble, if you go to three then the ratio of working bodies to those needing support 1:7.5 -- don't forget Japan's life expectancy at around 80 years.

That's some serious supporting to do. Not to mention the fact that all those older people take significantly more capital to support than children, and we know children aren't cheap.

Japan's economy has been on the rocks since the moment their culture started to slip into making it okay to eat the next generation's seed to improve the living conditions of today. Almost four decades of eating that seed is not something you fix with government programs, and even if immigration was more culturally acceptable you'd still have the problem that the rest of the world has been following Japan in their demographic practices for several decades as well. So even if Japanese who have qualms about foreigners come around to loving people who don't have pure Japanese blood then you have to realize that the motivation for them to leave their homeland will be greatly limited as they too will have family to take care of with limited resources in their own native land.

ido3• 15 years ago

I'm not sure what you suggest the solution is - to have more kids?

GiraffeNecktie• 15 years ago

Perhaps the solution is robotics. A smaller human population is, in very many ways, a very good thing for all of us in the long run.

VaedaStrike2• 15 years ago

Exactly.

Of course having more kids must needs entail more than the acts of conception and birth. We must not merely have more kids but change our way of seeing kids, we have to want to have more kids since merely the physical acts of 'having more kids' without the corresponding investment of human capital in raising them would be among the greatest of crimes.

Isn't it telling to the profundity of the problem when we're initially not sure what to do with a problem so fundamental?

Kind of like an indebted person taking a long time to discover that he must make more money and spend less than he has. The answer is so simple the fact that we find ourselves in the problem can become a self-parody.

The micro-economic reality is that having kids is expensive, time consuming and seen by many as squandering talented people's time, yet how do these talented smart people ever expect to transfer humanity if the next generation is not being produced? Or not being produced in sufficient numbers? We can make all the advancements in the world but if we don't pass humanity on to the next generation in a sustainable way we can just as quickly devolve into what we were a few 100 years back, or worse.

A colony of wild animals has a problem where the most fit members virtually stop having offspring there's either massive mutation of the colony en route or the species is in trouble.

Having and raising kids is a procurement that once you really realize we lack as a society it's already to late to avoid some very extreme consequences.

mark_l_watson• 15 years ago

I was in Japan a year ago and it is interesting to compare things with my country (USA) as far as living conditions: in Japan I saw no homeless people. They keep their roads and parks in beautiful pristine condition. People there didn't seem so friendly to foreigners (but I don't speak the language) but the impression I got was that people in Japan had a contented look (sorry for the generalization, but that was a general feeling I had, being there). My only disappointment with Japan is that I thought that many people in Japan play Go (I love the game) and I talked to no one who played. I should have looked harder for a public Go club.

In my country, we are closing public parks, in many locations the roads are in very bad shape, the fraction of people in college has drastically decreased in the last two decades, many businesses are closing, etc. We have problems just like other countries.

It seems common to diss on other countries. I view my country as being as good a place to live as other prosperous developed countries. Thinking that we are "special" is a mistake. I think that the author's main point is that we have been "propagandized."

gkanai4• 15 years ago

More debunking of Fingleton:

http://www.bloomberg.com/news/2011-12-26/women-beating-men-t...

The Myth of Japan's lost Decade

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