Post Reply  Post Thread 

Is Japan the Country of the Future Again? by Paul Krugman

Author Message
Helsworth
Heathen
****


Posts: 8,854
Words count: 1,597,451
Group: Super Moderators
Joined: Nov2008
Status: Offline
Reputation: 146
Experience: 859
Glory Points: 260
Medals: 11

Post: #1
Is Japan the Country of the Future Again? by Paul Krugman

In the broad sense, surely not, if only because of demography: the Japanese combine a low birth rate with a deep cultural aversion to immigration, so the future role of Japan will be severely constrained by a shortage of Japanese.

But something very odd is happening on the short- to medium-term macroeconomic front. For the past three years macro policy all across the advanced world has been dominated by Austerian orthodoxy; even where there haven’t been explicit austerity policies, as in the United States, fear of deficits has led to de facto fiscal tightening, while monetary policy has fallen far short of the kind of dramatic expectation-changing moves theoretical analysis suggests are crucial to getting traction in a liquidity trap.

Now, one country seems to be breaking with the orthodoxy — and it is, surprisingly, Japan:

The Japanese government approved emergency stimulus spending of ¥10.3 trillion Friday, part of an aggressive push by Prime Minister Shinzo Abe to kick-start growth in a long-moribund economy.

Mr. Abe also reiterated his desire for the Japanese central bank to make a firmer commitment to stopping deflation by pumping more money into the economy, which the prime minister has said is crucial to getting businesses to invest and consumers to spend.

“We will put an end to this shrinking and aim to build a stronger economy where earnings and incomes can grow,” Mr. Abe said. “For that, the government must first take the initiative to create demand and boost the entire economy.”
This is especially remarkable because Japan has been held up so often as a cautionary tale: look at how big their debt is! Disaster looms! Indeed, back in 2009 there were many stories to the effect that the long-awaited Japanese debt catastrophe was finally coming.

But, actually, not. Japanese long-term interest rates rose in the spring of 2009 because of hopes of recovery, not fear of bond vigilantes; and when those hopes faded, rates went back down, and are currently well under 1 percent.

Now comes Shinzo Abe. As Noah Smith informs us, he is not anybody’s idea of an economic hero; he’s a nationalist, a denier of World War II atrocities, a man with little obvious interest in economic policy. If he’s defying the orthodoxy, it probably reflects his general contempt for learned opinion rather than a considered embrace of heterodox theory.

But that may not matter. Abe may be ignoring the conventional wisdom on spending, and bullying the Bank of Japan, for all the wrong reasons — but the fact is that he is actually providing fiscal and monetary stimulus at a time when every other advanced-country government is too much in the thrall of the Very Serious People to do something different. And so far the results have been entirely positive: no spike in interest rates, but a sharp fall in the yen, which is a very good thing for Japan.

It will be a bitter irony if a pretty bad guy, with all the wrong motives, ends up doing the right thing economically, while all the good guys fail because they’re too determined to be, well, good guys. But that’s what happened in the 1930s, too …

by Paul Krugman


https://www.patreon.com/SerbanVCEnache
11.01.2013 15:11
Find all posts by this user Quote this message in a reply
Liberty90
Junior Member
*


Posts: 27
Words count: 1,488
Group: Basic
Joined: May2010
Status: Offline
Reputation: 0
Experience: 95
Glory Points: 0
Medals: 0

Post: #2
RE: Is Japan the Country of the Future Again? by Paul Krugman

Japanese government tried new stimulus spending policies many times in the last 20-years, and nothing good come from it.

Taiwanese economy is in better shape, without such policies and with public debt around 40 percent of GDP.

https://www.cia.gov/library/publications...os/tw.html
Taiwan
GDP per cap: $37,700
Growth:
4% (2011 est.)
10.7% (2010 est.)
-1.8% (2009 est.)

https://www.cia.gov/library/publications...os/ja.html
Japan
GDP per cap: $34,700
Growth:
-0.8% (2011 est.)
4.5% (2010 est.)
-5.5% (2009 est.)


Sorry for my bad english.

This post was last modified: 14.01.2013 02:56 by Liberty90.

14.01.2013 02:54
Find all posts by this user Quote this message in a reply
Cal
Member
*


Posts: 56
Words count: 6,781
Group: Basic
Joined: Jun2010
Status: Offline
Reputation: 3
Experience: 1036
Glory Points: 0
Medals: 0

Post: #3
RE: Is Japan the Country of the Future Again? by Paul Krugman

Wasnt it very similar free-market policies to Taiwans' that got Japan into the lost decades in the first place? Along with the Asian crisis?

14.01.2013 05:50
Find all posts by this user Quote this message in a reply
Helsworth
Heathen
****


Posts: 8,854
Words count: 1,597,451
Group: Super Moderators
Joined: Nov2008
Status: Offline
Reputation: 146
Experience: 859
Glory Points: 260
Medals: 11

Post: #4
RE: Is Japan the Country of the Future Again? by Paul Krugman

@Liberty90
They din't try spending stimulus, all they tried was Quantitative Easing. They've been confronting themselves with deflation, with too much savings, despite keeping the interest rates near 0%. Quantitative Easing is not spending stimulus, it's purely a financial operation with a desired monetary effect. By issuing bonds, the government gets the overnight interest in the market at the desired target. Despite having 0 rates, they still didn't have inflation, nor the desired growth effect. All they proved was that QE is useless. This new PM is attempting to increase the deficit at a times when austerity is supremely preached in the west. This will satisfy the need of the private sector to save, provided the new deficit is large enough to meet that desire. Inflation will be the yard-stick. If you don't have it, spend more/tax less, till the pressure appears. Then get the foot off the pedal, and let the private sector do its thing.


https://www.patreon.com/SerbanVCEnache

This post was last modified: 14.01.2013 10:45 by Helsworth.

14.01.2013 08:04
Find all posts by this user Quote this message in a reply
YacobiI
Junior Member
*


Posts: 28
Words count: 632
Group: Basic
Joined: Dec2012
Status: Offline
Reputation: 0
Experience: 21
Glory Points: 45
Medals: 2

Post: #5
RE: Is Japan the Country of the Future Again? by Paul Krugman

China, is the country of the future, hands down...........

14.01.2013 14:46
Find all posts by this user Quote this message in a reply
Aidan
Junior Member
*


Posts: 4
Words count: 77
Group: Basic
Joined: Jan2013
Status: Offline
Reputation: 0
Experience: 0
Glory Points: 0
Medals: 0

Post: #6
RE: Is Japan the Country of the Future Again? by Paul Krugman

I think it will no be so easy for japan to retain the same growth rate as was before.Know its difficult compete with china in the region.But if Japan Government reviews its policies regarding immigration then it might be helpful for the economy of the country.

16.01.2013 14:57
Find all posts by this user Quote this message in a reply
Post Reply  Post Thread 

Possibly Related Threads...
Thread: Author Replies: Views: Last Post
  Paul Krugman's ideas are part of the problem Helsworth 1 1,271 15.01.2017 03:13
Last Post: VineFynn
  Japan in the early 30s used Chartalist policies to get out of the depression Helsworth 2 1,290 09.01.2017 01:50
Last Post: VineFynn
  Japan's high Debt-to-GDP Ratio RinNatsume 1 1,794 07.09.2016 08:30
Last Post: Ajay Alcos
  Scott Fullwiler: Paul Krugman - The Conscience of a Neo-Liberal? Helsworth 0 1,356 12.01.2015 17:43
Last Post: Helsworth
  What caused Japan's Lost Decade? RinNatsume 1 1,272 12.11.2014 10:55
Last Post: Helsworth
  Philip Pilkington: Krugman Still Wrong on Monetary Theory (Loanable Funds Edition) Helsworth 0 1,629 16.09.2014 09:28
Last Post: Helsworth
  Krugman's misleading trivialization of the capital controversy Helsworth 0 1,156 26.04.2014 14:29
Last Post: Helsworth
  CEPR on Krugman's Bubbles and Secular Stagnation Helsworth 0 1,484 26.09.2013 15:11
Last Post: Helsworth
  Michael Hudson on Modern Monetary Theory, describing Paul Krugman for what he is Helsworth 2 2,257 05.07.2013 16:04
Last Post: Helsworth
  Ron Paul tells the real reason for the oil prices (sort of) Helsworth 2 1,445 16.04.2013 23:04
Last Post: Helsworth

View a Printable Version
Send this Thread to a Friend
Subscribe to this Thread | Add Thread to Favorites

Forum Jump: