The Myth of Japan's 'Lost Decades'

As an business major myself and having lived in Japan for 5 years, I was a little surprised to see no sign of a lost decade anywhere. I come from one of the riches regions in Europe (Salzburg) and I found the living standards in Japan to be at least on par. I lived in Tokyo, Osaka, Hiroshima and Nagano so far.

In my opinion the Author's explanation is a little misleading. He overlooked the most important factor: "Demographics". I am referring to the article at http://www.europeanvoice.com/article/2011/january/the-japan-...

Looking at the working age population, Japan is doing surprisingly well, better than the US, or Europe.

Despite the rapid decline of the working age population and the infamous long life expectancy Japan achieved economical growth. In other words there are considerably fewer Japanese working than a decade ago, but those few manage to make everyone in the country richer.

I agree with the author, Japan's 'Lost Decades' seems to be a myth.

I think this myth is largely believed within Japan, too, at every level of Japanese society I have access to. (From retirees to college kids to governors.) That doesn't make it true, but I'd be careful about characterizing it as wily Asians trying to pull one over on whitey. (Japanese cell phones in Chinese paper boxes counting as Chinese cell phones, on the other hand, is totally according to plan.)

Japan spent a decade or more working off the debt that it's citizens had, just as the US is taking a long time to get its citizens out of financial trouble.

The government eventually rescued the private sector by building railways to no-where. That's still causing problems, as they have to spend tax revenue paying interest, not paying for healthcare or research (or tax cuts).

The excessive debt shouldn't have been there in the first place.

Of course, it's not all bad news, and Japan has grown in some ways (despite competing with Korea and China), but its high trade balance is the result of abused consumers (who were first conned into taking in giant loans for their houses, then taxed so the government could rescue lenders), not of great economic strengths.

Lost decade or not, it is impossible to do a startup in Japan. We tried a few months ago, with 2 Japanese classmates. Even though they both spent significant time in the US, they could not say "no" and would not take any risks. If in doubt, be conservative was their mantra. Releasing a mobile app for a conference, we just needed to list the names and companies of people attending, no contact info. It was in the spec from the beginning. At the last second, someone got scared that someone might object, and although there was no evidence, they refused. So we couldn't test the app and we ended up abandoning. There is so much fear among the young.

Debate the macro economics all you want, but there is no doubt this generation is already lost.

Regardless of any of his other points, I almost stopped reading when I came across this artifact of the 90s,

"The Japanese boast the world's most advanced cell phones, and the biggest and best high-definition television screens."

Maybe we can give him the benefit of the doubt and assume he just doesn't know anything about tech, but is he trying to say that Galapagos phones are more advanced than (Apple/Android/WebOS/Windows/etc) smartphones?

And for TVs, I guess he's just trying to say that he thinks Sony and Sharp are bigger and better than Samsung, LG, etc?

These are the kind of empty statements that make you sound like an amateur and completely detract from your point even if you have a valid argument.

Wait, why is the author saying that defaltion (or "a strong currency") is a sign that the economy is doing well. And likewise why do they think that exporting much more than one inports is a good thing?

I stopped reading the article when I hit "Given that Japan's current account surplus (the widest and most meaningful measure of its trade) ...".

A positive current account balance is pretty useless figure for the robustness of a country's trade. A country could have extremely robust foreign trade and have a zero or negative current account balance.

The US, for instance, during our economic boom times often (always?) had a negative current account balance.

And if I were analyzing the Japanese economy, the giant current account surplus would give me pause because it begs the questions:

a.) Why are the Japanese not importing more? b.) Why aren't foreign companies making more capital investments in Japan?

Each of which contribute as much to the enormity of the capital account surplus as their healthy amount of exports.

If you don't think they are lost now, then take a look at their absolutely hideous public debt numbers (which was incurred when the government transferred private bank debt on to the public balance sheet and built the original bridges-to-nowhere to unsuccessfully fight deflation).

http://money.cnn.com/2011/01/27/news/international/s_p_japan...

The author calls the misrepresentation of Japan's economy in the USA a "media myth," but I would simply call it propaganda reinforcing the idea of American "exceptionalism." If you make people in a country think that they have it better than everyone else then they won't complain about things that with clear thinking they would complain about.

Assuming this article is correct, I don't understand why any political leader would not 'fix' the growth calculations to be rosier. Surely there are great political incentives to do so, the Japanese parliament has really unpopular leaders basically all the time. Do the bureaucrats really have THIS much power that PMs are basically forced to sacrifice themselves for trade policy?