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Comment by viburnum | Hacker News Reader

Nobody tell the author about Japan.

Could you elaborate on your point? It sounds like you have something interesting to add to the discussion, but it's getting lost in snark. I for one would like to know what Japan can teach us about this question.

There's this optimistic notion that we'll just bounce back from any setback and continue economic growth.

Japan had the same thing happen that we're seeing now in the 1980's -- and never recovered.

They’re facing a unique economic situation where their economy isn’t growing and prices are decreasing. When prices decrease, people hold on to their money (after all, it will have more buying power in the future). When people don’t spend, the economy slows down. They tried lowering interest rates to $0 to try to motivate spending...hasn’t worked. They give stimulus a lot and have expirations on the debit cards they give to force spending...doesn’t really work. They’re running out of tools to get the economy growing again. This is the reason central banks aim for 1-2% inflation - it encourages spending which is good for the GDP.

Japan:

- rapidly aging population (senior citizens don't buy anything, don't participate in labor force)

- women with a job have zero incentive to get married or have kids because of many cultural restrictions on married women (historically they lose their job, and husbands are home very late.) They buy their own condos now and stay single.

- consumer companies missed the Internet boom (Apple stole Sony's lunch)

- Japanese are legendary savers, not spenders. (It's considered shameful to not have $100k in the bank at all times.)

- govt is holding trillions in corporate stock and bonds to prop up their capital markets.

How much of this is cultural (e.g. valuing long-term planning / saving) versus mechanical?

EDIT: this thread has some insight. https://news.ycombinator.com/item?id=26171294

We need this for the whole world if we want to stay within ecological limits and avert the worst horrors of climate change. GDP is bad news

And yet, how is quality of life in Japan?

Pretty sh*tty if you don’t land a coveted salaried position out of college. Seriously, read up on the generation of workers who can only get part time work, they feel like outcasts in their society. About equivalent to our Gen X and Gen Y. When Japan’s economy was booming everyone got salaries jobs for life. Now only the most qualified do and everyone else is forced to scrape by on part time work that’s highly regulated by the government in terms of hours worked.

Japan dropped interest rates to zero about 20 years ago. They still do not know how to get out of this.

When the AUD was on a high a while ago there were stories about Japanese housewives in the forex trade buying AUD for our 6% interest rates.

Low interest doesn't help if you can just send all that money overseas.

Aren’t Americans too “spendy” to have that happen here? The main driver of the stagflation in Japan is that they’re too thrifty - their stimulus are literally expiring credit cards, forcing people to spend money.

It's important to think about the "spendy" / "thrifty" thing as being partly-- maybe mostly-- demographics. Young people are spendy, borrowing against future earnings, old people are thrifty, counting on assets to support them.

Japan is in demographic decline. The US keeps growing demographically, but it does because of immigration. If the US has less immigration the chances improve that it will stagnate economically like Japan.

I don't know if any of the things I am describing are good or bad. But a lot of our assumptions about how the US economy "always" is are based on 300 years of population growth.

The US still has MASSIVE amounts of un-developed land that our population can grow into and utilize in all sorts of ways. Have you ever driven across the midwest? Soooooo much land just being wasted...

Japan, on the other hand, is an island...

Used to be during the 1980s bubble era of Japan that you'd wave hundred dollar bills at taxis to wave them down.

Japan wasn't always thrifty. This was a cultural change induced by the bursting of the bubble.

A generational cultural change could just as easily happen to the USA too.

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