Reconsidering Japan and Reconsidering Paul Krugman
Sunday 12 December 2010
by: Steven Hill, t r u t h o u t | News Analysis
Shibuya, Tokyo. (Photo: - reuben -)
The New York Times is doing a series on Japan, which the Times describes as an examination of "the effects on Japanese society of two decades of economic stagnation and declining prices." Reading the series is about as cheery a task as rubbernecking at a car wreck on I-95, but, unfortunately, the Times series simply repeats the "conventional wisdom" about Japan put out by the same economic experts who missed an $8 trillion housing bubble in the United States, and, in fact, have been wrong on most of the big economic issues over the past two decades.
Look at it this way: In the midst of the Great Recession, the United States is suffering through nearly 10 percent unemployment and 50 million people without health insurance. A new report has found over 14 percent of Americans living below the poverty line, including 20 percent of children and 23 percent of seniors, the highest numbers since President Lyndon Johnson's War on Poverty. That's in addition to declining prospects for the middle class and a general increase in economic insecurity.
How, then, should we regard a country that has 5 percent unemployment, health care for all of its people, the lowest income inequality and is one of the world's leading exporters? This country also scores high on life expectancy, low on infant mortality, at the top in literacy, and low on crime, incarceration, homicides, mental illness and drug abuse. It also has a low rate of carbon emissions and is doing its part to reduce global warming. In all of these categories, this particular country beats both the US and China by a country mile.
Doesn't that sound like a country from which Americans might learn a thing or two about how to get out of the mud hole in which we are stuck?
Not if that place is Japan. During and before the current economic crisis, few countries have been vilified as an economic basket case as much as the Land of the Rising Sun. Google "Japan and its economy" and you will get numerous hits about Japan's allegedly sclerotic economy, its zombie banks, its deflation and slow economic growth. This malaise has even been called "Japan syndrome," a monicker that sounds like a disease to warn policymakers - as in, "You don't want to end up like Japan."
No one has been more influential in defining this narrative than New York Times columnist and Nobel-Prize-winning economist Paul Krugman. Throughout the 1990s, and still occasionally today, Krugman has skewered Japan's economy and its leaders. In the late 1990s, Krugman wrote a series of gloom-and-doom articles, complete with equations, theories and titles like "Japan's Trap" and "Setting Sun," bluntly stating: "The state of Japan is a scandal, an outrage, a reproach. It is operating far below its productive capacity, simply because its consumers and investors do not spend enough."
Krugman was commenting on Japan's so-called "lost decade" of the 1990s, when the Japanese economy was considered sluggish and underperforming. But let's look at some of the Japanese metrics during that time. Throughout the 1990s, the Japanese unemployment rate was - ready for this? - about three percent. Not 30 percent, that's three percent: about half the US unemployment rate at the time. During that allegedly "lost decade," the Japanese also had universal health care, less inequality, the highest life expectancy and low rates of infant mortality, crime and incarceration. Americans should be so lucky as to experience a Japanese-style lost decade.
Reopening the case of Japan raises some important questions. How do economists such as Krugman decide what to value and prioritize, or what to measure? What is an economy for? To produce the prosperity, security and services that people need? Or to satisfy economists and their equations, theories and models? For too many economic Cassandras, if their spreadsheet columns don't add up, if the surplus nations don't balance the deficit nations and the supply doesn't meet the demand, then disaster surely awaits.
Krugman has gone on the attack again recently, this time in a debate over fiscal stimulus versus deficit reduction as a strategy toward economic recovery. As a stimulus hawk, he has written that the Germans - one of the few economic bright spots in a struggling global economy - "seem to be getting their talking points from the collected speeches of Herbert Hoover." He is criticizing Germany for the same reason he criticizes Japan; he says the country is not spending or consuming enough to stimulate its economy.
But what exactly are the Germans or the Japanese supposed to buy more of? Surely Krugman has visited both countries, and it's plainly evident that neither are lacking in any material goods or modern trinkets to speak of. Americans are the only ones who seem to think they need three refrigerators, four televisions and a car for everyone in the household. Too many economists have yet to figure out that it is this consumer-driven economic model that has crashed and burned.
Japan's economy has been and remains successful. Germany's is thriving as well. Unlike the trickle-down US economy, Japan and Germany have reached an economic steady state in which they don't need roaring growth rates to provide for their people, and here's why: they are better at sharing the wealth produced by their economies to foster a more broadly shared prosperity among their populaces.
But for the economic experts, apparently, it doesn't matter if people's needs are being met; what matters is whether their theories and equations balance. It's no different with media outlets such as The New York Times, which has been getting it wrong for years – they also missed an $8 trillion housing bubble, as well as the lie on weapons of mass destruction in Iraq (prompting the Times to issue an unprecedented mea culpa to their readers). In the same way, the Times and the rest of the media have been missing the real story about what is occurring in Japan and Europe.
As a result, there is a commonsense aspect to this story that gets lost amid the rhetoric and the headlines. Two lessons of our times are that economic bubbles eventually burst, and that the environmental consequences of unbridled growth in this age of global warming are severe. The world needs to figure out how advanced economies can provide for their people without relying on roaring growth rates driven by asset bubbles. If consumer-driven growth was the order of the day in the post-World War II era, going forward it is going to be steady-state economic growth - growing not too fast, but not too slowly - and learning to do more with less. Yet stimulus hawks like Krugman don't seem to get this; they want to crank the "growth machine" into full gear with huge government stimulus spending.
But the real game is no longer strictly about economic growth; it's also about sustainability. The era of US-style trickle-down economies is over for wealthy countries because trickle-down is neither economically sound nor ecologically sustainable. The developed nations must lead the way towards a different path of development. This is not an easy challenge, yet it is the course that Japan and Germany have chosen. If the US didn't have such a trickle-down economy that has produced so much inequality - if it was better at sharing its wealth - perhaps it wouldn't need so much fiscal stimulus and growth.
At the recent G-20 meeting in Seoul, South Korea, German Chancellor Angela Merkel rebuffed President Barack Obama and Treasury Secretary Timothy Geithner's appeals to go back to the toxic economics of Wall Street capitalism. Said Merkel, "It is essential to return to a sustainable growth path." One cause of the crisis, she said, was that "we did not have sustainable growth. In many countries growth was built on debt and [speculative] bubbles."
Her finance minister, Wolfgang Schauble, was even more blunt. He described American policy as "clueless" and said the American growth model is stuck in a deep crisis. "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base." Catch the irony: Germany - previously sneered at by US pundits for its "weak and sclerotic" economy - is lecturing America about how to grow our economy. Given Germany's 6.7 percent unemployment (compared to 9.6 percent in the US) and an impressive record at manufacturing things that the rest of the world wants to buy, the Obama administration, as well as Paul Krugman, should be listening attentively.
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Comments
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Seems like an thinly veiled
Sun, 12/12/2010 - 11:30 — Anonymous (not verified)Seems like an thinly veiled attack on Krugman's left oriented economic theories with no actual constructive purpose.
Too bad.
It strikes me that the
Sun, 12/12/2010 - 11:51 — Anonymous (not verified)It strikes me that the article is an effort to cast doubt on Paul Krugman's economic thinking and Keynesian economics and is not really intended for any positive purpose.
Both Japan and Germany have cultures more oriented than ours to taking care of the less fortunate both by government action and by private and business action. This complicates comparisons.
In Japan, labels such as employed and unemployed, may be quite deceiving for some westerners. People who would be dismissed in the West are, in Japan, most often moved to holding companies at reduced wages where they may stay for a long time.
It is difficult to know the true significance of figures such as the unemployment rate in Japan and Germany as compared with the significance of the unemployment rate in the United States.
Despite, or because of, these considerations the article is interesting.
Terrific. I'm a fan of
Sun, 12/12/2010 - 12:12 — JTM (not verified)Terrific. I'm a fan of Krugman, on the whole, but he is operating within a conventional framework, where Growth is the Holy Grail. We need to step back, as you are doing, and ask "growth for what?"
And "growth for whom". Of course most of the growth of the last few decades has been siphoned off by "predatory capitalism".
Unfortunately this perspective is so far from political viability at this point that it's almost fanciful to talk about it. I think that might be Krugman's response or part of it. I'll be interested to see if he comments.
Japan and Germany are also
Sun, 12/12/2010 - 12:44 — KJH (not verified)Japan and Germany are also not spending billions of dollars on defense. Maybe we could redirect some of our defense dollars to health and education, and the economy would take care of itself.
This is a terrible article.
Sun, 12/12/2010 - 13:11 — BT (not verified)This is a terrible article.
Economic growth can be GREEN! A big investment in green technology would stimulate the US economy, reduce carbon emissions and bring down unemployment. But this author instead wants the US to have 10% unemployment forever just so GDP stops going up!
BT, where the actual hell do
Sun, 12/12/2010 - 13:21 — Austin Loomis (not verified)BT, where the actual hell do you get that? It's not from anything I see in the article itself.
JTM, exactly. "Krugman [...] is operating within a conventional framework, where Growth is the Holy Grail. We need to step back [...] and ask '"growth for what [and whom]?'"
Or, to put it another way: "Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus."
It appears that humans in other countries are capable of reaching equilibrium, rather than letting their national stories become the story of a shark's stomach with no ability to comprehend options more complex than "eat or be eaten".
"Unfortunately this perspective is so far from political viability at this point that it's almost fanciful to talk about it." Again, exactly. Americans, in general, literally cannot comprehend any alternative to keep-it-all-ism that doesn't involve five-year plans, two-hour lines for bread and meat, and midnight visits from the secret police.
Krugman doesn't get it.
Sun, 12/12/2010 - 13:42 — Anonymous (not verified)Krugman doesn't get it.
The premise "- if it [the
Sun, 12/12/2010 - 14:27 — Can You Do Simple Math? (not verified)The premise "- if it [the US] was better at sharing its wealth - perhaps it wouldn't need so much fiscal stimulus and growth." ignores the later referenced wisdom of our international peers that it was the endless credit that did us in - this was of course presided over by the massively corrupt Federal Reserve Bank - it had nothing to do with 'trickle down economics'. WRT the sustainability issue, the author needs to familiarize himself with the recent graduates from the Global Warming hall of fame - some of the very scientists who accepted the Nobel with Gore, such as Dr. Lucka Kajfež Bogataj, are bowing out because they declare the theory to be without basis and or promoted via fraud. As for Krugman, Kudos to TO for allowing a frank, if misguided, criticism of that nit-wit.
As someone who has an econ
Sun, 12/12/2010 - 14:47 — rocio (not verified)As someone who has an econ textbook that Krugman wrote, he's still not very much outside of a narrow way of looking at economics.
He's not a Friedman by any means but this article points out that just b/c you're in a "sluggish" period doesn't mean you're worse off than the country w/ the highest GDP with much worse inequality.
Do you really think that a
Sun, 12/12/2010 - 15:12 — bfearn (not verified)Do you really think that a country can be successful if it starts needless offensive wars that kill millions? If it imports far more than it exports? If it imprisons millions of its people for minor offenses? If it allows some to make hundreds more than others and taxes those people at a lower rate? If it is the worlds largest user and exporter of killing equipment? If it is the worlds largest polluter? If it is by far the worlds largest consumer of needless junk? If it has exhausted many of its once plentiful natural resources in a wasteful way? Etc. Etc.
Good luck America, you're going to need it!!
Agree with most of the
Sun, 12/12/2010 - 15:36 — Prissy (not verified)Agree with most of the sentiments above. Another factor to consider is that Germany and especially Japan are a lot more homogeneous ethnically and culturally. Maybe those are ties that really bind and drive social policy with heart and a sense of inclusiveness. Here in the States we have 24/7 media hell bent on divide and conquer, make war not peace, and Fux rallies to restore fear.
Reagan re-engineered the
Sun, 12/12/2010 - 15:49 — Ben Burrows (not verified)Reagan re-engineered the American economy based on the Japanese zaibatsu model. Both the United States and Japan failed to anticipate that their outsourcing of labor to lower-cost labor economies in China and Southeast Asia would undermine their financial institutions as well as their own middle class. Having destroyed their productive manufacturing base, the Japanese economy ran its financial institutions into the ground well before the United States. Stupidly, the United States committed itself to a super-imperial power status which it could not afford, in addition to eviscerating its middle class and manufacturing base. Japan's social choices were set in place largely due to advice from our military government, much as Europe's social safety net was put in place through the same mechanism. Sadly, we could not teach ourselves the lessons that Europe and Japan so eagerly took up following World War II.
Wrong on many levels. The
Sun, 12/12/2010 - 16:04 — BT (not verified)Wrong on many levels.
The author of this article wants an environmentally sustainable economy - a noble objective. But the author advocates the wrong solution: slowing economic growth. The western world needs a return to growth to prevent mass unemployment and the best way to do this is via further stimulus spending by the government. If that stimulus spending is invested in developing green technology, the world will move closer to sustainability.
Japan and Germany are relatively safe in this crisis thanks to their export surpluses, not their welfare states. The USA does not have an export surplus and furthermore it is not possible for all nations in the world to have an export surplus.
Krugman wants the USA to increase its exports, via a drop in the dollar and to get out of the slump with a temporary increase in government borrowing (which creates money) and spending (which creates jobs). Krugman also wants a more equal society, a strong social safety net and a sustainable economy.
The author totally mis-represents Krugman and clearly has no understanding of what a deleveraging crisis actually is, how it leads to falling stock of bank credit, economic recession and high unemployment.
Isn't it about time that we
Sun, 12/12/2010 - 16:09 — Anonymous (not verified)Isn't it about time that we replace the tired and misleading metaphor "trickle down economics" with a new and more accurately descriptive "gusher up economics" metaphor?? The data on income rates in the U.S. during the Reagan presidency and since show that this is really what happened.
Too easy to criticize this
Sun, 12/12/2010 - 16:46 — Ruby Begonia (not verified)Too easy to criticize this analysis. Germany and Japan are net exporters, totally dependent on other countries and specifically the US being a net importer. Japan like China has manipulated their currency for years. In fact China is following the Japanese model of promising then stalling revaluation. Yes, Japan's model was to take care of its own. We could abide by their policy and it would help. But Hill uses this to criticize Krugman. I have never read a Krugman article criticizing Japan's social policy. His criticisms have been that they have not done enough to get themselves out of the low growth rut they have been in, not even close to the same issue. I am sure Steven Hill knows the two issues are different. The question is why does he choose this method to criticize Krugman?
In this world to day, here
Sun, 12/12/2010 - 16:54 — needful things (not verified)In this world to day, here and now, sustained 'economic' growth, the kind greedy american's and the world's elite press for, is nothing short of a form of cancer. And sustained growth anywhere is never possible.
This has exposed krugman, who I thought of as being a better economist than most, as someone who has more ridiculous ideas for the enrichment of the elite and nothing but the crumbs for those who aren't so pepped up on becoming trillionaires as if that is what everyone wants. Not hard to see the impossibility of that, is it.
I would think sense and reasonableness would be a good attribute for individuals and groups or nations or all the people on this planet, but it isn't. The whole of human existence has been driven by greed and the elite of the world who for the most part have obtained their fortunes, have done so by the most devious and unscrupulous means of skullduggery available and they are not about to stop exploiting their 'underlings' for a reasonable, sound and stable economy. They hate the future and want it all in their present here and now. They are the enemies of the planet and all life on it but theirs.
Take time to reflect on what, and it has NEVER occurred on this planet before, what the affects of 7,000,000,000 people really is and the impossibilities it presents.
Each region in the United
Sun, 12/12/2010 - 17:12 — fred fep (not verified)Each region in the United States, or many of them, are comparable to Germany or Japan, to regions, to urban areas.
In Germany, in Europe, each region has a well thought out and implemented transportation network.
Why exactly not here? Barely in some areas. Yet, is the autos per household lower in Portland than elsewhere?
Bush's "shop 'til ya' drop" answer to 9/11 was disassociation due to trauma.
Nixon's Southern Strategy, was, in effect, an outlet for and sanctioned implementation, of bigotry, of intolerance, through Bitburg, et al by extension....up shaving cream creek without a paddle, lost in Palin Reality Show, Obama pretense and artifice....
By the way, arguing in opposition to a Krugman point is not being anti-left if what he's extolling is socialism as casual and expected, and practiced in Germany and Japan. Get real.
The incomensurable here is
Sun, 12/12/2010 - 17:13 — Anonymous (not verified)The incomensurable here is EXPORTS.
Japan and Germany are among the
lead exporter economies. The US is not
(as measured as a fraction of economic activity)
Therefore the lesson for the US is:
start making stuff again! start exporting more!
As someone who has lived in
Sun, 12/12/2010 - 18:49 — Anonymous (not verified)As someone who has lived in Japan for the past 20 years, I just have to laugh Steven Hill's glaring ignorance about the country.
And as for Krugman, while according to whatever economic models he uses, the Japanese don't spend enough, might indeed be true, but what he doesn't realize is that it ain't gonna happen if it ain't happening now. I am constantly amazed at how this country's media/entertainment industry/cityscapes are so wired to try and pry consumer yen out of it's people. There is literally nothing more the powers-to-be can do to change this at this time.
The Japanese are scared about the future. Hiring of new grads is at an all-time low. True unemployment is sky high. The homeless rate is ever increasing. More and more of the younger generation are forced to live at home and mooch of their parents (20-, 30-, & 40-somethings). And just like in the U.S., the wealth is being concentrated more and more into the few hands of a corrupt elite.
Within the next couple of years, the government will raise the consumption tax (a tax on all goods [currently 5%] sold--even the fee for after 5 p.m. ATM withdrawals), and when this happens, consumer spending will plunge. And on top of this all, the pension scheme is falling apart--people are scared to death that all the money they put into retirement, slaving at their jobs, won't be there for them.
The only thing that will save Japan now is either 1) kill off their old folks or 2) open the doors to immigration. But there is a lot of xenophobia/racism here to overcome before a multicultural Japan with tons of gaijin swirling about is ever realized.
@ needful things Those
Sun, 12/12/2010 - 19:14 — BT (not verified)@ needful things
Those worried about global population growth and its destructive effect on the environment should consider this:
Advanced countries have relatively low birth rates and only grow through immigration.
The solution to global population growth is to lift the world out of poverty and educate it. This requires global economic growth, but that growth can be solar powered, wind powered, nuclear powered and environmentally friendly.
We just need to develop green technology and spread it globally.
Stereotype-breaking article
Sun, 12/12/2010 - 20:08 — JadeQueen (not verified)Stereotype-breaking article and comment threads--I read with interest.
I liked the gusher- or siphon-up analogy over trickle-down. We now have yelling and leaking up as well.
And even some yelling down, as friends have described their meeting with a person who is supposed to represent where I live.
Lifeblood is sucked out of Main Street, and then D.C. pretends to give it back by giving it to their friends or to important generals or other persons presenting themselves as needing things, though flying in in your personal jet has become somewhat incorrect.
Perhaps truthout should have a name-the-screwflation phenomenon contest as a fund-raiser.
Maybe it could be kinda like the shoe-throwing contest online that the U.S. won even over Iraqi citizens, if the online counts were correct. You could really go world-wide with this.
Democracies and empires seem to have had these issues with bribe- and screw-flations.
Between bribe-flation and the screw, I am not sure which is worse. Both are incredibly stressful, even for the bribers and screwers, though the bribers and screwers can probably afford to drink more.
I'm a bit hesitant on
Sun, 12/12/2010 - 21:13 — tomo (not verified)I'm a bit hesitant on challenges to Krugman. Most of what I've seen lately by him has been on the stimulus issue. If he's addressed Germany or Japan lately, it's been in order to make a point about the stimulus. Any lawyer's brief may be a bit imprecise in the analogies it raises. I don't think Krugman despises what the Japanese or the Germans have been up to. How could he? He's much too occupied with our own glass house to go about throwing stones. As for growth--remember Paul is a Keynesian, not a Friedmanite; that is to say, his economic thinking is conducted out of a concern for his fellow mortals. Paul wants more CIRCULATION of money in our economy, more EQUALITY in our society. He thinks a generous stimulus package could bring that about. So do I.
The U.S. will forever miss
Sun, 12/12/2010 - 21:50 — Paul W (not verified)The U.S. will forever miss the oint. You are so wired to consumerism, you don't seem to realize it's bled you white.
Not to mention, when all your government spending is dedicated to producing and selling weapons and conducting wars, there's not much chance for export of anything except bombs, missiles,planes and guns. And God knows, you are the world champions at that.
All the other things mentioned in this article, like universal healthcare, consumption taxes, decent public education and the like, are nothing but thinly-veiled "Commie-Marxist plot" stuff, right? And we all know that the U.S. will never, ever, as long as it exists, acknowledge that those have any value whatsoever.
Capitalism sucks. It sucks the money from everyone in the poor and middle classes, up to the few fatcats at the top. Do they want that to change? Not on your f***ing life!!! Not now, not ever.
Hope and change? Not in America, not in your lifetime. Not ever. Sorry about that.
Share International magazine
Sun, 12/12/2010 - 21:53 — Alturn (not verified)Share International magazine in April 1989 commented on the causes of the Japanese crash. Maitreya is the head of the Spiritual Hierarchy of Masters:
"The coming stock market crash
The impending stock market crash is an outcome of commercialization. In Maitreya’s view commercialization means making money while others starve. The moment you are taught ‘the art of selfishness’ you cease to follow your destiny, which is to be aware of yourself. Those who cultivate rules and regulations that lead to nothing but selfishness eventually create a bad smell. This cannot be hidden for ever. When corruption takes place, people become aware of the smell, hence the process of disintegration taking place in Japan now. The press is no longer quiescent. The people are no longer complacent. This type of culture (that created this state of affairs) will disappear. The end of commercialization is now at hand."
"As already announced (Share International, December 1988) a world stock market crash will begin in Japan. Maitreya reiterates: a stock market crash is inevitable. The end is in sight. Stock markets are like gambling casinos where everyone is ‘hooked’ on the drug of making more and more money.
They even hide their wealth and create a criminal atmosphere. This is a bubble that is about to burst."
I don't envy the Japanese
Sun, 12/12/2010 - 22:38 — Anonymous (not verified)I don't envy the Japanese too much. They're living better than we are right now, but it won't last. Japan's birth rate is in the tank - in 2008 it was just 1.37 births per woman. In most countries you need 2.1 births per woman just to maintain a stable population. Demographically, Japan is literally going to fall off a cliff in the coming decades. Although environmentalists may cheer the prospect of major population declines, a decline that severe and that fast is only going to play havoc with Japan's society and economy. Nobody knows the future, but if present trends continue it is not inconceivable that the Japanese as a culture could be more or less extinct a few centuries from now.
It seems that Krugman and
Sun, 12/12/2010 - 23:28 — Anonymous (not verified)It seems that Krugman and Robert Reich are into the whole growth thing. They appear not to realize that such a thing is all over. We are now in the phase of paying the piper for all such pro-growth nonsense. What the world needs is not more economists and their theories but more vasectomies, tubal ligations and family planning. We need an economy that cares about its people not creating a paradise for the obscenely wealthy. They have been raised on a diet of get what you can and to hell with anyone else. At the end of the day the piper waits for all who endorse and vote for their own bitter end. How tragic it is and how needless.
This criticism of Krugman is
Sun, 12/12/2010 - 23:45 — j r abbott (not verified)This criticism of Krugman is overwrought and seriously lacking in contextualization. Of course Japan's economy and social system are structured very differently than those of the US, in ways that mainly work to Japan's advantage. The question however is what would happen should a Japanese-style deflation become endemic to the US economy -- an economy that lacks Japan's social safety net and emphasis upon producing goods the world actually needs. The social impact would be devastating, and as we've already seen, there is no reason that Americans are capable of drawing the right kind of conclusions from their economic immiseration.
Lacking as it does adequate contextualization, this critique of Krugman seems petty, tendentious and frankly irrelevant.
"Americans are the only ones
Mon, 12/13/2010 - 01:55 — Anonymous (not verified)"Americans are the only ones who ..think they need three refrigerators, four televisions and a car for everyone in the household."
If you believe anyone outside the upper-middle class is living like this, you listen to too much propaganda.
Most people in the mid 20's and early 30's are still forced to make arrangements with roommates to afford a damn apartment. We don't use TV's, we consolidate the functionality of all electronics in a single computer.
(continued)
(continued) As for a car.
Mon, 12/13/2010 - 01:55 — Anonymous (not verified)(continued)
As for a car. This is the US. germany and japan have five star public transit, as in, actually practical. venture outside NYC, SFC, or LA, and you may as well walk rather than take the bus. Barring a very large spending program on the scale of the interstate program to make public transit frequencies tolerable, cars are the ONLY way to practically get around for 99% of americans.
"i think america should
Mon, 12/13/2010 - 02:04 — Anonymous (not verified)"i think america should start thinking of investing in public transportation and could create a thousand job for the jobless."
that would involve taxation to help your fellow man. Didn't ayn rand teach you anything? They're lazy, YOU are the ONLY industrious person ever born into this world, and you'll be damned if you give a dime for their sake.
it would also involve the distinct possiblity you might end up on a train or bus with one of those "undesirable" ethnicities. Gotta love the embedded racism lurking beneath the surface of US society.
The statistics from japan
Mon, 12/13/2010 - 02:11 — Anonymous (not verified)The statistics from japan regarding mental illness and unemployment are skewed.
Many "children" in japan end up living with their parents, and settling for insults (i dare not call them jobs) which don't provide a living wage.
There is an epidemic of social isolationism. The people who engage in this, called "hikikomori" or "NEET", live as parasites on their family's dime, not bothering to seek employment and in the most extreme cases never leaving their rooms.
Japan has a whole stew of social maladies simmering beneath the surface. It's hidden there in the same way racism is hidden in northeastern and western coastal cities in the US.
Krugman's Keysianism is of
Mon, 12/13/2010 - 03:47 — dipconsult (not verified)Krugman's Keysianism is of course correct - you don't starve a depression (which is what this is. The key surely is government encouraged investment - which Krugman also supports. But that implies investment in the new world that is being born with climate change, oveir-population, etc. etc. including the ending of American dominance. That means - as so many point out - investing in education and energy saving (like the Chinese), carbon emission reduction, and infrastructure for a less motorised future. All this new-direction-investment will greatly stimulate job creation in the right way.
But all this also means accepting that ever increasing consumption is not the path of the future. Non-essential consumption only leads to imports from low wage economies and loss of local jobs.
Immensely important is a return to much greater equality - the one percent with ever increasing share is not the way to the future because trickle down hardly trickles at all.
It's the way to even greater divisions in society - no prescription for a stable future.
You have touched upon some
Mon, 12/13/2010 - 10:41 — Anonymous (not verified)You have touched upon some good points. Namely that we need to embrace a steady state economic model, at least in terms of the consumption of actual physical commodities like energy and minerals. The current paradigm does not work and is no longer sustainable.
I would argue though that while Germany and Japan have more compassionate and homogeneous societies, their wealth is based on exports and over-consumption by other nations. In their current form they are still part of the problem.
Good point. Krugman, while
Mon, 12/13/2010 - 11:04 — FredJ (not verified)Good point. Krugman, while brilliant and progressive, still operates in the past. He is arguably a "realist", compared to more modern viewpoints.
The fact is the planet's resources are limited. The insults it can take are limited.
Therefore "growth" should stop. Yet some people need to grow, need to have more stuff. That means others, who have too much, will do with less. Less Chinese-made plastic stuff, though, doesn't mean a decrease in standard of living. Less driving through traffic jams doesn't mean less freedom. Etc.
Certainly countries who redistribute what wealth there is better, who plan transportation and industry wisely, who organize education well, have a lot going for them. They may not be growing their GDP, or even have a very high GDP per capita, but overall they may have a better life, and a more sustainable way of life, than the USA does.
It is all the more important that democracies show the way, lest China become the model. People in nonwestern world may in fact be tempted by a totalitarian regime, which may be perceived to address inequality and ecology more forcefully.
Wow. This article totally
Mon, 12/13/2010 - 12:43 — JayK (not verified)Wow. This article totally misses the point on both Japan and Germany. Both of them have managed to keep unemployment lower then here in the USA because they run _large_ trade surpluses. It is simple accounting that it one country has a trade surplus, one or more others _must_ have trade deficits. IOW, neither Germany nor Japan have somehow magically developed a "steady-state" economy: they only do as well as others (i.e. the USA and Europe minus Germany and France) do poorly!
Japan maintain low
Mon, 12/13/2010 - 18:47 — aliena (not verified)Japan maintain low unemployment because they had huge budget deficit.
Germany is against deficit spending and is killing it's neighbors that need this spending because they don't export as much as Germany.
"in today’s world, where everyone is trying to get rid of debt, no one wants to borrow that $100. This is just what happened during the Great Depression, and also what happened to Japan in the 1990s.
But Japan was smart: the government borrowed and spent $100 instead, keeping the money flowing. Even though it increased the government’s debt by 460 trillion yen, it sustained over 2,000 trillion yen – “making it a huge bargain,” the understated Koo points out. On the other hand, cutting spending and government deficits will have the opposite, devastating effect."
http://financialservices.house.gov/Media/file/hearings/111/Koo%207_22_10.pdf
In an earlier comment above
Mon, 12/13/2010 - 20:23 — tomo (not verified)In an earlier comment above I intended a kind of "tactical" defense of Krugman. Both dipconsult and FredJ take on a wider, more strategic context. I am very impressed with the points they make. I don't think their points tell particularly against Krugman. We as a people have not paid much attention to the observations they make about growth.
What they say is very important. I wish their insights were at the center of our discourse. I thank them for putting them out there. I hope they will continue to do so.
How much of their GDP has
Tue, 12/14/2010 - 01:23 — Baldski (not verified)How much of their GDP has Japan & Germany spent on their defense?
Everytime we suggested Japan share more of the defense chores, they trot out the treaty we imposed on them limiting their military.
Unintended consequences?
"Americans are the only ones
Tue, 12/14/2010 - 19:45 — Anonymous (not verified)"Americans are the only ones who seem to think they need three refrigerators, four televisions and a car for everyone in the household."
Or, as in my neighborhood, two extravagantly decorated recently-cut immature Xmas pine trees, one prominently displayed in the large front picture-window, and the second placed outside, only steps away from the first in the large front picture-window.
I guess the message is: they've made it, so viva la Xmas!
There are two fundamentally
Mon, 12/20/2010 - 17:02 — Kelly (not verified)There are two fundamentally different ways of viewing the economy:
1. We exist to serve the economy
2. The economy lives to serve us
The ruling dogma among American economists is #1. Perhaps the Japanese and Germans subscribe to #2.
If your paradigm and dogmatic thinking follows #2, then Japan and Germany have been stupendously successful, and America is a phenomenal failure. If you adopt the #1 approach, then it's vice-versa.
What you see depends on where you stand.