June 19, 2006

The Japanese Miracle, Again?

The Japanese Miracle, Again?

3 Quarks Daily — which, true to its name, is one of our daily reads — pointed recently to an interesting article on the Japanese economy by UCLA business professor Sanford Jacoby.

Japan pulled out of its economic slump in 2002 and now figures among the fastest-growing developed economies. So why has the story of this turnaround been such a sleeper in the U.S.? Jacoby suggests it’s in part because Japan’s recent success is “controversial,” the result of strategies rather different from ours. In other words, that it’s surprising and somehow difficult to accept — and therefore not heavily covered by American media.

Which bring us to the meat of it: is the U.S. model of capitalism really the best and only way? How does Japan’s differ — and what could it teach us? Shouldn’t we be paying closer attention to one of the strongest Asian economies, especially when it’s the economy of our closest regional ally…and happens to be China’s biggest trading partner?

Extra Credit Reading
Sanford M. Jacoby, Japan’s alternative economics, Le Monde diplomatique, June 2006.

(Thanks, 3 Quarks Daily)

Sanford M. Jacoby, Look who’s back in the passing lane, International Herald Tribune, March 17, 2006.

The rising sun leaves some Japanese in the shade, The Economist, June 15, 2006.

(Thanks, sidewalker)

Uneven recovery in Japan, The Economist, May 4, 2006.

Chalmers A Johnson, MITI and the Japanese Miracle, Stanford University Press, January 2004.

(Thanks, Cave_Blogem)

Weighing in on the Japanese economy, International Herald Tribune, May 31, 2006.

Rebecca MacKinnon, Japan’s recovery: where next?, Forumblog.org, June 13, 2004.

Taro Akasaka, Japan Economy Outlook: Recovery to Last Through 2012, Japan Real Estate Blog, November 1, 2005.

Japan’s Dangerous Savings Drought, BusinessWeek, June 9, 2006.

(Thanks again, sidewalker)

Related Content

  • Brian

    I quite enjoyed the article. Paul Krugman in his articles has broached this subject a number of times (not in recent memory though).

    While the U.S. does very well economically, its arrogance around the “greatness� of their model is infuriating. Especially when the Washington Consensus is largely driven by ideology and not reality. I think two decent books that deal with the subject well are Joseph E. Stiglitz’s ‘Globalization and Its Discontents’ and Paul Krugman’s ‘Return of Depression Economics.’

    I should mention, for fairness, some competing arguments but I can’t think of anything off the top of my head.

  • To round out this discussion a bit, readers might want to take a look at this article from the Economist. With a growing income gap, huge government debt, high unemployment among the younger generation, an a looming demographic crisis, talk of a miracle shouldn’t even be part of the question.


  • On second thought, one could imagine that it is a miracle that Japan could climb out of its long recession without having fully adopted harsher neo-liberal economic policies. But this is also no miracle. The crisis in Capital was overcome by a massive devaluation through bank write-offs, by reducing the cost of labour with unpaid work, by shifting from full-time employment with benefits to non-regular employment, by expanding capital investment overseas, and by further shortening the production-consumption cycle with more throw-away goods and amusements. None of these are new methods.

    The socio-economic impact was lessened because people could draw on their savings (see link below), many unmarried people under 30 still live with their parents and can help out with expenses, families have fewer children, mothers could find jobs in convenience stores, the government created many make-work programmes, and, YES, because Japanese companies take a softer or more gradual and consultative approach to tossing workers when quarterly profits decline.

    On savings:


  • It is very timely to take a closer look at different “models” or socio-cultural forms of capitalism, not because “Japan is back,” as Jacoby suggests, but rather because socialist governments in Latin America and Islamic nations are attempting to brunt if not counter the mal-distribution and exploitation of the slash & burn American form.

    These, rather than the case of Japan, offer perhaps a different paradigm. This is not to say they will succeed or will create more egalitarian and participatory societies. The global cultural economy is a creative-destructive raging river that has little regard for social institutions that try to direct its course through slower irrigation channels that bring relief to those who can’t dip their hands in the river of plenty.

  • Cave_Blogem

    I agree that it is “timely to take a closer look at different ‘models,'” but not necessarily for the reasons Jacoby or sidewalker give. I think the important consideration is that people in the US are so steeped in free-market ideology that they can no longer reason constructively about economic matters. During the Cold War we at least had a conception that there was a different (albeit deeply flawed in the popular imagination) way to run an economy. Then the wall came down and the blinders went up. Thomas Frank, in _One Market Under God_, documents the increasing pervasiveness of the market mindset during the late 1980s and 1990s, with particular attention to the ways that media organs like _Business Week_ promoted it.

    Japan’s economic “miracle” was carefully and ably analyzed by Chalmers Johnson’s _MITI and the Economic Miracle_ and a series of essays collected and republished in _Japan: Who Governs_. Brian noted that Paul Krugman periodically wrote about the Japanese economy, but I think that most of his work on Japan came before he started with the _New York Times_. That work was, for the most part, collected in _Pop Internationalism_, an indictment of Johnson and the Clinton Administration. His criticisms of Clinton were fairly accurate, but I think he missed many important features of Johnson’s analysis.

    I have a feeling that Japan is socioeconomically more prosperous than the US right now. But GDP growth certainly won’t decide that issue. We need some other way of measuring prosperity.

  • Brian

    I enjoyed reading both articles. And to comment on Cave Blogem’s entry, yes, I believe that it was during Krugmen’s time writing for Slate that he commented on Asia and specifically Japan.

    First I should say that I think the word Miracle is a misnomer, but that shouldn’t take away from the larger point that there are other methods to the U.S.’s method of economics. I also think that it is important to state that Japan does have many of the same problems that all Western countries are facing:

    “With a growing income gap, huge government debt, high unemployment among the younger generation, an a looming demographic crisis, talk of a miracle shouldn’t even be part of the question.”

    But it is still important to note that Japan, Malaysia, China, and South America are all thumbing their nose at U.S. orthodoxy and to varying degrees of success. Is it sustainable? That comes down to how you measure success to some extent. That isn’t to say that no matter what the outcome, I am going to label non-U.S. economic models a success, what it means is that one has to ask what are our goals. The U.S. and its supporters tend to measure all success through the U.S. standard. Low enemployment, low inflation, high GDP. While these are admirable, if a society has comparable individual freedom to the U.S. can that society not take the emphasis off of GDP and place it more on education and poverty rates? The U.S.’s poverty rate is 12%!!!! That is crazy. That written, I don’t know what the poverty rate is for Japan. I looked in the CIA’s world fact book but the information was NA.

  • “I want to live in a country where the poor people are fat” – quoted by an US citizen of Indian decent from his friend who still lives in India.

    A description of the state of the “12% of Americans who live in poverty”

    “But only a small number of the 35 million persons classified as “poor” by the Census Bureau fit that description. ”

    “The following are facts about persons defined as “poor” by the Census Bureau, taken from various government reports:

    * Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.

    * Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.

    * Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.

    * The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)

    * Nearly three-quarters of poor households own a car; 30 percent own two or more cars.

    * Ninety-seven percent of poor households have a color television; over half own two or more color televisions.

    * Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.

    * Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.”


  • US Fed Govt Public Debt

    “The CIA’s World Factbook estimated the U.S’s 2005 GDP at $12.49 trillion, ranking it at the time as the 35th most indebted country in the world by percentage of GDP at 64.7% of GDP. By comparison, the Factbook’s 2005 estimate of China’s external debt was $242 billion with an estimated 2005 GDP of $2.225 trillion. Of the 206 listed countries in the Factbook the combined debt was $38.54 trillion. Of that world wide debt, the US owes approximately 22%â€?

    “It should be noted that the debt of United States on par with what it is in many other developed countries, such as Germany and France.�


    Bush May Meet Vow To Halve The Deficit Three Years Early

    Aided by surging tax receipts, President Bush may make good on his pledge to cut the deficit in half in 2006 — three years early.

    Tax revenues are running $176 billion, or 12.9%, over last year, the Treasury Department said Monday. The Congressional Budget Office said receipts have risen faster over the first eight months of fiscal ’06 than in any other such period over the past 25 years — except for last year’s 15.5% jump.

    The 2006 deficit through May was $227 billion, down from $273 billion at this time last year. Spending is up $130 billion, or 7.9%.

    The CBO forecast in May that the 2006 deficit could fall as low as $300 billion. Michael Englund, chief economist of Action Economics, has long expected a deficit of about $270 billion this year. Now he thinks there’s a chance the “remarkable strength in receipts” will push the deficit even lower.

    With the economy topping $13 trillion this year, a $270 billion deficit would equal less than 2.1% of GDP, easily beating the president’s 2.25% goal. Bush made his vow when the White House had a dour 2004 deficit forecast of 4.5% of GDP, or $521 billion. The actual ’04 deficit came in at $412 billion, or 3.5% of GDP, before falling to $318 billion, or 2.6% of GDP, in 2005.

    A CBO analysis last week noted that withheld individual income and payroll taxes are up 7.6% from a year ago, with the gains picking up in recent months.

    “Those gains suggest solid growth in wages and salaries in the national economy,” CBO said.


  • State Budget Deficits

    Surprise! As Taxes Surge, States Aren’t `Strapped’

    “In fiscal 2006, revenue exceeded budget projections in 37 states. It was on target in 10 states, and below projections in only two, according to a June survey by the National Governors Association and the National Association of State Budget Officers. (Oregon didn’t respond to the survey).

    Does that surprise you? It probably does. Like most Americans, you’re probably used to the states being characterized as perennially behind the fiscal eight ball.

    Just last week I began reading a newspaper article and noticed that the headline began, “Strapped States,” and I bet most people thought: Yes, of course, the states forever wrestle with big budget deficits. There are some people who swear the feckless states are about six feet from Armageddon, at all times.

    The only problem with that picture, at least according to the governors and budget officers, is that it just isn’t true. The “Fiscal Survey of the States” is published twice a year by the two groups, and arrives refreshingly free of agenda. It’s just numbers, with a little bit of text up front describing what the numbers mean.

    The survey is a wonderful antidote to all those stories and pieces of commentary that make broad assertions based on little bits and pieces of data. There was a time when 37 states had to cut their budgets by $15 billion — but that was in 2002, after the stock market collapse. ”


  • The world’s largest economies in 2050

    In 2003, Goldman Sachs attempted to project which countries had the potential to become the world’s largest economies over the next fifty years.

    Rather than simply extrapolate a figure from current growth rates (the “straight line” method), the study projected development by applying existing models of capital accumulation, productivity growth and demographic transformation. The results of these models combined together allowed the researchers to get a good idea of future GDP growth (based on growth in employment, capital stock and technical progress), income per capita and currency movements. Their methodology also factored in the influence of productivity on currency values (and thus overall wealth in real terms, rather than just purchasing power parity). The ‘catch up’ effect (where less developed countries have more to gain, so can grow faster than developed countries) is also captured. Importantly, the ageing countries of Europe and Japan will not stagnate, thanks to being able to trade with and invest in the developing world.

    To check the effectiveness of their methodology, the authors re-ran their model based on what the world looked like in 1960. Excluding factors that were essentially political and thus outside the scope of the study (e.g.: Latin America’s stagnation), the projected average growth rates were suprisingly close to the actual outcomes, particuarly for developed countries with steady growth. The model however under-estimated Asia’s economic growth trajectory.

    Living standards in the former economic superpowers are still high. Americans remain the richest people on the planet, with a real GDP per capita of $83,710 – more than twice the 2000 figure.

    Far behind the big three are Japan ($6.7 trillion), Brazil ($6.1 trillion) and Russia ($5.9 trillion). Britain remains having a voice in the world through its Athenian power play and stays in G7 as the sole European power, with a GDP of $3.8 trillion.


  • Unemployment In U.S. Sinks to A 3-Year Low

    “The U.S. unemployment rate sank to a three-year low of 6.4 percent�

    “”For Clinton, it’s golden,” David D. Hale of Kemper Securities in Chicago said.â€?

    Saturday, January 8, 1994


    Employment Situation Summary

    Nonfarm employment edged up in May 2006 (+75,000), and the unemployment rate

    was little changed at 4.6 percent, the Bureau of Labor Statistics of the U.S.

    Department of Labor reported today.


  • College grads back in demand

    Posted 5/16/2006

    College graduates are landing fat salaries and signing bonuses again as a stronger economy leads to the best college hiring market in years.

    Employers expect their college hiring for 2005-06 to surpass that of the year before by nearly 14%, according to a study by the National Association of Colleges and Employers (NACE).


  • Cave_Blogem

    W/R/T winston_dodson’s posts: Even if accurate, the Heritage Foundation’s stats are misleading: “Forty-six percent of all poor households actually own their own homes.” Puzzling, isn’t it? I “own” my own home, too. Since prices Massachusetts peaked my equity is approximately $0. What does “ownership” mean? If I sold it, the bank and the realtors would get all of the money. Doesn’t make me feel rich. Even if it is correct, that Heritage factoid requires some analysis and careful consideration.

    Others cited reveal consumer preferences. Would you trade your microwave for the average European’s six weeks of vacation? Sometimes I don’t have time to make real food. . .

    Other stats cited above mislead because they are stripped of context or compare apples and oranges. And so the US economy will be the biggest economy in the world in 2050. Reassuring to futurist/nationalists, but the largest determinant in these economic growth projection models happens to be population growth, which for us comes mostly from immigration.

    It’ a complicated issue, as I said in my first post. Dumping statistics absent analysis clouds the issues. One needs some way to analyze these issues without the no-doubt-well-intentioned assistance of Heritage or USA Today.

  • Winston, I will grant you that poverty is relative. But come on, an article from the Heritage Foundation? You complain that moonbats writing here always turn to Kos and other biased sources. Nobody can take HF seriously. Or at least nobody should.

    In a 1990 article on poverty in America they wrote

    “”Poor” Americans consume three times as much meat each year and are 40 percent more likely to own a car than the average Japanese. And the average Japanese is 22 times more likely to live without an indoor flush toilet than is a poor American.”


    Now give me a break. I have travelled around this country since 1984 and visited quite a few homes and sorry to say, not once did they send me to the outhouse or ask me to poor water down the bowl. :)) As for the meat thing, maybe they should consider that Japanese people take protein from fish, tofu and fermented soybeans.

    Even the loosest wingnut would want to think twice about referencing a group that puts out this pirate ship.

    Of course they don’t cite a source.

  • Poverty on/of the brain: (“…poor water” should read “…pour water” above).

  • Sidewalker – The article was from the Heritage foundation, the data was from the US Census Bureau.

    Cave Blogman – And anyone who owns a home (no matter how much equity they have in it) or 2 cars, etc and is still classified as living in poverty is obviously miss classified. So simply stating the non-illustrative fact that “12%” of Americans “live in poverty” and trying to draw some conclusion about America in general is absurd. It is obvious from this data that the real problem with poverty is much smaller that the published 12% but that simply reduces the scale of the problem, not the severity of problem of those who are really poor – and those are mostly children. And, I agree that that problem should be seriously addressed.

    But I didn’t provide this data to get off track and discuss these issues. I thought they would provide a portion of the foundation to discuss this show’s topic – the Japanese miracle. And I thought that I should “clear the deck” of such phrases like “huge government debt, high unemployment among the younger generation, an a looming demographic crisis” so that the discussion re: Japan can begin from where we, the US, and Japan really stand.

    If you look at any reasonable projection (the one that I presented from Goldman Sachs above is just one among many) in the next 100 years there will be only 3 countries / societies / economies that will matter in any discussions – China’s, India’s and the US’s. They will have each ~ 25% of the world’s economies within their borders. This is currently where the US stands – ~ 25%. And, China and India will not get there from some “Brand B” economic model but will only do so with some form of “Anglo-American” capitalism. And Cave Blogman, the story is that the US’s economy will be just large, it is that it will continue to grow so that even with the growth in the US population our standard of living will continue to outpace everyone in the world, even those who are currently comparable to ours. So, you can go to Paris / Berlin and have a coffee in 2050 you’ll just be doing it at a cafe that caters to a population that has at that time, the equivalent to the standard of living that Mexicans have today.

    But I think that the interesting part of the discussion re: Japan are not how their economy differs from our but how it is the same. The only really relevant discussion in economics today’s is how much a county is modeling its policies on “Anglo-American” capitalism not how it differs.

    The EU’s 2000 Lisbon Agenda was to turn the continent (notice continent not all of EU, since the UK is included in the phrase “Anglo-American” capitalism) into the most “completive economy” in the world by 2010. It was to make third economies look and perform more like oar’s not less. By the way, the Lisbon agenda has failed and been abandoned.

    The arguments re: the Anglo-American form of capitalism and alternative forms is analogous to the arguments against modern medicine and alternative forms and so can be understood using simple data from the analogy.

    The average life expectancy in the US in 1800 was ~ 37 years. Today it is ~ say 75. The difference is almost totally attributable to modern medicine – by this I mean the empirical science of medicine and include disciplines like public health and nutrition etc. So, the story of out longer lives is the story of modern medicine not “alternative medicineâ€?. Sure, can we learn from other forms of medicine and apply those to modern medicine but all of that is an extension of, additions to and small effects when compared to the effects modern mainstream medicine has and wil have on our lifespans / heatlh.

    The analysis applies to economics. The only relevant dicussiuons are how other economic ideas can add to the prevalent Anglo-American model not how different they are. If they are very different (just like acient tribal medicine is very different from modern medicine) then they cannot provide anything close to the standard of living.

    So sure, the 2nd largest economy in the world – Japan’s, should be discussed and it is a miracle that it is the 2nd largest but the vast majority of the reason’s that it is there is because it is similarites that it has with the Anglo-America model not because of its differences

  • Cave_Blogem

    Winston_dodson seems kind of angry, which I have a little difficulty understanding. Is there some sort of danger in discussing a different sort of economic regime? Is there something that we need to be afraid of here that I don’t quite get? I, for one, would appreciate at least a respectful tone in further references to me, starting with the pseudonym I have chosen, Cave_Blogem, not Cave Blogman. I can see how it might, to less-careful readers, have looked like Cave Blogman, but it is actually joke-Latin for “Beware of Blog,” which seemed funny at the time.

    To the rest of the comments, let me say that I have been an economic forecaster, and though that was years ago on another coast, I remember this about that profession: any forecast more than five years out shows much more about the assumptions of the economists than it does about “reality.”

    And my main comments thus far have been to urge caution in our comparisons, because the US and Japanese are both wealthy countries, but they operate very differently. For much of the postwar era, Japan’s was what Chalmers Johnson calls a bureaucratically led developmental state–very different from the US. Others have pointed to other features of Japan’s economy, like its treatment of patents, its system of lifetime employment, (which decreased employee incentives to resist innovation), its interlocking directorates and keiretsu structures, its shu-chu gou-teki yushutsu.

    Winston_dodson may be quite correct that many of these structures are changing and increasingly resemble 21st century US capitalism. I kinda hope not, though.

    Sorry to go over 200 words. Please do not send me to Graceland. I will attempt in the future to follow both the spirit and the letter of ROS commenting guidelines.

  • Cave Blogm – Maybe the reason why many people are former Economic forcasters s that they weren’t as consistently accurate as Goldman Sachs? And, I will make the claim again, that eventhough there are differences in the US particular form of Anglo-American Capitalism the similarities far out way the differecnes and I would live to have, as part of this show, a discussion of how Japan has changed those differences to more cloesly match the predominate model. It was widely recognized in Japan that many of the reasons for its more than 10 year bought of deflation, that bordered on a depression, was due to many of the differences that you sited above. The banking crisis was directly caused by the perversity caused by the interlocking relationsips of the keiresu. It was the Japanese dismantling these relationships and the banks Japanese banks adoption of US banking standards, policies and strategies that unwound the many of the problems that they had. The ten year span of those problems gave plenty of time for thier problems to me examined and the remedies applied and the Economist is repleat with articles on that subject.

    I applogize for accidently butchering your psuedonym and I couldn’t even begin to reach the intellectual level to appreciate the joke behind its Latin roots – I think that Logarithm is a birth control method for lumber jacks.

    And I also have no particular aversion to discussing alternative economic models any more than I do discussing alternative medicine – I honestly try and discuss with my 63 year her belief that her Chiropractor has a postive affect on her hemorrhoids when he pops her neck.

  • Winston, in the article I was referencing from the HF, the Census Bureau facts were footnoted. The points about toilets and meat were not. I still think you can do better than turn to that organization to make your argument, which is not without merit just rigor.

  • Katherine, I would love to know how ROS came up with this topic. If it was in the 70s, I would have no objections. But to use Japan as an alternative socio-economic practice to critique the American one at this point in time is far-fetched at best. I hate to agree with Winston, but he is right on the mark for a change when he suggests that the similarities in the economy are much greater than the differences, and more so every day. Lifetime employment: all but gone. Non-regular employment: ever on the rise. Layoffs: no longer big news. Bankruptcies: common-place. Cheap consumer goods: readily available. Large-box retailers in the suburbs: a similar eye-sore. Entrepreneurship and start-up businesses: catching on. Outsourcing and the shifting of factories overseas: old hat. Individual investors in the market: a growing trend. Maxing out credit cards and saving less: the youth have caught the fever. Japan’s economy has never been so flexible and never looked so much like the post-Fordist, American regime.

    As Cave_Blogem points out, this wasn’t so before and Japan had more of a centrally planned economy, though the unsecured loan fiasco and speculation of the 80s revealed that regulators had lost their will or power to intervene as the Japanese economy integrated with global capital markets.

  • This said, there are still socio-cultural differences that influence business practices, government policy, consumer trends, investment choices and the likes. Japanese people on the whole still believe in the virtue of the middle class and a byoudou or egalitarian society, thus the uproar about a widening income gap. As in the US, the politicians will have to give lip service to this issue while actually doing not much about it. Some of these are transferable to the US, but others have deeper geographical and historical roots.

    Now, if I were going to do a relevant show on Japan it would be on the demographic changes. Topics could include immigration or its lack, sexless couples, parasite children, NEETS, the pension issue, retirement age, etc.

    If I wanted to look at other socio-economic regimes, to consider the socially destructive side of US capitalism and if there is not a better way (there of course is a creative side and the question is whether the scales have tipped too much towards the former), I would look towards Scandinavia or perhaps some countries in South America. Or maybe the US has to learn from itself?

    (Sorry, had to cut this comment in half to avoid the 200 world limit)

  • Cave_Blogem

    I agree with sidewalker that, as currently framed, this show would have made more sense decades ago–perhaps when American businessmen were reading Myamoto Musashi to figure out why Japanese businesses suddenly owned their golf courses and luxury hotels–perhaps peaking with Ron Howard’s “Gung Ho” in 1986.

    That’s why I have attempted a little reframing. One way is to look at different ways of measuring prosperity. The Economist and Business Week like to use GDP growth and other metrics devised by neoclassical economists. Japan looks a little different through the lenses of infant mortalilty (Japan at around .03%, the US at more than twice that), life expectancy (US at 76.8 yrs, Japan at 81.2), and others.

    I am not terribly interested in doing any of this just to criticize American capitalism. The Japanese have their own problems with externalities (I seem to remember some weird building and paving boom in the 1990s when the Japanese per capita production of cement rivaled that of the Swiss.)

    I just thought that the English-language media’s wild misrepresentations of the Japanese standard of living made a better story.

  • Cave_Blogem, the idea of how to measure prosperity is a good one, and again we would want to open the discussion beyond the all-too-familiar Japan-America comparison (there is a whole media industry built on this here).

    Areas to consider would be the income gap, health care, day-to-day safety, life expectancy, air water and food quality, working conditions, educational opportunities, sense of community, chances for civic participation, and yes, Winston, the number of televisions and ipods one owned.

    The problem with the over-hyped GDP measurement, as is well discussed, is that all goods and services are counted, even the ones harmful to society. Handguns, divorce and all polluting activities are a boost to GDP, but not to social betterment.

    The UN identifies 5 harmful types of growth and stress quality over quantity.

    jobless: growth which does not translate into jobs

    voiceless: growth which is not matched by the spread of democracy

    rootless: growth which snuffs out separate cultural identity

    futureless: growth which despoils the environment

    ruthless: growth where most of the benefits are seized by the rich

    (UNDP Human Development Report, 2003)

  • The UN Human Development Index is another measure, that looks mainly at education, income and life expectancy. It is a better indicator, though it still does not directly take into account some factors, such as environmental quality, working conditions, physical safety and civic participation. Based on this indicator, both the US and Japan are down the list compared to a number of European countries as well as Australia and Canada.


    Bhutan could even provide a source of inspiration. It uses the Gross National Happiness measurement when setting government policy and legislation.


  • By chance I was listening to some CDs and this Willy Mason song came up and I thought it was perfect for this thread:

    Oxygen – Willy Mason

    * I wanna be better than oxygen

    So you can breathe when you’re drowning and weak in the knees

    I wanna speak louder than Ritalin

    For all the children who think that they’ve got a disease

    I wanna be cooler than t.v.

    For all the kids that are wondering what they are going to be

    We can be stronger than bombs

    If you’re singing along and you know that you really believe

    We can be richer than industry

    As long as we know that there’s things that we don’t really need

    We can speak louder than ignorance

    Cause we speak in silence every time our eyes meet.

    ** On and on, and on it goes

    The world it just keeps spinning

    Until i’m dizzy, time to breathe

    So close my eyes and start again anew.

    I wanna see through all the lies of society

    To the reality, happiness is at stake

    I wanna hold up my head with dignity

    Proud of a life where to give means more than to take

    I wan’t to live beyond the modern mentality

    Where paper is all that you’re really taught to create

    Do you remember the forgotten America?

    Justice, equality, freedom to every race?

    Just need to get past all the lies and hypocrisy

    Make up and hair to the truth behind every face

    That look around to all the people you see,

    How many of them are happy and free?

    I know it sounds like a dream

    But it’s the only thing that can get me to sleep at night

    I know it’s hard to believe

    But it’s easy to see that something here isn’t right

    I know the future looks dark

    But it’s there that the kids of today must carry the light.

    [Repeat **]

    If i’m afraid to catch a dream

    I weave your baskets and i’ll float them down the river stream

    Each one i weave with words i speak to carry love to your relief.

    [Repeat * , **]

  • Cave_Blogem

    Sidewalker, thanks for pointing to the Human Development Index. Also at its source: http://hdr.undp.org/statistics/.

    I guess I wish that they factored in climate. There are some cold countries above US on the list.

    Song that keeps going through my head is Elvis Costello:

    As the sky fell over cheap Korean monster movie scenery and

    spilled into the mezzanine of the Crushed Capsule Hotel

    Between the Disney abbatoir and the chemical refinery

    I knew I was in trouble but I thought I was in Hell

    Well you look around the tiny room and

    you wonder whereintheHell you are

    A KKK convention are all stranded in the bar

    They were heard to carry shotguns

    in the mainstreets of Montgomery

    But they’re helpless here as babies

    ’cause they’re only here on holiday,

    –Tokyo Storm Warning (as best as I can recall w/o looking it up)

    Not a hopeful song, I’m afraid (later is “Japanese got Jesus robots telling teenage fortunes/for all we know or all we care they might as well be Martians/They say gold paint on the palace gates comes from the teeth of pensioners/Their so tired of shooting protest singers that they hardly mention us . . .

  • Quote from Katherine, in the prologue.

    “Which bring us to the meat of it: is the U.S. model of capitalism really the best and only way?”


    What I would like to know is what is the U.S. model of capitalism, as you see it?


    To me, at its core it is one where low-price and volume dominates as the key to high consumer sales. This creates the negative feedback loop of lower wages and benefits, lower incomes and, hence, a greater demand for lower prices and the social spiral downwards. It also creates a situation where we have brand-name U.S. companies using contractors in Jordan and elsewhere, where slave-like working conditions are reported in the special industrial zones.

    If we are talking about alternative models, we would have to look at ones where the bent principle of the lowest price is changed to the socially just principle of the fairest wage.

    Japan might have offered an example when its middle class was strong and when prices were high enough to pay workers a decent wage, but not today.

  • If you read the artilce with the results of the Goldman Sachs model you would see that there is no real competition to our model. Europe will be a group of 3rd World nations and the only ones in our league will be India and Japan who will look more and more like us with each passing year.

  • The conclusion to the article Winston Dodson referenced about the Goldman Sacks model says something important:


    Now, I am not sure if it was scope creep that scared Goldman Sachs from making other assumptions. One doesn’t have to be an environmentalist to wonder what will happen when 1.5 billion Chinese run riot with the living standards of what Americans enjoy today (assuming, of course, oil remains plentiful or is replaced by an alternative energy source).

    The resource depletion and environmental degradation problems, among others, are just too important to omit from any modeling of real value. That GS did, indicates that they were looking for the rosiest economic picture possible to keep investments coming. Why should we not be surprised. That is their business after all.

    But it’s not very persuasive.

  • Cave_Blogem

    The article to which winston_dodson refers is, I think, a little confusing. Perhaps better at this point in the discussion to go back to the Goldman Sachs white paper that initiated it at http://www.gs.com/insight/research/reports/99.pdf.

    As to Europe being “a group of 3rd world nations,” that’s not in the original. “Third World,” of course, refers to those halcyon days when there were two superpowers locked in combat over (among other things) economic and political ideologies. We, the industrialized capitalist West, were the “first world,” the Soviets were “the second world” and usually referred to via other euphemisms such as “the Evil Empire.” Then the “third world” was what was left, which many today refer to as the less developed world or many other varieties. The GS whitepaper does not show that these countries decline in prosperity (for which I am using Goldman’s GDP per capita figures). Indeed, the prosperity of Japan, Great Britain, Germany, France, et. al., double over the timeframe of the model.

    What’s odd, though, and troubling if one takes GS’s whitepaper as received truth, is Russia’s 1756% growth, India’s 3611%, China’s 3572%, Brazil’s paltry 513% growth. Should we follow the Chinese model?

  • Here is an an interview with Niwa Uichiro, Chairman of Itochu, a large Japanese trading company, who argues against the neo-liberal approach to capitalism promoted by our own would-be Elvis, Prime Minister Koizumi.


  • Here are a couple of articles on social issues in Japan that threaten any second coming.

    Youth Employment in Japan’s Economic Recovery: ‘Freeters’ and ‘NEETs’


    Whither Japan’s Lifetime Employment System?


    Japan Stares into a Demographic Abyss


  • Japan has an old population (compounded by a low birthrate and very little immigration). And the country has almost no energy resources of its own. Japan thus is a great test of whether technology and education are sufficient to allow us to slip the trap of two enormous problems.

  • Cave Blogem – The reason why those countries you sited in your analysis above can achieve those enormous % increases is that they are so far behind the US. And you specifically site China – well they will achieive those results by being morel like the US not less.

    And, no matter what version of the Goldman Sachs report you read or what word you use to describe the future state of European economies you still get US that goes from an ~ 30% greater GDP / head to an ~ 250% GDP / head. So I wonder, how much Social System can those govts buy at those levels?

    Current situation – US has / produces ~ 25% of the entire world’s economic activity.

    Future – by any realistic estimates (you can fiddle with compounded growth rates) the US, Chine and India will each have about 25% of the same. Japan’s economy will not decline it just will not compete at the same level going forward. Europe’s is and will simply fail.

  • tbrucia

    Interesting that no one has mentioned income distribution in any detail… Japan is an ethnically homogeneous middle class nation. It has a small wealthy class and a small underclass. In other words its income distribution is that of ‘a diamond’. — The United States, on the other hand, is an ethnically diverse nation where most productivity increases are siphoned off by the top fifth of the population, and the emergent model is the classic ‘pyramid’, with a large base and a small elite. The true miracle of Japan is that it has not followed the usual model:a small kleptocracy ‘farming’ a mass population, thereby destroying the national future. Most of the world is pyramidal; Japan is not (at least so far).

  • Almanch

    regarding Winston:

    > “I want to live in a country where the poor people are fatâ€? – quoted by an US

    > citizen of Indian decent from his friend who still lives in India.


    > A description of the state of the “12% of Americans who live in poverty�


    > “But only a small number of the 35 million persons classified as “poor� by

    > the Census Bureau fit that description. �


    AND tying in tbrucia

    What is the result of a nation where the elite can make sure that you don’t know the “grass is greener” elsewhere?

    Is it a true sign of national success when the poor have a lot of “stuff” that makes them unhealthy, unhappy, and forces them to work two jobs to make ends meet?

    And do the two (or more) jobs and cheap sources of entertainment (TV) make them too busy or too distracted to care about alternatives? Nevermind that it’s not in the media’s interest to promote them.

    MOST IMPORTANT (IMO): isn’t it true that if any system becomes too unbalanced, it will fail?

    (In this way it becomes an issue of sustainability)

  • In the September 2006 issue of National Geographic there is an article on China. In it there is mention of how the large Japanese companies, such as Cannon and NTT, have set up call centres in Dalian staffed by Japanese speaking workers to sell their products back in Japan. More evidence that Capitalism may have many faces, but ultimately speaks in the forked tongue of commerce.