Turning Japanese

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The earthquake in Japan and tsunami which followed it might have killed 0.15% of that country’s population (20,000) and will be the the catalyst for the media “discussing” how that country should “remake” itself.  The press has already pointed out the xenophobic nature of  Japanese culture as when this story appeared on CNN’s website shortly after the disaster:

Public attitudes toward immigration, to help bring in young workers and have them naturalize to become builders of tomorrow’s Japan, remain toxically negative.

In fact, Japan’s charismatic Foreign Minister Seiji Maehara resigned his position about a week ago because he had accepted a modest campaign donation from a woman of Korean descent who had lived in Japan most of her life, had a Japanese surname and had known him since the second grade.

Japan has 1/6ths of the world’s nuclear reactors and the push is already on for them to “remake” how they get electricity:

And failures at nuclear plants in the quake raises a fundamental question: How can earthquake-prone Japan coexist with nuclear power plants?

And regarding Japan’s capitalist economy, this, too, must be “remade” after the natural disaster:

“It is sufficiently possible to expect demand that should be called a restoration New Deal,” [Prime Minister] Kan told a meeting of economic ministers at his office, referring to a series of economic programs implemented in the United States in the 1930s.

While almost all of Japan remains largely undamaged, the temptation for large “stimulus” projects such as were initiated by the Obama administration will be great.  The country with the second highest public debt as a percentage of GDP in the world is, surprisingly, Japan (right behind Zimbabwe).  The United States is #35 on the list.

Sound familiar?

During the 1990s as Japan’s economy slowed (right after a series of books came out saying how they would take over the world) no fewer than 10 stimulus packages were initiated.  Before New York Times columnist Paul Krugman contradicted himself by becoming a fan of President Obama’s spending, he wrote this:

Japan’s postal savings system, which channels money into public works projects that have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital employed producing goods nobody wants.

Japan cannot go on like this.  Swelling public debt will eventually threaten the government’s solvency.

Just imagine how much different the financial health of Japan would be had the government there not run the country’s debt to a startling 196% of GDP on wasteful “stimulus” packages.

In short, Japan’s massive Obamanomics “stimulus” spending failed, sent the country deep into debt, and now when they need to spend some money it will be harder to get it and, in spending money will send themselves deeper into the hole.  The Japanese economy will have to turn inwards in order to cope with the tragedy and this, in turn, will put a further squeeze on America and other countries as limited capital is diverted to domestic needs and pulled out of foreign markets.

There is a tsunami coming for the rest of the world but it will be monetary.

At this point it is unclear how Japan should “remake” itself as the agendas of journolists have not fully matured but the likely narrative is how Japan must adopt an Open Borders mentality and become socially diverse:

This would be a good time to consider opening up what it means to be Japanese, to reinvent Japan and rise above the tragedy.  Bringing in more stakeholders who want to contribute to long-term vitality is the only way Japan can possibly manage what will become after this crisis an even more whopping debt load.

The Open Borders crowd has been extremely active in Democratic politics for a generation and continues to push for illegal immigration to be essentially ignored because there are really no countries in their book.  And so the story will go for Japan even though that country has steadfastly refused to allow a Western-style influx of foreign born into its country.  It will be argued that foreign money and populations will be needed to keep Japan “healthy” even if it will radically alter that country’s national character which the indigenous population seems to cherish even if it does have a darker side.

Just as Americans forced Japan to open to the West in 1854 through gunboat diplomacy, so the earthquake and tsunami might force similar societal changes in that country.  The danger for Japan is that the country will likely become a blank canvas upon which the gaijin of the world try to “remake” the country according to their dreams.  We have already highlighted several topics currently under “discussion” in the media.  Replacing nuclear with wasteful “Green Energy” will be another hot topic.

The bottom line on the disaster is that the country, having spent so much on failed Big Government programs now will find its back to the wall and will have to radically change its civilization in order to stay afloat.  The estimated damage currently exceeds $180 billion.

This should provide a cautionary tale for Americans who don’t want to see our country sent so far into debt that we find ourselves in a similar situation should a similar catastrophe occur either by Nature or by Man.

The United States and Japan are very different countries and we do enjoy much greater natural resources than they do but the lesson is still the same.

 

 

 

 

About Harrison
Owner and operator of Capitol Commentary.

17 Comments on Turning Japanese

  1. I have been seeing a lot of this in the news; so many people seem to think Japan has to change itself in the wake of this earthquake and tsunami. Maybe changes do need to be made in some areas, but some of the things you have mentioned are more than a little radical.
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  2. That was intersting about the stimulus spending in Japan in the ’90s, I didn’t know that. It seems we could learn a lesson or two from them.
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  3. I looked at the Krugman article from ten years ago, and I don’t think he was saying that stimulus spending is per se wasteful. He was saying that the Japanese program was wasteful, because it was delaying the recognition by banks of losses that would have to be recognized eventually, and it was spending public money inefficiently. His prescription was that Japan should allow inflation and also allow the yen to fall, which would encourage consumption by Japanese consumers and investment by Japanese businesses. The economic problems of Japan are in some ways the opposite of ours. They suffered from too much private savings, invested inefficiently, and not enough consumption, and also too much public debt. Our debt, as you say, is nowhere near the level of Japan’s.

    As far as whether stimulus spending is wasteful or not, you just can’t just lump all stimulus spending together. It really depends on what you spend the money on, doesn’t it? If we spend money on highways and ports and airports and high speed internet and education and things like that, that at least has the potential of making our economy more competitive in the future, and that is worth going into debt for. You really have to do a more careful analysis of where the stimulus dollars went before you can say whether or not it was worth it to increase our public debt. Also don’t forget that only about one third of the Obama stimulus consisted of that kind of public works spending that you seem so unhappy about. The majority of the stimulus took the form of tax cuts and aid to the states. Krugman, who I don’t think was being inconsistent with his advice to Japan, thought that the stimulus should have been at least twice as large as the Obama plan, and was highly critical of the administration for pushing through such a small stimulus package.
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    • Joe, the other link in the article says this:

      Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen and cut income tax rates during 1994. In January 1998, Japan temporarily cut taxes again by 2 trillion yen. Then, in April of that year, the government unveiled a fiscal stimulus package worth more than 16.7 trillion yen, almost half of which was for public works. Again, in November 1998, another fiscal stimulus package worth 23.9 trillion yen was announced. A year later (November 1999), yet another fiscal stimulus package of 18 trillion yen was tried. Finally, in October 2000, Japan announced yet another fiscal stimulus package of 11 trillion yen. Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen, and each failed to cure the recession. What the spending programs have done, however, is put Japan’s government in poor fiscal shape. The “on-budget” government spending has caused public debt to exceed 100 percent of GDP (highest in the G7), and even more debt is apparent when the “off-budget” sector is included.

      Politicians in the Liberal Democratic Party (LDP) run most of these government agencies. The Economist Intelligence Unit profile states that “FILP money is channeled toward traditional supporters of the LDP, such as those in the construction industry, and without proper consideration of the costs and benefits of specific projects” (EIU 2001, p. 30).

      That’s “shovel ready” stimulus and it didn’t do any good then and it won’t work now in America.

  4. I’m not sure what you’re trying to say, Harrison. You can’t be suggesting that we should never borrow money to invest in anything. That can’t be true, otherwise how could anybody ever start a business? Or maybe you’re saying that it’s ok for businesses to borrow money to invest, but government has never been successful in investing money. But that can’t be true either, and you can find examples from the transcontinental railroad to the TVA to the interstate highway system to the internet itself, of government spending on infrastructure, that paid for itself many times over with economic benefits to all of us. So maybe you’re saying that Japan didn’t do a very good job of choosing projects to invest in. That could be true. I don’t really know much about Japan’s program. Or it could be that Japan’s recession would have been even worse without that infrastructure spending, and that the benefits of that spending have not become apparent yet. Either way, I’m not sure their experience has any application to the Obama stimulus. If you think that the 2009 stimulus was not helpful to our economy, you have the burden of showing that the benefits of those projects will not, over time, exceed their costs (including interest costs of course). I just don’t see how you can possibly make that case yet.

    • Joe, recall back in 2006 when President Bush passed the $286 billion Highway Bill (of the infamous “Bridge to Nowhere” fame) and now in 2011 we apparently still have a crumbling infrastructure which will require 10s of billions of dollars to upgrade/maintain. Stimulus spending whether to “jump start” the economy or reduce unemployment simply no longer passes the public’s sniff test.

      I am in the federal aquisition business so I know first hand the layers and layers of rules and regulations, all well-intended, that absolutely throttle any notion of stimulus spending to jump start the economy. Think of $787 billion dollars being squeezed through an hour glass. All the myriad of rules and regulations create delays, inefficiencies and waste and ironically enough, become a potential source of graft and corruption themselves.

      Be it known, I’m not against federal spending for big infrastructure projects, but this notion of stimulus spending having the effects desired by the Obama and Bush administrations and the rest of the Keynesian acolytes needs to be consigned to the ash heap of history where it belongs.

  5. Don’t forget Dean, that of the $780 billion in the stimulus bill, only about a third of that was infrastructure spending. The rest was tax cuts and aid to the states.

    I appreciate your acknowledgment that federal spending for infrastructure projects can be beneficial. (We can agree to disagree about the Keynesian effects of that.) But personally, I would have preferred that a lot more money had gone to infrastructure projects, and less to tax cuts. We are falling behind other countries that are making huge investments in transportation, communication and energy projects. Tax cuts are nice too, but if people spend their savings from tax cuts to buy products made in China or Japan or Germany, which of course they do, it doesn’t do our economy a whole lot of good.
    Joe Markowitz recently posted..Net Neutrality

    • So here’s a question for you Joe. Let’s say 10,000 taxpayers go out and buy 10,000 Toyotas. You say “it doesn’t do our economy a whole lot of good.” Doesn’t the city where those cars are bought get sales tax? Doesn’t the guy who sold that car get a commission? What about the mechanics who will repair that car later or the parts companies that will sell the Toyota owners new stereos or oil or the bodyshop that might re-paint some of those cars? What about the person who buys the car who might be able to get a better job because they have a more reliable car?

      Those things don’t do our economy a whole lot of good?

    • So $286 billion from ’06 + ~$250 billion from porkulus = we still need infrastructure upgrades? The math both figuratively and literally doesn’t add up. Where did that over half a trillion go with respect to infrastructure?

      At some point, the overall dollar figure of a stimulus program becomes moot as the regulatory regime effectively throttles down the intended results. Again, think of the hour glass. There can be as much sand in the top half of that glass as you want but the “flow” of projects will be slowed as to negate the desired effect.

      I think an unemployment rate some 2% above what we were promised with porkulus is proof of that.

      • Why haven’t states been using their gasoline taxes and Federal highway funds to keep up on maintainence? Bloated and inefficient allocation of monies is why. So let’s just go hundreds of billions of dollars more into debt so we can continue to feed these construction firms? No thanks.

  6. Not only that, Harrison, but you can even make the argument that when Americans buy Toyotas, a lot of the money that goes to Japan will come back to us eventually in the form of trade. The question, however, is whether that kind of stimulus is as efficient as stimulating the economy by paying an American contractor to put American workers to work building roads and bridges that Americans will use. It still seems to me that infrastructure spending is going to have a lot more direct beneficial economic impact than tax cuts.
    Joe Markowitz recently posted..Net Neutrality

    • Joe, you totally ignored my point about Americans buying Toyotas. Letting people decide what to do with their own money by cutting taxes is the best remedy. Infrastructure projects do employ some people for a short time but they an inefficient way of distributing limited capital and then you have upkeep costs to factor in down the road. Also, if you’re talking about the Feds trying to force tens of billions of dollars on localities that don’t want trains because they will be money losers I think we begin to see how government distribution of capital is a bad idea.

  7. So in your world Harrison, we would all be driving Toyotas down streets filled with potholes and across bridges that might collapse at any moment. That is not my vision of America.
    Joe Markowitz recently posted..Net Neutrality

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