
The myth of Japan's failure - sajid
http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-story-of-japans-economic-success.html?pagewanted=print
======
dev_jim
There's a lot to admin about Japan, but this article is hackery at best and
deceptive at worst.

The article is almost solely focused on Tokyo. Yes, Tokyo is still doing well.
It's still one of the richest cities in the world. But Tokyo cannot be held up
as "Japan", just as New York cannot be used as representative of the entire
U.S.

Life expectancy in the U.S. has gone up by 4.43 years since 1980. All rich-
world countries has seen a similar increase. [1]

Unemployment is lower in Japan because labor force participation rate is
(much) lower. The popular is older, far fewer women choose to work, and many
men have dropped out of the workforce (a similar phenomenon is happening in
the recovery here). [2]

Cell phone supremacy? You mean the iPhone which is designed in California? [3]

He links to Shadowstats which is a conspiracy theorist website about
understanding CPI. CPI is one of the most scrutinized measurements out there.

[1] [http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...</a><p>[2]
<a href="http://research.stlouisfed.org/fred2/series/JPNLFPRNA"
rel="nofollow">http://research.stlouisfed.org/fred2/series/JPNLFPRNA</a><p>[3]
<a href="http://techcrunch.com/2011/05/18/the-iphone-4-tops-handset-sales-
ranking-in-japan/" rel="nofollow">http://techcrunch.com/2011/05/18/the-
iphone-4-tops-handset-s...</a>

~~~
wisty
It also has wonderful quotes like: "The Japanese are dressed better than
Americans. They have the latest cars, including Porsches, Audis, Mercedes-
Benzes and all the finest models. I have never seen so many spoiled pets."

Americans do the same crazy stuff, but they do it in a way that looks
unremarkable to other Americans.

~~~
recoil
That sentence made me wonder if the author had never been to California.
Speaking as a Brit, that sentence could so easily apply to any non-American's
perspective on people in that state (I've only really spent time in NY and CA,
BTW, so I acknowledge that my perception of life in the US is just as skewed
as the author's pereception of life in Japan, but in a sense that's exactly my
point).

------
mbesto
Let's look at one metric that supersedes all (in my opinion):

According to, Japan's unemployment rate has been no higher than 6% over the
last 32 years (1980-2012).It's currently at 4.5%[1]

Compare that to the US, who's unemployment rate has been at worst 10% over the
last 32 years (1980-2012). It's currently at 8.5%[2]

Why does this supersede most other stats? Because we simply need to keep
people busy "doing things", otherwise (as you're seeing in the US)
riots/protests break out, crime goes up (crime is largely a result of
poverty), and people don't have the means to keep themselves healthy. What
more do you need from a society? I understand people will say "but we need
growth". I ask why? What is the end result of growth that makes societies
"better"?

[1]<http://www.tradingeconomics.com/japan/unemployment-rate>
[2][http://www.tradingeconomics.com/united-
states/unemployment-r...](http://www.tradingeconomics.com/united-
states/unemployment-rate)

edit: 32 years...doh!

~~~
bane
It reminds me of my first time visiting South Korea. While there I observed
people who's job it was to wear a cute uniform and bow to cars entering the
parking garage at the local department store, people hired by companies to
stand in the aisles at the local supermarket holding packs of coffee or
shampoo or whatever and dance to loud techno music (usually young women in
short skirts and thigh high boots, bizarre to see families shopping for
vegetables, fighting their way around scantily clad 20 year olds in the middle
of a dance routine around the cabbage aisle), and other similar, "keep people
busy" type jobs. I'd be highly surprised if these folks made more than
$3-4/hr, not even remotely a living wage.

\- checking on the numbers, the minimum wage in South Korea for 2011 was about
$3.75. I'm guessing when I first went there in 2003, it was even lower.

\- in 2006 I visited and remember having to make my way around a gauntlet of
guys in doorman uniforms, who's job it was to bow to people entering the
hotel, and another guy who's job it was to push the "up" button to request an
elevator. That's it, that was his entire job. For eight hours a day, he stood
outside of the elevators, waiting for guests, and pushed the only button to
request an elevator (there was no down button the hotel I was staying in).

So yes, while the unemployment figures were pretty good, the actual "work"
that people were doing was essentially meaningless.

I've never been to Japan, but I'd be highly surprised if there weren't similar
analogues.

~~~
wisty
All marketing is "keep people busy" work.

In Australia, people don't like service-people. There's this weird pseudo-
independence thing, where we'd like to believe that we haven't oppressed any
workers to get our cup of coffee. It's not a problem if the coffee was grown
by plantation slaves, and made by a Philippino guest-worker on an exploitive
H1B1 equivalent visa, but the waitress had better be quick, efficient, and get
out of our way so we don't feel sorry for her. If it's a waiter, he'd better
be even quicker, because we detest seeing men do degrading work even more.

So all the marketing is depersonalised. Cafes might have lavish interiors
which were extremely labor-intensive to build, but the work is all done behind
closed doors. People will pay lots of money for seamless advertising and
marketing, so you can't see that a real human being had to put the sign
together.

It's kind of strange.

I'm sure service people hate their jobs, and do kind of meaningless stuff, but
no less than the rest of us.

~~~
jacques_chester
Having worked in retail and service jobs, I can tell you that a generous
fraction of Australian consumers _rely_ on the lowly checkout chick / salesman
/ service assistant / phone operator etc as someone to prop up their self-
worth through condescension.

~~~
wisty
If you want to do something bad to a person (i.e. slightly inconvenience them)
it's a lot easier to justify if you hold them in contempt.

------
surrealize
The overall point of the editorial might be right, but some of the metrics
that it mentions are random or problematic. The number of high-rise buildings
constructed? That says more about how little buildable land Japan has than it
says about the strength of the Japanese economy.

The article also mentions electricity "output" (a.k.a. consumption), which has
grown faster in Japan than in the US. The article spins it as an indicator of
the strength of the Japanese economy, but you could just as easily describe it
as a success story about US conservation efforts.

And some of it is just strange. Michelin ratings as a measure of the strength
of an economy? Cultural factors matter as much as economic strength, there.

Japan might actually be doing better than people in the US think, but this
article isn't a good argument for that position.

~~~
gwern
> And some of it is just strange. Michelin ratings as a measure of the
> strength of an economy? Cultural factors matter as much as economic
> strength, there.

I was in a theater on the 4th to watch _Nausicaa_, and one of the previews was
for a documentary about some sushi chef. Breathlessly it mentioned that he was
the first Japanese restaurant to receive 3 Michelin stars.

I was a little astonished. 'Yes, I know 3 Michelin stars is very hard to get,
but this must've been in the last 20 or 30 years - how could Michelin have
deprived _Japan_ of any 3-star rankings for so long after WWII? Their
restaurants are not unusually better these days than they were over the last
century or two.'

The obvious answer is that Michelin didn't have any real presence but began
ramping up relatively recently (perhaps during the bubble). So it wouldn't be
surprising if the coverage continued to increase despite whatever the true
trend of Japanese restaurant quality is (up or down).

~~~
learc83
From what I've been able to find, it looks like Michelin didn't review Japan
at all until around 2007-2008.

~~~
gwern
That would make sense.

------
aycangulez
I have been following Fingleton, the author of this article for quite a while.
His main thesis that "Japan's lost decade is an illusion" has not changed much
over the years. In fact, he was among the group "Japan bashers" in the 90s,
and their main argument was that Japan's Ministry of Finance (MOF) was
intentionally trying to paint a grim image of Japan to gain advantage in trade
negotiations. This argument holds little water these days: it is next to
impossible to hide information about the true state of a country when access
to information is so easy thanks to the Internet.

Fingleton also claims that Japanese are early adopters in technology, which is
only partly true. Japanese, in general, prefer to excel in something by using
manual skills and they take great pride in that. They resort to technology
only when manual skill is not enough. Making good cars require industrial
robots so they have plenty of them, but in other parts of the industry,
adoption of advanced technology can be quite limited. In other words, Japanese
companies often find themselves at local maximums as compared to their
American counterparts. Just look at the current state of Japan's once great
electronics companies: Sony, Panasonic, Sanyo, NEC, Hitachi, etc. Only Canon
seems to be doing fine these days.

~~~
yummyfajitas
_This argument holds little water these days: it is next to impossible to hide
information about the true state of a country when access to information is so
easy thanks to the Internet._

It's actually quite easy:

Step 1: recognize that gathering macroeconomic statistics is really hard. One
example: if people previously spent $3 on salsa, but now they spend $5 on
guacamole, what is the inflation rate for mexican dips?

Step 2: come up with a catchy title for a statistic, and make sure reporters
know all about it. E.g., "the burrito index, which measures how much good
mexican food costs."

Step 3: tweak the definition of the statistic until you get the result you
want.

Want more inflation? All mexican dips are equal, so inflation is up 66%. Want
less inflation? Guacamole is 2x better than salsa, hence dips have actually
dropped in price 17%.

~~~
borism
except salsa and guacamole are interchangeable.

it doesn't seem to me you can easily exchange one component of CPI with
another?

~~~
kijin
What Americans typically refer to as "salsa" is not interchangeable with
guacamole.

~~~
anamax
> What Americans typically refer to as "salsa" is not interchangeable with
> guacamole.

It is for people who don't want either one.

This effect explains why different people see different amounts of inflation.

------
Yrlec
One of the most important lessons that we have learned from the past years is
that you cannot look at a country's standard of living in isolation. You also
have to look at the debt levels to see if it is sustainable in the long run.
Japan has the highest government debt-to-gdp ratio in the world:
[http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub...](http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt)
(higher than Greece!). I suspect that they have a huge hangover coming their
way.

~~~
tobylane
They have a uniquely high level of internal debtors, the government bonds were
bought by Japanese people much more so than other citizens buying their
countries' bonds. I didn't understand why this made a difference though.

~~~
blumentopf
It does make a difference in that Japan could finance the public debt entirely
by itself. The country has a trade account surplus, it's not them being
indebted to others, but others are indebted to them.

That makes it unattractive for speculators to bet against the country.
Countries like China or Germany are in a similar position.

~~~
rmrm
They have had a historically high internal savings rate that allowed this. One
thing to keep an eye on is their terrible demographics. I believe Japanese
citizens as well as the largest institutional buyers (Japan Post etc) have
just recently become net sellers of JGBs as they move towards liquidation to
fund retirements.

Japan currently funds more than half of their gov't via borrowing, with the
demographic shift and the internal demand for JGB turning towards net
negative, they will increasingly rely on external buyers of their debt. I
believe China has been a buyer of late.

What has worked for Japan historically may not work so well going forward.

~~~
muraiki
I've read that most of this money came from retiree savings, which are rapidly
running out. Furthermore, the younger generation doesn't have such savings,
yet alone the population, to keep such a thing going.

In a sense, this system of internal borrowing in a hidden tax. While it of
course is not mandated, it's required in order to keep things going smoothly.

------
beefman
Words do not exist to explain errors in this article. The world's most
populous island improved internet infrastructure? Wow! Life expectancy
increased, just like in every other OECD nation? Wow!

The appreciation of the yen is a result of the deflationary pressure that
crippled the Japanese economy from 1995-2005.

He links to shadowstats, a known internet cook hangout. It's like linking to a
global-warming denial site.

"Japan leapfrogged the United States in the space of a few years in the late
1990s and it has stayed ahead ever since, with consumers moving exceptionally
rapidly to ever more advanced devices."

On what planet does the author live? The smartphone was invented here and the
US leads the world in smartphone adoption. The Japanese are still texting on
9-keys.

I can't go on.

~~~
blrgeek
Re: phones -

In 2005 my friend had a Japanese phone which had high speed Internet, video
calling, and an ssh client among other things.

The US had the Razr.

Don't change history, smartphones were widely popular in Japan well before
anywhere else in the world. The iPhone was just the first usable smartphone
for the rest of us.

------
JamisonM
I think this "lost decade" talk is mostly a matter of perspective, Japan is
the nation in the world that, of any I can think of, could most afford to
"lose a decade". An older population, a shrinking population, and a very high
savings rate means that deflation was not as hard on its economy as it would
be on an economy like the United States. In the US and many other economies
inflation helps consumers with their debt, population growth requires that the
overall GDP grow significantly to keep pace, and a younger population means
many young people need meaningful work to sustain themselves while an older
population can live on savings and supplement with poorly-paid employment to
hobble through to retirement.

Some of the arguments may also be unfair:

The author breaks down GDP on a per capita basis to make the argument that
Japan might have grown faster than the United States since 1989 - but Japan is
2 decades our from their financial collapse and the US only some 4 years after
a similar event.

Unemployment in Japan has always been much lower than the US, so comparing
them now as some sort of evidence regarding a "lost decade" is not meaningful.

It may also be that, since the population is shrinking, the life-expectancy
gains are more of a collection of a dividend from past public health
improvements than any reflection of recent health care system improvements.
(I.e. all those old people living longer from better care in the past vs.
relatively younger people dying from other causes to lower the average.)

------
bjornsing
I think a major factor determining your opinion on Japan's "lost decade(s)" is
how you view inflation. Those who stand to benefit from more (stealth)
inflation (politicians / bankers with access to the fed discount window /
those with highly mortgaged real-estate) will see those decades as truly lost,
but those that generally stand to benefit from less inflation (savers / "main
street") will view those decades in a more positive light.

------
danmaz74
I remember a recent article on the same wavelength, here on HN - but I can't
find it.

Anyway, I agree that GDP shouldn't be idolized, just like no single metric
should be.

~~~
heydenberk
I do too -- if you find it, leave a comment here please!

~~~
heydenberk
Rather, here it is: <http://news.ycombinator.com/item?id=3389678>

~~~
JamesNelson
Both articles are actually by the same author. His blog is at
<http://www.fingleton.net/>

------
mark_l_watson
I have some friends who don't travel internationally and who have totally
bought into the propaganda that the USA is better than any other country using
any metric.

Love of one's own country and mild forms of nationalism are good things, but
they should be tempered with a realistic view of the world. In the USA we have
a clear and present danger to the economic health of our country: spending too
much money on "defense."

~~~
drumdance
I know a lot of people like that where I grew up. My sister jokes that if
nothing else the USA is number one in self esteem.

------
abracat1
It is easy and popular for westerners to romantacize Japan - but it has
serious and structural problems. When analyzed on its own (instead of
comparing it to the USA) it becomes readily apparent.

I will just say a few observations which show that the picture the article
paints is not quite accurate.

Firstly, yes there are many people with fancy clothes. What the author does
not say is that a lot of those people live with their parents - and their
whole income is expendible. I don't know if this phenomeneon started after the
bubble economy, but it is quite shocking.

Then there is the fancy cars - what is the percentage of car ownership?

About employment - finding permanent employment for young people has become
almost impossible. Many young people now have short term contracts or do so
called "arebeito" (extremely short term work with hourly wage). This is
clearly not optimal and is a new in this generation.

Japanese health care is a joke. They spent a lot on the last years of life
(everywhere you look is AED machines), but nothing on the quality of life.
Japanese dental care is below third world country! The majority of people do
not get orthodontal treatment even when clearly necessary. Take a look next
time you walk around.

Another example of the quality of health care - I've spoken to two
dermatologists (from national health care in Japan) and they don't even know
about ruaccutane (isotretonion). This surely is a basic treatment that in some
cases are necessary?

Japanese banking is pathetic. It seems they do everything by hand - which is
nice but inefficient. With my non-japanese banking I get internet banking for
free and ATMs are open 24/7. Good luck getting that in Japan.

Typed on iPhone so sorry for typos.

~~~
nandemo
There's quite a bit of disinformation in your comment.

* that people live with their parents is only "shocking" if you happen to come from a country where that is considered taboo. In many countries it's not considered shameful to live with your parents while you're single. It didn't start after the bubble, it started like 1000 years ago. Yeah, there's a downside to it, but then there's also a downside to getting into debt in order to live by yourself.

* the percentage of car ownership is quite high. Just google it.

* "Japanese health care is a joke" compared to what? Look at life expectancy numbers, doctors per capita, etc.

* Internet banking has been around for years. ATMs are open 24/7 in convenience stores.

* etc

~~~
abracat1
> In many countries it's not considered shameful to live with your parents
> while you're single.

I can completely understand that you want to live with your parents when you
are studing (or a young working adult). But 28years+ is becoming a bit
ridiculous. Maybe it is because a lot of people are not getting married
anymore. But the point is that many people (and some of my friends) can not
afford a really expensive apartment. Tokyo is expensive to live in.

Anyways, the point I wanted to make is the Article's comment about the clothes
young people wear - it is quite deceptive to use such a metric.

> * "Japanese health care is a joke" compared to what? Look at life expectancy
> numbers, doctors per capita, etc.

Life expectancy is higher in Japan partly because of diet (there are not that
many overweight people - that is almost the norm in USA and Aus. Even trying
to get overweight with the FAtkins diet followed in USA and Australia would be
prohibitively expensive in Japan).

The USA's life expectancy is also lower due yo violent crime, excessive deaths
due yo traffic accidents, AIDS and other lfestyle diseases).

Yet life expectancy is not the only measure of health care. There are other
factors such as quality of life. The simple fact is that dental care in Japan
is far behind the west (and I am not talking about the poorest of the poor
without proper dental care, but fairly rich upperclass people).

> ATMs are open 24/7 in convenience stores.

That is true, I grant you that. 7-11 ATMs are open, but you will not find your
banks ATM open after 19h00 (e.g. JP postbank).

PS: The goal of my post is not for Japan bashing but trying to give an
unromanticized balanced view. There are many things wrong with the Japan, just
as there are many things wrong with the west.

~~~
learc83
I'm with on most of that, but what do you mean by "FAtkins" diet?

Severe carbohydrate restriction may be to difficult for most people to stick
with, and therefore not optimal for keeping the weight off. But there is is
irrefutable evidence that carbohydrate restriction will result in weight loss.

~~~
abracat1
I was refering to a diet full of delicious red meat, bacon and carbohydrates.
The diet is popular in many countries and I love it too.

But it is a simple fact that such a diet is impossible in Japan. The price of
meat, especially red meat is extremely high.

PS: I agree with you that a carbon restricted diet has obvious healt benefits.
My point was that following an unhealthy red meat diet in Japan is impossible
due to price.

------
tsotha
Japan has the highest debt/GDP ratio in the world. It's true most of that
money was lent by Japanese people, but as the population gets older people
will start draw down their savings. The government will be forced to go to
international markets to service the debt, and then the wheels are going to
come off. If they had to roll over that massive debt at 3% interest service on
the debt would consume the entire budget.

They'll have to impoverish the savers through inflation of the yen, assuming
that's a political possibility. Is this the sign of a healthy economy?

The "lost decades" are not a myth. Japan has been able to preserve the
appearance of wealth by borrowing it. Of course the country has great
infrastructure. It was all built on borrowed yen in a futile attempt to
stimulate growth. But the bill is coming due.

------
tryitnow
My main takeaway from this article and these comments is that it's devilishly
difficult to make international economic comparisons.

As one commenter mentioned such activities quickly disintegrate into highly
subjective "meaning of life" debates.

This is incredibly important because a lot of policy analysis depends on
making international comparisons. If such comparisons are really intractable
problems then what does that say about the potential for effective policy
making?

