

Why the Japanese stock market has done so badly - echair
http://www.newyorker.com/online/blogs/jamessurowiecki/2008/10/theres-a-reason.html

======
smanek
Think it might have something to do with the "Hodo Hodo" generation?

[http://www.careerjournal.com/article/SB122548483530388957.ht...](http://www.careerjournal.com/article/SB122548483530388957.html)

------
newt0311
Please. Disdain for shareholder value does not lead to incredibly low
profitability. There are several examples of US companies who put shareholders
last and still do extremely well (P&G comes to mind).

The primary problem of Japan's economy is lack of competition. In the US and
Europe, exclusive contracts are illegal. In Japan, they are the norm. In
Japan, the standard growth tactic in new product spaces is to gain market
share as quickly as possible. Often at a loss. Then once a (small) group of
companies collected up a critical mass, they would lock in some customers with
exclusive long term contracts and segregate the contracts. Middle men are
rampant. Export/Import controls are rampant, protecting the inefficient
domestic companies from foreign competition.

Japan has a two tier economy. The extremely efficient export economy,
efficient because it must compete internationally, and the extremely
inefficient import economy. Inefficient because, for the most part, it does
not even has to compete domestically.

------
kingkongrevenge
Japan has long been a "two tier" economy. They have a handful of world class
corporations that do very well, but most of the domestic economy is actually
extremely inefficient businesses.

~~~
startingup
This observation runs quite deep. This two-tier economy is the price Japan
paid for its export obsession and its long post-war tradition of mercantalist
trade policies (export good, import bad ...)

Here is approximately how it happened: Japan exported heavily, piling up trade
surpluses. Eventually the currency appreciated sharply (250 yen to dollar in
1980 to 100 yen to dollar by 1990), making Japan a first-world nation in terms
of per-capita GDP. Yet, Japan's overall economic structure wasn't and still
isn't as balanced as more mature industrial economies like Germany.

Imagine a kid who has been trained and trained from age 4 to be a world-class
chess player (with no exposure to anything else). He/she could achieve world-
champion chess player at 25, but would be a highly imbalanced individual.
Japan's economic story in a nutshell.

You can see this when you travel to Japan: their service sector productivity
sucks. Over-staffing is rampant. As a society they have chosen to redistribute
the enormous surplus from exports to sustain inefficient employment in a lot
of far-less-than-world-class businesses. Their totally undeveloped software
sector shows the real cost of their mercantalism. Their woefully tiny housing
(NOT to be attributed to population - Singapore has higher population density,
has lower per-capita GDP than Japan, yet Singaporeans enjoy larger apartments
and overall live better than the Japanese) is an everyday reminder of the
cost.

On balance Japan has done fine, but considering that they are the hardest
working people on the planet, they could have lived better, and could live
better today, if they hadn't developed that export obsession. They gifted the
rest of the world a lot of their hard work, while denying themselves those
fruits.

As an outsider, I can't complain, I love my Japanese luxury car ;)

~~~
litewulf
I think some of this rampant over-staffing is more cultural than the product
of a funny economic buildup. If you've been to other Asian countries, you'll
see people doing ridiculous jobs (sidenote: many people in Taiwan have someone
else wash their hair, there are people who have never washed their own hair
before and don't know how).

Also the second to last paragraph is so true. Japanese people are somewhat
crazy about their savings. They tend not to invest but instead put it in banks
(sometimes at rates below inflation).

~~~
bootload
_"... Japanese people are somewhat crazy about their savings. They tend not to
invest but instead put it in banks ..."_

Maybe because they are more experienced with an older culture. It makes sense
to have cash in hand with larger, older populations. You can see the
consequences of not doing this reading the quote below...

 _"... the deteriorating financial condition of our federal government in the
face of skyrocketing health-care costs and the baby-boom retirement could
fairly be described as a super-subprime crisis ..."_

This is the reality of US retirees who will hit the US economy very soon ~
<http://news.ycombinator.com/item?id=351351>

------
crabapple
japan has simply been in a secular bear market. we are now in one too.

the distinguishing difference will be why their bear has been more mild than
ours will be...because they started theirs as the world's largest
creditor...we have started ours as history's greatest debtor

