This is about the first of a series of articles in the New York Time; this article is titled Japan Goes From Dynamic to Disheartened. Essentially, the New York Times (hereafter: NYT) is making Japan out to be the poster child of the evils of deflation.
A Very American Context
There is a context to this.
Right now, and I mean, as I write these words, the U.S. Federal Reserve is talking up the possibility of bringing controlled inflation to the United States. Unsurprisingly, all this talk is making the U.S. dollar decline significantly on international markets, which accomplishes half the U.S.’ goal without firing a shot. The lower the dollar, the better it is for exporters… and the more a general surge in commodity prices continues, with the price of Cotton hitting a 140 year high (that is, since 1870, at the start of Reconstruction and in the midst of the Meiji Restoration!!).
To not bore you to tears, inflation as a solution to economic problems is something that has been pushed for years as the last line of defense against the Japanese disease, as people would have you accept it. This is a subject of serious academic inquiry by minds such as Paul Krugman and Ben Bernacke (the latter being the current Federal Reserve head).
If you read up independently on this, the key word is liquidity trap, which is something Krugman pushed for years as being when the economy becomes resistant to pouring money on it at the Fed level like a Type 2 Diabetic becomes resistant to sugar absorption, resulting in a surplus of the sugar in the bloodstream. (I have Type 2 diabetes, but it is under tight control with medication and was always a mild case, for which I am highly fortunate. – J Sensei)
So the point is, inflation as a cure for our ills…. because you don’t want to end up like Japan over there, do you, youngster?
Laying It On A Bit Thick
I linked to the NYT above so, you can go read that for yourself. Here, I’ll focus on the issues raised.
First of all… let me put this simply. A thousand yen buys a LOT more today than it did 10 or 15 years ago. Akihabara, the mecca of Japanese electronics, has seen incredible turnover in the technology available for consumers at the same prices as the previous generations.
So, let’s not talk about this as if price is the only concern here.
Second, if you hadn’t noticed, the U.S. government has been chewing out Japan for supposedly doing beggar-thy-neighbor policies driving down its own currency. This is, uh… silly. I wrote about this over at Learn Out Live (which uses the same host as my humble blog here), in Don’t Start A Currency War You Can’t Finish, and since then the Obama administration has essentially… backed down meekly. For now. The gist is, the U.S. is a giant culprit in devaluing its own currency, but does so using means outside of actual currency market manipulation, so its devaluation is cool, but that of others, is not.
Look, Japan is seeing a massive rise in the value of the yen and has intervened only to try to hold the line to get some damned currency stability. Even that was enough to make the U.S. explode at it and cry charges of beggar-thy-neighbor.
So wanting some stability is trying to screw over your trading partners. Uh, okay? Point being, it undermines the advantages China and the U.S. seek to obtain from devaluing their currencies. Remember, if the U.S. dollar is going down, and China is keeping a constant ratio to the U.S. dollar artificially, that means the Chinese currency is going down, too.
Well, the point being is this:
The NYT’s Accusing Finger
The NYT’s basic message is simple: because you idiots won’t inflate the economy, coerce your people into spending more money like they did during the 1980’s, and shake people out of their problems, you suck. Not only do you suck, but you are stinking up the entire world, and the last thing we want as Americans is to end up like you.
Cheerful, isn’t it.
Let’s go over a few short topics.
Japan’s 1980’s bubble had valuations that were UTTERLY INSANE.
We’re talking like the sum value of real estate in Tokyo, on paper, being worth more than all real estate in the continental U.S., put together. I think that’s one statistic I heard, but I can’t be bothered to look it up over ten years later.
Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
You don’t think an entire nation spending like this was beyond its means? Japan is still, in the end, an island country that has to import huge amounts of foodstuffs to keep a first world level diet going. Delicacies like ootoro (the fattiest tuna belly meat) don’t come cheap. How do you think they get tuna meat raw from catch in the Atlantic ocean and get it fresh to Japan? By flying it chilled, of course. You think that’s cheap?
So yes, Japan’s economic valuations were the result of a shared economic delusion that eventually hit reality. The bubble could not sustain itself, and it burst.
People responding to that are baka? Seriously?
People think spending money (blindly) is stupid. (It is.)
No, they’re not idiots at all.
Take not taking out a multi-decade mortgage on the premise that young Japanese people today don’t have the job stability of their parents’ generation. Guess what? They don’t.
The discussion should end at that fact, but the NYT seeks to make a moral issue out of it more or less: lack of spending and lack of price inflation is equated with the national character, shown as a disease that essentially gives the entire country of Japan a smaller endowment, in the male sense. I could get more explicit, but I don’t need to, do I?
They’re Cowards For Scaling Back National Ambitions?? Really??
Japan’s modern economic miracle started where, the 60’s? Heavily subsidized by American policies, mind you. At any rate, they were rebuilding from being bombed into submission in WWII. Of course they would have an economic boom. The funny part is, the boom brought Japan more prosperity than before… largely because the U.S. wasn’t closed to it. That’s a luxury the U.S. would never have provided without WWII and military occupation; it’d have felt quite unsafe otherwise.
But since when? Japan has a long history. I study it, so I have some sense of it. What period of Japanese history are we basing this loss of national character on? The Meiji Restoration? The Edo Period? The Warring States Period (Sengoku Jidai)? When?
Japan, lest it be forgotten (by journalists anyway), has a long tradition of economic conservatism, a long history of economic doldrums spanning centuries and even well over a millennium (and that’s just recorded history), where most of the people were dirt poor and had no concept of microwave ovens or plasma TV’s, let alone every girl on the street walking with brand name European designer handbags and high heels.
To paint recognizing a lack of money to keep up that level of blind, insane spending forever as
“It’s like Japanese have even lost the desire to look good,” said Akiko Oka, 63, who works part time in a small apparel shop, a job she has held since her own clothing store went bankrupt in 2002.
is just annoying to read. Really it is.
If people want to look good on a budget, don’t sneer, please. It’s disgusting.
Living Standards Are More Than Street Prices.
It’s stupid that I even have to write this but, Japanese living standards are dependent on what their yen buy, not on HOW MANY yen are used to buy it.
Seriously. I don’t think the NYT writers know that.
Lay Off The Attacks On People’s Manhood Please
So we have more of the herbivore men mocking, saying that Japanese males have lost their animal spirits.
OK, so let me get this straight. They’re not offered lifetime employment. They don’t have a realistic shot at a house the size their parents had. They’re expected to slave at work for very long hours, land a girl and become baby factories for… visibly less than what their parents had, and they’re expected to grin and bear it and happily do it because well, that’s what Real Men do.
People ask why Japan’s birthrate is low. Uh, have you looked at the economy there? It costs to raise a kid. It’s a massive commitment. They’re not inner city gangsters who have ten kids with six different women and skip out on all of them (or spend time behind bars). They’re trying to be (gasp!) responsible adults, and that means not leaping into commitments they can’t keep.
Also, well, the women have reason to say, is that all you have? At some level, people just have to deal with the fact that there’s less shiny objects to gather the attention of females with.
Less, but hardly none.
The Bottom Line: Japan’s Still OK
The real bottom line here has to be pounded home.
Japan didn’t collapse. It persevered. It’s still here.
(Granted that annoys some, but whatever.)
A lot of people might suspect that… Japan ought to have collapsed, it’d be good in the longer terms. We should just have a mass blowing up of economic society and start over. Something like that. Funny that the Japanese themselves don’t think so.
Now look, it’s easy to understand one way inflation would have helped certain people: by digging them out of debts that were way over their heads once the bubble burst. That’s why it was a bubble.
Let me put it a different way. At their most basic, prices are mathematical representations of reality. Inflating prices with no relation to underlying reality is nothing more than denial of reality.
So for not denying reality, as the Federal Reserve plans to push in America – which some people sanely point out would be ruinous – Japan is condemned as having lost its national manhood.
You know, the U.S. didn’t like Japan when it did have the swagger. Remember the movie Rising Sun? I’ve seen it three times. I was fascinated by Japan in spite of the whole, well, you know, Evil Japanese Bogeyman vibe. (Simple reason why: It beat stupid Canadian language politics. – J Sensei) A lot of Japanese people seemed sort of relieved to not be so threatening to the U.S. that it threatened a trade war to trash their existing living standards.
By the way, Japan has largely maintained its living standards, in reality if not on paper. Ironically, the higher the yen soars, the better off importers are (though I won’t say consumers, that would mean lower prices get passed on; right, keep dreaming). Sure, it sucks for exporters, and the government doesn’t want to see Toyota and Sony coming in with sucky profit figures, but their problems run deeper than the value of the yen.
Indeed, Japan would be well served by forgetting about these manhood issues and just focusing on solving real problems in the real world and ignoring the harpies at the New York Times.
Buyer Beware – Inflation Has No Trade-In Policy
You can’t give inflation back to the store for a refund.
I will say one thing about Japan: so far as I can tell, through serious study and observation of the facts, what got Japan to the state where it is today – that is, no swagger but still kicking – is that it stopped a lot of evasion and political back-scratching and took restructuring of the banks’ balance sheets seriously. Real, long-term problems that could have been made to disappear with mass inflation, at the cost of the life savings of two generations of Japanese people (or is it three? who’s counting?), were instead acknowledged and painfully dealt with.
In so doing, society has been stable. Not great, not fantastic, certainly not dynamic in the size and length of Japan’s… economic numbers, but let me tell you something…
It could have been much, much worse.
Serious Business Thus Concluded
Hey, I want to get back to culture and anime blogging as much as anyone. I just feel a lot better getting back to that once I put in context how I feel about these other issues.
Essentially, I feel that Japan has hope. It’s not a matter of quick fixes or instant gratification. It is the longer, less traveled path, the search for a greater and more fulfilling personal experience rather than a brute force approach through life. It is appreciating what we have and searching for what we desire. It is doing so in a way that will not break us, but will enrich us and make us wiser over the long haul.
That’s why I blog about Japan. That’s why I learned the Japanese language over years of study (over a decade in fact).
Because deep down, I think that Japan is worth it.
(Even if the New York Times thinks Japan is boring and shouldn’t be bothered with except to make it a poster child of decline while lavishing awe upon China…)