Japan’s Secret Success

So in my last (embarrassingly dated) post I was talking about the secret success in global poverty reduction, and today I want to highlight (via a Eammon Fingleton story in this week’s NYT Sunday Review) another hidden success story: the Japanese economy. Well, “success story” is perhaps a bit strong, but Fingleton’s article nicely pulls together a lot of points I’ve been thinking around but hadn’t fully articulated around the idea of Japan’s demise being greatly oversold. (See earlier posts here and here for hints of this thinking.)

The simple point is that the widely accepted narrative of two decades of decline/stagnation just doesn’t seem to jive with evidence of life as it is lived in Japan, which seems to have improved about as much as it has in the US and Europe over the last 20 years. Part of this is about the distinction between economic measurements and happiness/quality of life measures, but even in rather pure economic terms there’s plenty of evidence that Japan is doing okay. As is widely known, Japan has low unemployment, a trade surplus, and a strong currency. But even more interesting are a number of other sub-indicators which seem to suggest economic life in Japan isn’t really so bad: Fingleton notes that internet infrastructure (and indeed infrastructure more broadly) has expanded dramatically, skyscrapers continue to go up across Tokyo, electricity output is growing, and the Japanese have the coolest new cell phones, drive the flashiest cars, pamper their pets the most, and eat at the best restaurants. Does this sound like a population that is suffering from decades of economic malaise?

Given the disappointing GDP record (specifically in comparison to the US and Europe), the obvious question is whether a) there are technical deficiencies in measuring GDP that can explain the difference or b) GDP just isn’t that closely correlated with these other things. There’s probably some truth to both, but my guess is b) is the more important factor.

As a final note, as I’ve never actually been to Japan, in some sense the most contact I’ve had with Japanese people is via the tourist buses that clog the streets of the various tourist-friendly cities I’ve lived in (Ottawa, Paris, DC, and now Oxford). As a snotty local elitist I of course always found this to be a nuisance, but of late my thinking has (somewhat) evolved. Because when you think about it, a society where almost everyone has a job, the latest technologies are widely employed to make life easier and more enjoyable, and people choose to use their time and resources to travel the world and take in new cultural experiences (rather than, say, buying lots of crap at Wal-Mart) is actually pretty close to how I’d envision an ideal 21st century advanced economy.


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  1. 1 Were Japan’s Lost Decades Worth It? « Tomorrow's Economy Trackback on January 11, 2012 at 1:45 pm

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