The economic fallacy of 'zombie' Japan
guardian.co.uk, Wednesday 11 August 2010 18.00 BST
Paul Krugman and others have got Japan wrong: Americans should be so lucky as to get a Japanese-style lost decade
Princeton economist and New York Times columnist Paul Krugman has frequently warned US policymakers against emulating the Japanese economy in the 1990s.
Japan has been getting a raw deal from the so-called economic experts. Consider this: in the midst of the great recession, the United States is suffering through nearly 10% unemployment, rising inequality and poverty, 47 million people without health insurance, declining retirement prospects for the middle class and a general increase in economic insecurity. Various European nations also are having their difficulties, and no one knows if China is the next bubble due to explode.
How, then, should we regard a country that has 5% unemployment, the lowest income inequality, healthcare for all its people and is one of the world's leading exporters? This country also scores high on life expectancy, low on infant mortality, is at the top in numeracy and literacy, and is low on crime, incarceration, homicides, mental illness and drug abuse. It also has a low rate of carbon emissions, doing its part to reduce global warming. In all these categories, this particular country beats both the US and China by a country mile.
Doesn't that sound like a country from which Americans and others might learn a thing or two about how to get out of the hole in which we're stuck?
Not if that place is Japan. During and before the current economic crisis, few countries have been vilified as an economic basket case so much as Japan: it's been hard to find any reference to the country without some mention of its allegedly sclerotic economy, its zombie banks, its deflation and slow economic growth. This malaise has even been called "Japan syndrome", sounding like a disease to warn policymakers, as in "you don't want to end up like Japan." more
And what happens when you lose your ability to manufacture complex, high-quality things? Eventually folks stop taking you seriously.
Europe can’t even be bothered to hate America any more.
You can still buy an American newspaper at the kiosk in Rome’s Piazza Colonna, but you have to ask the lady behind the counter. She turns from the window, paws through a stack on the floor, and produces an International Herald Tribune, holding it at arm’s length like a day-old fish. It’s the same availability and tone in Venice, the Greek islands, and Istanbul. The implicit question in the transaction is always the same: why would you want to read that thing about that place at this time?
And when you read about America in European newspapers, what you are likely to find is a tone bordering on pity. The U.S. is depicted as a fraying empire of obesity, ignorance, debt, gridlock, stagnation, and mindless war. Sure, the iPad is cool, but it is evidence of what America was, not what it will be again. The stories are not angry, accusatory, or even ideological. It’s worse: they are condescendingly elegiac.
European disdain for the United States is centuries old, of course. But over the course of decades of traveling in the U.K. and on the continent, I have never gotten the sense that I got on a recently completed three-week trip to Italy, Greece, Turkey, and the Black Sea. America is no longer admired, imitated, or feared. We remain—for now—a safe haven for dollars (of which there are too many in the world). But we increasingly are seen less as a model or as an empire than as a cautionary tale of national neglect and decline. more