Japan's Economic Prospects Dim - no longer a "first-class" economy

[kurth]

For Japan, a Long, Slow Slide
Declines in Productivity, Population Combining to Stifle Economic Growth
By Blaine Harden
Washington Post Foreign Service
Sunday, February 3, 2008; A17

TOKYO -- As the United States frets noisily about a recession, Japan is quietly enduring a far more fundamental economic slide, one that seems irreversible. This country, which got rich quick in a postwar miracle of manufacturing and alarmed Americans by buying up baubles such as Rockefeller Center, is steadily slipping backward as a major economic force.

Fifteen years ago, Japan ranked fourth among the world's countries in gross domestic product per capita. It now ranks 20th. In 1994, its share of the world's economy peaked at 18 percent; in 2006, the number was below 10 percent. The government acknowledged last month what has long been obvious to economists and foreign investors, if not to the Japanese public and many politicians. The minister of economic and fiscal policy, Hiroko Ota, told parliament that Japan could no longer be described as a "first-class" economy.

Japan is still the world's second-largest economy, as measured by gross size, although the island nation has been surpassed by China in purchasing power. In coming decades, the economies of China and India will dwarf Japan's, according to many projections. By 2050, Japan's economy will be about the size of Indonesia's or Brazil's, according to a study by PricewaterhouseCoopers. Japan's slide relative to other major economies is not a tabloid tale of suddenly squandered riches. It is rather an insidious petering out of growth, productivity and innovation -- and of political will to stop the slippage.

The slide has dovetailed with another quietly insidious crisis -- the petering out of the population. Japan has the world's highest proportion of elderly people and the lowest proportion of children. By 2050, population decline will have reduced economic growth to zero, according to the Japan Center for Economic Research. Seventy percent of the country's labor force will have disappeared. The undertow is already being felt here. Supermarket and department store sales have declined for 11 consecutive years. Toyota now is arguably the world's largest carmaker, but sales of new cars of all brands in Japan peaked 18 years ago and have been falling steadily since then. Still, with the exception of increasing poverty among the elderly in shrinking rural towns, this remains a remarkably comfortable middle-class country, with good health care and infrastructure and a low crime rate...

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/02/AR2008020200913.html?hpid=topnews

[Bonobo]

1. They are in better shape than us. They take care of each other pretty well still.

We are in the shits here too. And the difference is, we are pretty cold and indifferent to each other compared with Japan. Trust me.

When it really hits the fan here, we will be at each other's throats.

[enid602]

2. hmmm.

"Japan's slide relative to other major economies is not a tabloid tale of suddenly squandered riches." Now, I wonder to whom are they referring.

[piedmont]

3. Geez, people-- this is what SHOULD happen to every economy. Infinite growth is impossible.

Growth-based thinking about economics is totally at odds with reality. Populations can not grow indefinitely, and neither can consumption/productivity. Sustainability should be the goal.

[AdHocSolver]

4. Manufacturing is the bedrock of any economy. Japan is losing export sales to China and India.

However, Japan is, and will continue to be, better off than the U.S. That is because they will never allow themselves to get into such heavy debt as the U.S. has.

Even though Japan has few resources to exploit, it became a power house economy through manufacturing and exporting goods. Japan has used its profits wisely to build up its infrastructure and develop mass transit to save on energy usage. Even with a reduced economy, the Japanese standard of living is, and will continue to be, better than that of the United States.

Meanwhile, Americans fell for fairy tale econmics. We saw jobs being offshored to low wage countries like China and India, and the corporations told us what a paradise we would have because the price of goods would be so cheap. Yet even with cheap costs of manufacture, the real cost of everything of importance costs more today than it did 20 years ago.

What the corporations did not tell you was that they would pocket the reduced labor costs as profit, and charge you the same no matter where the goods were made. They also did not tell you that as the trade deficit became larger, they would import goods on credit to such an extent that the value of your dollars would drop precipitously, so that the cost of goods would rise anyway.

The U.S. corporations also did not tell you that they would sell you substandard overpriced health care, sell you gas guzzler cars and SUV's to keep their oil company investments profitable, start wars to make their investments at Halliburton, et al more profitable, put billions of dollars in sub-prime mortgages and other get-rich-quick schemes, and on and on.

Because the Japanese were smarter, and less gullible, than Americans, when crunch time comes, it will mean a slight drop in life style for them. For the U.S., it will be a major disaster for most Americans.

Will Americans then get over the delusion about the virtues of outsourcing manufacturing and jobs? Will they finally understand that becoming history's largest debtor nation does NOT improve one's life style, nor make for a more powerful and wealthy country? Will they finally understand that "free trade" is a fraud to bamboozle them into supporting economic policies that only enrich a few corporate insiders, while impoverishing them?

The Americans of the 1920's were as gullible and ignorant about economics, as are the Americans of today. The Americans of the 1920's had to endure a great depression, a massive economic collapse, before they finally woke up and supported government policies that reined in the greedy corporations. They finally got over the propaganda of their day that all government was evil and the corporations would save them and make them prosperous.

The Americans of their day accepted regulation of business, and that taxation to support infrastructure and provide for the needy was a good thing. Will the Americans of today come to understand these truths, or will they cling to corporate lies and propaganda, in spite of the evidence, and keep promoting the greed of a few until the entire economic system collapses around us? Stay tuned, folks!

[water]

5. No, many countries barely manufacture anything at all.

Japan's entire financial system has been so f*ed up by their government that I'm surprised they're still as successful as they are.

[frankenforpres]

6. they have a higher national debt

as a % of their gdp, they have a higher debt, and it is almost as high as ours overall

[SoCalDem]

7. Fact: Old people don't buy much

Rising costs create a need for women to work outside the home, which leads to fewer children.

When a single "Dad-salary" could support an entire family, it was more likely that there would be 3 or 4 children. Put Mom into the rat-race with dad, and you might get ONE child or even NONE.

Urbanized people often have fewer children too, because of the lack of space in apartments and the unaffordability of larger housing.

Can't have "sustainable growth" of population without a nurturing society that values families..