A few thoughts on "Japan's Economic Dilemma: Comfortable Decline or Painful Revival"

I came across an interesting piece today by Jacob Schlesinger in the Wall Street Journal: "Japan's Economic Dilemma: Comfortable Decline or Painful Revival?"

In it, the author explores some of the choices policy-makers in Japan have made over the last twenty years, and the types of problems that face them now. Some key lines:

"Tokyo in recession showed none of the distress you would expect in the U.S. or Europe: no boarded-up storefronts, garbage piles, beggars, trashed subway stations or any hint of serious street crime. If anything, the city had spiffed up considerably during the “lost decades” of my absence."

This reminded me of a line in David Pilling's book, "Bending Adversity: Japan and the Art of Survival" (2014) (see a review here) in which a British MP toured a bustling street in Tokyo and pronounced, "If this is a recession, I want one." As Schlesinger highlights, up to now Japan has maintained a relatively equal society since the bubble, having peak unemployment reach just 5.5% during the Great Recession--remarkably low compared to the same rate in the US or Europe. This has come at the cost, however, including high underemployment, lack of full-time careers, and all the borrowing issues that come with deflation (debts become more difficult to pay over time, etc.).

"Deflation, he suggested, allowed Japan to spread and limit the pain from its decline, because firms could cut wages instead of carrying out U.S.-style mass layoffs.
That attitude, perhaps jarring to Americans, seems more mainstream in Japan, where mistrust of market messiness runs deep. The Pew Research Center this year asked people in 43 countries whether they agreed with the statement: “Most people are better off in a free-market economy, even though some people are rich and some are poor.” In Japan, 51% disagreed—just one of four countries where a majority doubted capitalism’s net benefits."

This last statistic in particularly is surprising to me, and perhaps highlights more than any other in the piece why public opinion on this issue seems so muddled. In noting the growing discontent with Prime Minister Shinzo Abe's economic program, Schlesinger notes that: "Some disaffection comes from signs the Abenomics revival is stumbling. But some actually comes from its success, because success isn’t necessarily “comfortable.”  

For another perspective on this: Japan and the Art of Shrugging (NY-Times, 2010).

The entire WSJ piece can be found here (Japanese version here).