Eamonn Fingleton writes on "The Myth of Japan's Failure." We've all heard a million times about how since 1990 Japan has turned into a post-apocalyptic wasteland ruled by the Humongous, but it actually looks okay. A friend who moved to Japan in 1980 said that back then it was full of ugly buildings and poorly dressed people. Now, it's full of nice buildings and well-dressed people.
That brings up a general question I have about economic statistics. It strikes me that one of the overlooked factors in comparing wealth over long periods of time is that buildings don't burn down as much as they used to. For example, one reason Japan in 2012 is better off than in 1990 is that it has now been 67 years since the B-29s last firebombed the place rather than 45 years.
But even in places that haven't been ravaged by war or earthquake-caused fires, like Chicago, the rate of fire loss is way down. Assets accumulate when they don't burn up. People can devote economic resources to new stuff instead of replacing old stuff that went up in smoke. Has this ever been measured?
I wonder what percentage of all property (excluding land) burned up in, say, the year 1875? Off the top of my head, I'd guess, oh, say, 0.5%. I mean, they used to have to use flames for lighting at night. (It's hard to grasp how scary that would be to a 21st Century sensibility.) A half percentage point loss due to fire per year would compound over the generations into a sizable difference in wealth.
I wonder what percentage of all property (excluding land) burned up in, say, the year 1875? Off the top of my head, I'd guess, oh, say, 0.5%. I mean, they used to have to use flames for lighting at night. (It's hard to grasp how scary that would be to a 21st Century sensibility.) A half percentage point loss due to fire per year would compound over the generations into a sizable difference in wealth.
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The urban areas made unlivable by "social change" since the Great Society cancel out whatever small gains have been made,
One consequence of fewer large fires is that fire departments have less and less to do. In many cities fire trucks are dispatched to medical calls with no fires anywhere in sight.
Peter
As I said before, Tokyo is three years from evacuation. Japan is 50 years from its demise thanks to the nuclear meltdown.
Heh Matt! I recall riding the train up in Chicago and being amazed at what diversity had wrought on some areas of Chicago. It looked like large tracks between downtown and the museum of science and industry had been subjected to firebombing raids.
Japan is still quite ugly by North American standards. A good book to read in this regard is "Dogs and Demons" by former Japanophile Alex Kerr, who dubs it among the ugliest countries in the world due to its haphazard approach to city planning and complete disregard for the urban/rural aesthetic divide that most of us take for granted.
Official economic statistics are one of the big lies of recent years. I would rather live in a place that had both 20% less GDP per capita, and much less social problems than the current US.
Looking forward to your take on this
http://www.nytimes.com/2012/01/06/education/big-study-links-good-teachers-to-lasting-gain.html?_r=1&hpw
My brother has lived in Japan since 1969. When I phone him, I often ask about the crisis I keep hearing that Japan is in. He always responds that he sees no evidence of crisis whatsoever. The reports perplex him.
“The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets. And the physical infrastructure of the country keeps improving and evolving.”
A lot of Americans would have those things too if we stopped reproducing as the Japanese have.
This shows a good point. If growth is zero and economic activity stalls at a very high level, you can still end up richer each year than the year before.
If my income stalls at $100K but I manage save and buy durable tangible assets worth $50K each year, if you visit me in 20 years you will see a millionaire.
If it has been measured, you'll denounce it as "economics" (i.e., the use of mathematics to understand the world).
Tokyo is still nice because young people from all over Japan are moving there in search of other young people. The countryside is being depopulated, so that's where you find all the abandoned strip malls, amusement parks, and schools.
Tokyo will probably remain vibrant for a few decades at least, but the reason you saw so many old people in the earthquake footage was the three prefectures of Iwate, Miyagi, and Fukushima have an average (average!) age of 65.
Truth, would you care to put money on the line re Tokyo?
Beware any pro-Japan articles that seek to polarize emotions with words like "belittled" and "ridiculed" while politely shooshing up about d-e-b-t.
Another stat that suggests Japan's decline has been exaggerated is Tokyo's status as restaurant capital of the world: it has more restaurants with 3 Michelin stars than Paris, and about 4x as many as New York.
Tokyo is a wonderful city and the people are great, it's just that the youth seem to have the problem our youth do..they have college degrees, but cant get jobs, so they stay chronically underemployed. Part of it, over there and over here, is the sense of the entitlement the youth have, and the weakness brought upon them by society.
So long as the field of economics is dominated by Keynesians and the GDP-tards, you won't see any studies into this.
You see, keeping an old building contributes nothing to GDP, while knocking one down and building another contributes plenty. This is why GDP is such a specious measure of economic progress. It doesn't measure opportunity cost. It never asks the question 'if we hadn't devoted materials, labor and money to knocking down this building and putting up another, what could we have achieved with that same amount of materials, labor and money elsewhere'. So it never takes into consideration malinvestment.
GDP is a measure of activity, not productivity. Plenty has been written about the 'broken window' fallacy of GDP, but it seems nothing has been learnt. Its one of the keys to the housing bubble. Certainly there were problems on the demand side that everyone knew about, but on the supply side, constructing more and more McMansions in the exurbs was considered an unmitigated good, because it boosted GDP.
Next time someone points to GDP as a measure of economic progress, laugh in their face.
What's up with comparing life expectancies, etc.? All that tells us is that Japan is full of Japanese.
On the calculations of John Williams of Shadowstats.com, a Web site that tracks flaws in United States economic data, America’s growth in recent decades has been overstated by as much as 2 percentage points a year.
So what would Japan's growth had been if we'd applied Shadowstats' methodology to them? Oh wait, we have no idea what Shadowstats' methodology is.
Let's see:
Floods
Hurricanes
Tornados
Asbestos siding
Sinkholes
Tsunamis
Mudslides
Toxic Mold
It seems that there are plenty of catastrophes waiting to happen even if a devastating fire doesn't. Forest fires still take out huge numbers of houses in suburban areas which off sets the fire losses lost out on in urban areas. I'd say overall the disasters have increased exponentially along with the number of dwellings, not having as much wide open space to dissipate into nowadays.
Also, I can't think that any Japanese chick would be wearing something I wanted for myself or that a bunch of shortish, blockish people should be wasting lots of money trying to look like models. So, you had it tailored, you still don't look as great as George Clooney or Cindy Crawford would in clothes from Wal-mart. My advice: buy retail off season and avoid horizontal stripes.
Great piece from the NYT. I wonder how the Japanese manifest their wealth, since the google streetviews don't impress (I know, a poor metric). It always looks drab and a poster who lived there confirmed it. However, I wonder if the Japanese simply put more of their wealth is what is actually "wealth": productive assets.
Maybe they spend less on flashy consumer goods and oversized homes, and more on factories and hi-tech production facilities. If true, their future is bright.
In fhe US, it seems like most suburban cnstruction is designed not to last real long. Commercial buildings in particular seem disposable--people are always tearing down the building the Walgreens was in because it doesn't fit the plan they want for a Safeway or Target or whatever, rather than reusing the existing building. And it seems like neighborhoods, malls etc., get handed down from higher to lower social classes--fhe neighborhood that was the one everyone wanted to live in 20 years ago is now, often, the place where the schools aren't so great and most houses have alarms.
Now, it's full of nice buildings and well-dressed people.
Er, what is meant by "nice"? Is that like "good" suburban schools, where it means merely "clean" and "safe"?
If architectural and sartorial taste have improved in Japan in the last 30 years, that seems to go counter to the trends of the rest of the developed world, with its ugly glass and steel and denim everywhere. Gehry, Libeskind, Hilfiger...
As I said before, Tokyo is three years from evacuation. Japan is 50 years from its demise thanks to the nuclear meltdown. --Truth
This, from a man who lives just up the road from Alamogordo...
"In many cities fire trucks are dispatched to medical calls with no fires anywhere in sight."
When we called the ambulance, a hook and ladder truck showed up: complete rescue overkill.
"amazed at what diversity had wrought on some areas of Chicago. It looked like large tracks between downtown and the museum of science and industry had been subjected to firebombing raids."
For his Pearl Harbor film, Michael Bay filmed the Doolittle Raid sequence in Gary, Indiana (I guess he had to use CGI to make it look pre-firebombed).
As far as I know, there's no real "balance sheet" component to GDP. If a company were to lose a building to a fire, the economic loss would show up in their income (offset by any insurance claims) - though it wouldn't be reported as "operating income" - the loss is still recognized. But there's nothing like that in our National economic accounting.
For example, all the oil extraction that went on in the U.S. before we became a major oil importer depleted the nation of an important asset. But only the economic activity generated by the extraction showed up in GDP - there was no accounting for the loss of the oil assets in the ground.
" So long as the field of economics is dominated by Keynesians and the GDP-tards, you won't see any studies into this."
Don't confuse Keynes with the so-called Keynesians, he would have been horrified at all the social engineering done in his name. To quote Peter Drucker:
"He had two basic motivations... One was to destroy the labor unions and the other was to maintain the free market. Keynes despised the American Keynesians. His whole idea was to have an impotent government that would do nothing but, through tax and spending policies, maintain the equilibrium of the free market.
http://www.forbes.com/2009/08/13/john-maynard-keynes-conservative-opinions-columnists-bruce-bartlett.html
The housing bubble was due to the
govt subsidizing the real estate sector (well that and by ignoring the trade deficit). It went beyond Fannie and Freddie and Wall Street speculation, Congress pumped up RE with tax breaks on mortgages, capital gains, depreciation and local property taxes, which weakened the rest of the economy since everything else had to be pick up the slack with higher taxes.
Go read Michael Hudson if you want all the gory details.
http://michael-hudson.com/category/real-estate-and-georgism/
"Truth, would you care to put money on the line re Tokyo?"
Give me 5 years, and I'd go whatever you can cover. You must understand the mass media does not give real news, and from what I've read, it is catastrophic.
There have already been 14,000 deaths linked to the Fukushima disaster according to an article in the International Journal of Health Services...
Not in Japan, IN THE U.S.!
"When we called the ambulance, a hook and ladder truck showed up: complete rescue overkill."
These jerks sometimes get bored and go joy-riding, sirens blaring, lights flashing in the middle of the night.
I guess this is better than the alternative, lights and sirens off coasting through intersections on dark country roads. Oh wait, I just gave 'em the idea.
That is the worst article with the worst statistics I've ever seen. And I'm even sympathatic to his thesis.
Simple example. Most of the cars you see are nice cars because the cost of car ownership due to parking, tolls, etc is sky high. So the kind of people that can afford the maintanence can also afford nice cars. The vast majority of people ride bicycles to the train station.
"As I said before, Tokyo is three years from evacuation.Japan is 50 years from its demise thanks to the nuclear meltdown."
Um, "Truth", you do realize that they rebuilt Nagasaki and Hiroshima, despite those being the site of actual atomic bomb detonations?
"Beware any pro-Japan articles that seek to polarize emotions with words like 'belittled' and 'ridiculed' while politely shooshing up about d-e-b-t."
Most Japanese debt is held by Japanese citizens themselves, unlike the US Government, which is in hoc to a passel of foreign (net) creditors (including the Japanese, incidentally). So when the Japanese government pays interest on its debt, it's basically transferring funds from (younger, on average) Japanese taxpayers to (older, on average) Japanese bondholders. This might be a problem in the US, where there exists a racial and cultural divide between the generations, but in a highly cohesive society like Japan it's close to a nonissue.
The major problem Japan has is a "birth dearth" that is increasing the ratio of dependent elderly to productive youngsters. But they're not nearly as badly off as similarly situated (in the demographic sense) European nations, which have exacerbated the decline of their native populations by bringing in millions of hostile (and disproportionately welfare-dependent) foreigners.
"Tokyo is still nice because young people from all over Japan are moving there in search of other young people. The countryside is being depopulated, so that's where you find all the abandoned strip malls, amusement parks, and schools."
Economists tend to view increasing urbanisation as a good thing in developed countries (and pretty much everywhere).
Cities are where the economic action is (don't get me wrong - the country is vital, but we don't actually need to employ many people there), and the reason why Western countries have hinterlands that are as populated as they are is often to do with wealth transfer from cities via governments (rural areas have voters you see, and voters want jobs and rural development councils).
It might seem a shame to have all these abandoned buildings and whatnot - particularly if you are a US or UK style property speculator that wants to buy and sell people property at a markup to make money, without ever having to invest in potentially risky productive commercial venture - but ultimately the trend in developed countries is for urbanisation and with very few people living in the hinterlands.
My guess would be that the Japanese situation is not some fuck up by bureaucrats, but what "should" happen if it weren't for the artificial economic barriers created by Western governments which end up favouring sprawl and extension.
In nations that have sane immigration policies, like Japan, the flow of workers is always going to be from the country to the city. That is distorted in the West, where the real distance and real cost in assets for immigrants to travel to our metropoles is often less than for natives from rural areas.
(E.g. if you own a house in the rural South that was nominally marked up to some stupid price by the housing boom, you're probably likely to want to hold on to that and less likely to migrate to a nearby city than a Mexican peasant who has nothing and for whom its not a significantly longer or more difficult journey with all the modern conveniences of travel. Even though you're probably productive enough that even with your wage premium you would add more to the city's economy than the Mexican peasant.)
But it's no surprise that that's not the way it is in Japan, which has a sane and long term immigration policy (i.e. understands that the only advantages of Third and Second World citizens are that they have been conditioned to work by a poor environment and are relatively young and that these advantages are not in the long term sustainable, while the disadvantages are).
Fair enough point about fire loss, against this though, is the problem that buildings become technologically obsolete like anything else does, and standing in one place for a long time is not the same thing as being just like new. Cities will a lot of very old office building stock, like New York, Philadelphia and Washington, have problems with not being current on air conditioning, fire safety, and computer wiring needs.
But Japan's biggest advantage is defense costs. I've read that the USA military, since the beginning of cold war, has spent more than the value of all America's capital stock in place (factories, houses, office buildings, dams, every single man-made object). Our addiction to defense has cost us literally everything we own.
See, this is the thing:
Your Westerner allows immigrants to come to his country. GDP per cap maybe goes up, but he largely spends his extras on luxury stuff he doesn't really need.
(Of course, we all know that the average person does not actually become richer and all the wealth is captured by elites and at least the top 20% (if that), but still....).
Japanese are willing to pay a cost to be Japanese rather than Pakistan, Brazilian and Nigerian. They skip bringing in the immigrants and they skip spending it on the luxury.
Provided they aren't doing that off the back of foreign debt they don't wish to pay back, I find that basically admirable.
I don't really see why economists think they have any more right to complain about that than any other form of "luxury" spending. Just because a preference that people are willing to pay for is not "captured" by their GDP and is decided collectively (because that is the only way it can be decided and if you have a problem you can emmigrate) does not make it invalid.
...
With regard to GDP not having a balance sheet element and all the flaws in it (i.e. doesn't consider spending of existing assets or debt), I actually think this is something we should bear in mind when considering, one reason why more intelligent countries have more.
More intelligent people, like we saw in the recent financial crisis debacle, GAME THE STATS.
They're smart enough to do it, so end up doing the dumb thing and gaming the stats in the way that dumb people are too dumb to do.
I've viewed the high unemployment problem Japan has faced since the 90s as being largely due to their aging population and declining birth rates. There was a book about generational economics I recall reading in the early 90s about Japan that predicted the countries economic downturn due to this issue. So far he had been right, with the exception that he thought Japan would rebound a little once America declined after 2008. The US and Japan's baby booms or generational booms are opposite to each other.
Maybe this is what we will be seeing the US going forward with the baby boomers retiring.
- The buildings are still kind of ugly, the japanese view non-landmark buildings as consumer goods. But perhaps they used to be even uglier, what do I know?
- Relative decline due to demography (which is Japan´s most pressing problem) is not an ugly or disorderly problem. Especially not when technological improvement largely makes up for the shortfall of working-age people.
-The wealth that you percieve when you visit somewhere is to a large degree accumulated wealth. GDP is a flow, comparable to annual income for an individual, wealth is a stock.
- Beware of using capitals for assessing the state of a country. Capitals are not representative, as they are usually much richer than the rest of the country (not to mention the hinterlands), sometimes wildly so.
Finally:
"You see, keeping an old building contributes nothing to GDP."
Jesus christ. Ever heard of "alternative cost?" Of course maintenance is in GDP, but the most important impact on GDP of not letting old buildings decay needlessly is the freeing of resources for alternative uses.
"Certainly there were problems on the demand side that everyone knew about, but on the supply side, constructing more and more McMansions in the exurbs was considered an unmitigated good, because it boosted GDP."
Yes, I am sure that was the argument used by developers, builders, etc. - "We should build more exurbs because it boosts GDP". Jeez.
They built the houses because people bought them (or, at the end of the bubble, beucase they had thought that they had bought them).
You can´t decouple GDP and demand, that makes the concept much less useful, not to mention confusing.
Truth, you might want to read the comments to the article you cited before accepting it as the Gospel Truth.
As one commentor pointed out on the site where the article you cite is posted:
"The study is flawed.
The data before and after Fukushima differ: After Fukushima, the authors included 119 cities in their evaluation, before Fukushima only 104 cities. The excess infant deaths come from the 15 additional cities.
A trend analysis of weekly infant deaths with the official CDC data from week 50, 2009, to week 25, 2011, yields no upward shift, but a 1.3% decrease of infant deaths after Fukushima."
I might add that the article does not mention what the historical standard deviation is for deaths in these American cities so I memmediately thought it was suspect. Also the study takes deaths from disparate causes (such as influenza, and other unrelated illnesses) and claims that they all must have been "somehow" increased by the fallout. Even if there were an increase in deaths (which apparently according to the commentor I cite there was not because the authors cooked the sample) it seems pretty strange to claim that such an increase in all these differnt types of deaths, espescially some that are contagion related such as influenza, was caused by the increase in nuclear fallout.
I mean if there turned out to be more traffic deaths in Idaho the month after the nuclear accident in Japan and resulting increased levels of radiation in the U.S. does that mean that the traffic deaths were caused by the increased nuclear fallout?
If you are a true believer in nuclear non proliferation, like the site which posted the article you cite, I know that the answer to the above question is yes.
I don't want to belittle the seriousness of the problem in Japan, but the article you cite is not very convincing evidence for eminent demise of Japan.
Remember that prior to 1875 land was a much higher proportion of assets than now.
I doubt if, when the world economy is growing at 4.8% losses from fires would reduce it much. Indeed it is quite possible that fires, by getting rid of outdated buildings and making the land available for development, have a net positive effect. This was certainly the case with the Great Fire of London 1666 which destroyed the medieval buildings and allowed St Paul's Cathedral etc to be built.
It has been argued that the Allied airforce's urban renewal programmes provided the same services to Germany and Japan and that this contributed their post war success.
The science of fire fighting has developed tremendously. It is one of those revolutionary technical advances that changes people's lives but nobody notices it. Like sewage disposal and clean water supply, cold chains and air conditioning. Sprinklers have reduced fires in a 95% and additional safety measures like illuminated exit routes, emergency doors, fire-resistant textiles and other materials etc. have almost eliminated fatalities. Japan, morfeover, has a well organized and well trained population, so human life and real estate is very durable in Japan.
But with national debt at 200% of its GDP.
Okay Truth, the condition is the evacuation of Tokyo, the expiration date is 2017, and the stakes are a grand. Agree?
I'm not trusting any claims from the "Global Justice Ecology Project".
"Eamonn Fingleton" set off my BS detector. this guy writes a lot of BS. double check everything he writes with a simple google or wiki reference. he's often completely factually wrong.
he's some kind of japanese supremacist, or empathizer. whatever it is, he's been writing for years, over a decade i think, about how we're all way behind japan in everything.
last article or book excerpt i read from him, sometime in 2008, guy was DEAD F WRONG about supercomputers. easily fact checked by a few internet searches.
he strikes me as similar to a writer like james kunstler. a guy with no technical background in anything he writes about yet steadfast in prediction of demise, despite being proven wrong again and again.
in kunstler's case, we're going to somehow run out of oil so fast and without warning "soon" that everything will come to a grinding halt and take us into "the long emergency". with fingleton, it's about the same except it's japan that's going to come out of nowhere, having secretly been turning into an awesome unstoppable machine for decades, and beat all our asses.
"I often ask about the crisis I keep hearing that Japan is in. He always responds that he sees no evidence of crisis whatsoever. The reports perplex him."
remember that it's the finance people who are raising the alarm. constantly. continuously. obnoxiously. if "japan" as an economic entity doesn't grow, year after year, like clockwork. the sky falls for them. things must "grow" year after year like clockwork for these types of people. everything in based around growth. keeping the borders open is based around the crappy and ephemeral growth it temporarily creates.
if their stock holdings don't go up 10% per year every year forever, the sky is falling. they can't buy a new mercedes. they can't buy that third home. opportunity is crashing down around them and things are worse than they were 1 year ago.
remember they live in an artificial world of an air conditioned office with a computer screen that shows then numbers. their life is about those numbers. if those pixelated numbers on an LED screen don't show them what they want to see, things are going to shit.
that's their world. those numbers on a computer screen. not the real world. not the continuously improving material world, always getting better in non-NAM areas thanks to smart, hardworking engineers, scientists, and doctors. if the cancer rate comes down 1% per year and the rate of people dying in car crashes is at a near all-time low and the violent crime rate has dropped like a rock, but the economy does not grow at 5% per year, the world is falling apart, damn it.
they get daily reinforcement that the world is falling apart by the pixels on their computer screens, which they stare at for 10 hours a day. you can only really know the things which you interact with, and they interact with numbers that are kinda fluctuating up and down and not going up, up, up like they are supposed to.
this is why we would be wise to ignore most modern economists, who have condensed human existence down to one math figure: growth.
"A lot of Americans would have those things too if we stopped reproducing as the Japanese have."
japan has deflation which inhibits economic growth by a decent amount, but does have the side effect of: tomorrow, things will cost even less! so hold your money, hold your money, hold your money...now buy expensive shiny car.
of course there's the issue that the japanese are literally dying off. in 2012 there will be less japanese humans on earth than there were in 2011. combined with the tsunami and japan probably did not grow last year. japan will be back to growing by 1% or so this year, you can't hold them down for long. so industrious and smart. automation and robotics will help eek out a percentage point of growth every year even with a declining population.
absolute population decline is also reality in germany now i believe, and the germans are starting to leave earth. but the economic situation is reversed. pretty sure germany grew by 3% in 2011.
they also voluntarily elected to deactivate their fission reactors, a total mistake, whereas japan shut down most of them temporarily for genuine safety reviews. so to grow 3%, despite leaving behind cheap energy and opting for 50% more expensive energy, that was decent performance.
manufacturing costs energy, and japan and germany consume lots. it needs to be relatively cheap and bountiful. you don't build 3 million toyotas in factories powered by solar panels and windmills.
"GDP is a measure of activity, not productivity."
true, this is why GDP growth is not necessarily reflecting something important. two mexicans selling tacos increases GDP, but contributes almost nothing to the US really. multiplied by a million mexicans and you get some additional phantom GDP but not much important GDP. in fact, mexicans are having a huge effect of this nature on the US right now.
"Next time someone points to GDP as a measure of economic progress, laugh in their face."
well it's not like that everywhere, it's still a pretty decent way to measure activity in homogenous nations. in social science like economics and in some psychology (modern research psychology is hard science i would argue) you would say the reliability is high but the validity can be questionable sometimes.
@ Tom Regan re your comment about the GDP,
Thanks, you explained that clearly and concisely. Much appreciated.
Now we just let the buildings fall apart into decay. Also, look at Greece, Rome, Egypt, ... Those buildings didn't burn, but the civilizations collapsed.
Good point, though, Steve. As usual, you bring up lots of things I've never thought of.
Tokyo is still nice because young people from all over Japan are moving there in search of other young people. The countryside is being depopulated, so that's where you find all the abandoned strip malls, amusement parks, and schools.
Exactly the same thing is taking place in American and Europe - young people leaving the countryside and small towns and moving to the big cities. This naturally results in a greying of some parts of the country in queston.
"As I said before, Tokyo is three years from evacuation. Japan is 50 years from its demise thanks to the nuclear meltdown."
Convincing...Hey, make a movie!
There have already been 14,000 deaths linked to the Fukushima disaster according to an article in the International Journal of Health Services.
Actually there have not been any specific deaths in the US "linked" to Fukushima. Not a single one.
What the "International Journal of Health Services" did was to look at increased levels of Iodine-131 in the US and project that such increased levels would perhaps result in an extra 14,00 deaths in the US for the year in question. Keep in mind that every year about 2.4 million people die in the US. That number varies each year of course. A bad flu season can increase it by far more than a measly 14,000. In fact on average aout 36,000 peple die in the US from flu each year.
Citizens can sleep safe in their beds and not worry that they are are in danger of radioactivity poisoning. And Troot is once again exposed as a nincompoop.
"TGGP said...
Truth, would you care to put money on the line re Tokyo?"
"Truth said...
Give me 5 years, and I'd go whatever you can cover. You must understand the mass media does not give real news, and from what I've read, it is catastrophic."
So, TGGP, his answer to your question is: "No" - given surreptitiously, with the usual slathering of obfuscatory bullshit that is "Truth"'s stock-in-trade. Not that anyone should care what this credulous, dim-witted blowhard thinks anyway.
Wall-Street and Free Traders pushed the line that Japan is some kind of economic wasteland because they resent Japan for not being like us - a nation that leaves itself open to the predations of speculators and financial manipulators.
That brings up a general question I have about economic statistics.
There's also the philosophical issue of what exactly the economic statistics like GDP really mean.
Something like GDP can be viewed as a total cost of living and reproducing.
The problem with Japan is stalled growth, due to the dearth of young people. Now, the extreme over-crowding in Japan makes that halfway a good thing, but all those old people will need a lot of medical and other care. That costs a lot of money. Easy if you are growing, if you are not, then money gets taken off other things to pay for that.
Moreover, a lack of a critical amount of young people stifles innovation. Not to many 80 year olds create new technology. For a nation like Japan with few resources, many regional enemies (with long memories) and a need to generate wealth to pay for all that stuff (in a way say, that the Philippines adapted to grinding poverty does not) ... well that's decline.
Employment, wages, Japan-based production, all in steep decline. Seiko and Honda for example, do much of their production offshore (only Toyota is intent on maintaining Japanese production).
Basically the Japanese are the French vs. the Germans, wrt China, in say 1905.
Economists tend to view increasing urbanisation as a good thing in developed countries (and pretty much everywhere).
There's a point at which what is normally a good thing becomes pathological. Young people are moving to the big city because they can't find mates. Once they get there they can find a mate but they can't afford to have children.
Like I said, Tokyo (and the other large cities) will remain vibrant for a few decades. It will be interesting to see what happens then.
It's about "Who, whom?" as usual.
Foreign investors i.e. American hedge funds, banks, etc. don't like Japan because Japan's real estate and financial markets have been flat. That's what's meant by "lost decade". It's not that it's been that bad for ordinary Japanese, what's been "lost" is the opportunity for these foreign investors to make capital gains and extract more money out of Japan for themselves.
What the foreign investors wanted was for Japan to sell its people out and gin up its real estate and financial markets by things like immigration population growth.
A flat, low real estate and financial market is not necessarily a bad thing for your ordinary citizens. It keeps the costs down for your ordinary citizens to buy.
This applies not only between foreign investors and ordinary Japanese, but also between Wall St. and ordinary American citizens in fly-over country.
"Um, "Truth", you do realize that they rebuilt Nagasaki and Hiroshima, despite those being the site of actual atomic bomb detonations?"
No, I hadn't heard that one.
So when the Japanese government pays interest on its debt, it's basically transferring funds from (younger, on average) Japanese taxpayers to (older, on average) Japanese bondholders
Yes, but as the population gets older more people are drawing down their savings in retirement. Japan will eventually be forced to go to foreigners to roll over its massive debt, and when that happens interest rates will rise and the wheels will come off. They've managed to borrow so much money if they had to pay 3% interest, debt service would consume the entire budget.
When (not if, but when) that happens what are they going to do?
Yes, but as the population gets older more people are drawing down their savings in retirement. Japan will eventually be forced to go to foreigners to roll over its massive debt
I don't think this word "forced" means what you think it does.
when that happens interest rates will rise
Perhaps, perhaps not. The world (including the supposedly broke Japanese) still loan money to the US at irrationally low rates.
The looming credit crunch you ought to worry about is the one right here in America.
The problem with Japan is stalled growth, due to the dearth of young people.
You can always rely on Whiskey to repeat the conventional wisdom.
Economic "growth" has nothing to do with the number of young people, or even of people.
I agree! We'll let mr. Anon hold the money.
(BTW, disclaimer: Online wagering is illegal in the United States)
The following kind of economic growth seems preferable to importing cheap farm labor.
Japan plans futuristic farm in disaster zone
http://www.google.com/hostednews/afp/article/ALeqM5gr9wItZr_n5h3gcE2aC9KKqgDqVQ
Japan is planning a futuristic farm where robots do the lifting in an experimental project on land swamped by the March tsunami, the government said Thursday.
Under an agriculture ministry plan, unmanned tractors will work fields where pesticides will have been replaced by LEDs keeping rice, wheat, soybeans, fruit and vegetables safe until robots can put them in boxes.
Carbon dioxide produced by machinery working on the up to 250-hectare (600 acre) site will be channeled back to crops to boost their growth and reduce reliance on chemical fertilizers, the Nikkei newspaper said.
The agricultural ministry will begin on-site research later this year with a plan to spend around four billion yen ($52 million) over the next six years, a ministry official said.
Land in Miyagi prefecture, some 300 kilometres (200 miles) north of Tokyo, which was flooded by seawater on March 11, has been earmarked for the so-called “Dream Project”.
65 years ago Germany was all but destroyed by war. Sweden by comparison was completely unharmed. Today they are roughly at the same level. What's extraordinary is how little destruction of buildings seems to matter for the economy in the long run.
(The Swedes themselves did tear down much of beautiful Stockholm later, progress and all that).
In another example, here's a heartbreaking photo spread of Detroit:
http://www.marchandmeffre.com/detroit/index.html
Japan has a lot of debt and is demographically aging. Currently their deficit is largely funded domestically -- the Japanese are big savers, and they seem to invest a good portion of that in government paper (go figure). Unless those two things -- demographic aging and big deficits -- change, eventually they'll have to borrow abroad. Which will cost them a good deal more.
It's a matter of time.
Jody. Comments excellent enough to fasten your name in my head as one to pay attention to here, and to not reject arguments out of hand if I initially disagree.
Unless those two things -- demographic aging and big deficits -- change, eventually they'll have to borrow abroad.
The US is already borrowing abroad, and it's hard to see how it will ever pay that money back. But I don't see the same hand-wringing about US debt that I see about the Japanese.
The US is already borrowing abroad, and it's hard to see how it will ever pay that money back. But I don't see the same hand-wringing about US debt that I see about the Japanese.
NONE of this debt is going to be repaid - not by anyone.
Not by the USA, not by Japan, not by China, not by France, not by Spain, not by Italy, not by Greece, NOT BY ANYONE.
That's my point over on the [adjoining] Breaking Bad thread: Everyone knows that we're approaching the apocalypse - the collapse [and disappearance] of much of the civilized world - and Walter White [The Omega Man] is busy making plans for how he and his family are going to survive in the aftermath.
NONE of this debt is going to be repaid - not by anyone.
Not by the USA, not by Japan, not by China, not by France, not by Spain, not by Italy, not by Greece, NOT BY ANYONE.
Adam Smith noted in The Wealth of Nations that no government ever paid off its national debt.
http://www.bartleby.com/10/503.html
Book V
III. Of Public Debts
"When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment."
"of course there's the issue that the japanese are literally dying off."
Their birth rate isn't healthy, but they're still having about a million births per year. Ten million new Japanese per decade - it's not as dire as some seem to think. Of course, without immigration, a Japan with half as many people as now is still going to be Japan. Smart women all over the world are overwhelmingly secular now, and that kills birthrates. How likely is that cultural trap to reverse itself at any point during this century? I don't know. If it happens, they'll be able to re-inflate.
"of course there's the issue that the japanese are literally dying off."
Remind me again how the Americans are doing. Oh, they're "literally dying off" as well?
"amazed at what diversity had wrought on some areas of Chicago. It looked like large tracks between downtown and the museum of science and industry had been subjected to firebombing raids."
Sure, find the official worst part of the city and judge it by that! It is like driving through South Central LA and judging all of that city by that area!
On the flip side of your article, places like Chicago and Japan got a shot in their asses when they were destroyed. Within 25 years of the fire, Chicago was running neck and neck with New York in population and importance (New York had to annex Brooklyn to stop the population part). And within 30 or so years of WWII, Japan was running neck and neck with the US in importance. If the US could cut out some deadwood, it may bounce back from the current doldrums!
" Commercial buildings in particular seem disposable--people are always tearing down the building the Walgreens was in because it doesn't fit the plan they want for a Safeway or Target or whatever,"
It's like a backyard shed school of architecture. So many buildings look so cheap. Store buildings built maybe 50 years or more ago seem to have more real brick.
How come real brick isn't used anymore. We had a house built in the 60's and it had real bricks. It seems in the 70's the use of bricks went down.
Japan employs a lot of people in agriculture, the army is pretty big and there are all sorts of make work schemes to prop up employment.
Seems to me there is scope for shifting some of these people into the productive sectors of the economy - compared to now - thus countering some of the demographic change.
Actually there have not been any specific deaths in the US "linked" to Fukushima. Not a single one.
I thought Truth was being ironic with original claim.
Great piece from the NYT. I wonder how the Japanese manifest their wealth, since the google streetviews don't impress (I know, a poor metric). It always looks drab and a poster who lived there confirmed it.
That's true. I have taken probably thousands of street view "tours" around the world. Japan often looks very unimpressive. Even the iffy parts of LA look nicer. Taipei (Taiwan) tends to look like this too. Hong Kong, on the other hand, has a more pleasing "feel" to it (surprising number of buildings that look like eastern european "commie blocks" though). Haven't "been" to Singapore yet.
But there's nothing like that in our National economic accounting.
Actually, there is a measure called Net Domestic Production, which accounts for the depreciation and replacement of capital stock.
GDP is more often used because it's a measure of current production. If you want to know how much is presently being produced (over a year, typically), you have to look at GDP. GDP, of itself, isn't supposed to clue you into what GDP may be five years from now.
true, this is why GDP growth is not necessarily reflecting something important. two mexicans selling tacos increases GDP, but contributes almost nothing to the US really. multiplied by a million mexicans and you get some additional phantom GDP but not much important GDP. in fact, mexicans are having a huge effect of this nature on the US right now.
Jody I know you like to believe no one before you ever tried to explain the world we live in, so it may surprise you to learn that you're not the first one to have had this idea. Economists have long considered GDP per capita a much more important metric than total GDP.
Now, the extreme over-crowding in Japan
Roughly as "extreme" as Massachusetts, which is just e.x.t.r.e.m.e How anyone can live there I'll never know.
Silver
"Real bricks guy":
What you don't seem to take into account is that real bricks take real mud. Had we not economized in our lavish use of such brick, we'd now be looking at an even more disastrous shortage of mud--the stuff from which all those real bricks are made.
You might think I'm joking about this but you'd be wrong. Every time mud is used to make bricks, there's that much less to do what's most important: hold up our houses--especially our lawns, to grow stuff to eat (mud for farming is getting in such short supply that there's whole bunches of scientists and engineers trying to develop ways to do without it--they give it a fancy name--"hydroponics"--but it's just a cover to divert attention from the real crisis). We've even taken to producing artificial surfaces to economize on the stuff for football fields--even tennis courts.
If you paid attention to these things, you'd realize we're running so short of mud that we're in danger of running out of enough to dig holes in to dump our trash. We used to send a lot to poverty-ridden places like Africa that really needed that stuff but now we keep it just to fill up all the places stripped of their mud, just to keep the public from seeing the reality.
Of course, we've actually been economizing on mud for a long time. For instance, there was a time when a brick house was actually made of brick. Nowadays, the only brick is a veneer on the outside--for show, to "keep up appearances," so to speak.
Of course, we'll adapt, one way or another. Time was when we had a thriving industry cutting ice blocks in the winter from lakes up in Maine and shipping it where it was needed, places like South Africa and even India. We didn't run short of ice in those places but those foreigners came to prefer other sources for their ice (or maybe have their drinks without--I don't really know). It might've made some folks temporarily uncomfortable but they got over it and made their living selling lobsters (to Japan, I think). In those days, half the country's agriculture was just growing hay and corn and stuff to feed horses for police, firemen, and deliverymen (ice, milk, coal--even the "ice cream truck" that came around city neighborhoods). All gone now; but, somehow, people got by. I don't know what everyone will do when the mud runs out but I'm sure they'll come up with something. They always do.
Some of you folks would do well to read my (relatively short) book, THE LAW, on which I've received many hundreds of very favorable reviews, quite a few even going so far as to find it 'entertaining."
Though I wrote it quite some time ago, I included quite serious commentary on the many advantages enjoyed in places like Japan and Germany as the result of being so heavily bombed as to destroy most of their industrial capacity. And there are even some considered suggestions on how the U.S. might reap some of these same benefits.
The science of fire fighting has developed tremendously. It is one of those revolutionary technical advances that changes people's lives but nobody notices it. ... Sprinklers have reduced fires in a 95% and additional safety measures like illuminated exit routes, emergency doors, fire-resistant textiles
Also, fewer tobacco smokers.
Firefighters respond to emergency health calls because their fire station is, often enough, nearer the afflicted caller than is the paramedic-ambulance station, or because the paramedics are off in their ambulance responding to another afflicted caller. Before the Age of Paramedics (which began at about 1970 as paramedics and emergency services evolved into specializations) it was firemen, far more often than ambulance crews (who in the pre-paramedic era were nearer to white-garbed chauffeurs than to medically-trained emergency responders), who responded to calls for health emergency aid. To this day firefighters are trained & drilled in first aid and are equipped to provide baseline emergency first aid with oxygen, stretchers, splints, extraction tools, hazardous substance response gear and training, and their better communications links to more specialized medical emergency services (paramedics). This is where public employee unions enter the picture - paramedics, firefighters, police all battle over municipal, county, and state funds for their pay, benefits, pensions, equipment, installations, &c., so that the balance, or proportion, of the various emergency services are always in flux, since they hew, among other factors, to the power of the various public employee unions and to politicians' priorities in municipalities, counties, &c.
Buildings themselves are now built to be far more fire-resistant (and many are more disposable and more easily & cheaply replaced) than earlier structures were (money is at root here: lower cyclical insurance costs appeal to owners of buildings having superior fire-resistance, sprinkler systems, &c). In the last thirty years the widespread introduction, often according to local/state construction and occupancy codes, of smoke alarms has greatly reduced firefighter response times and the effectiveness of their responses to alarms - and contributed to significant reduction of fire deaths, injuries, and damages. Finally, there is the simple attrition, owing to various causes (including destructive fire, ordinary demolition & replacement, urban renewal, &c.) of older, less fire-resistant/more fire-prone structures, which has reduced the number and severity of fires. There is also nowadays far less commingling of commercial-industrial installations whose processes use or produce hazardous materials: the industrial park and even the common strip mall have segregated factories, shops, and warehouses from residential areas in which commercial enterprises had long been more frequently co-located with residences, thus reducing the impact of commercial structure fires upon residential tracts and their occupants. Specialized substances, far less flammable than what had been their common predcessors (benzene, toluene, &c) for tasks such as household and industrial cleaning have evolved, making both homes and workplaces safer, far less fire-prone.
In the US just about every state now mandates so-called "Fire-Safe Cigarettes" which include chemicals that extinguish a cigarette if it's not drawn upon by its smoker. (This is, in my opinion, exemplary of Big Nanny State overreach, if not a veiled tactic of anti-smokers to make ciggies tastes so foul from their "Fire-Safe" chemical additives as to discourage smokers from enjoying - and buying - them.) But this is also exemplary of countless initiatives to reduce fire hazards.
Japan, like Finland, is a great counter-argument against people who claim the only way to have a competitive high-tech economy is to throw open the floodgates of 3rd world immigration (also against people who claim that it's impossible for high-wage countries to maintain a manufacturing base). In the long term a smaller population will probably be good for Japan once they get over the demographic hump, resulting in more affordable real estate, less crowding, and higher wages. I give them credit for wanting to preserve their culture and ignoring the many commentators who have called for them to combat their declining population by importing a servant class from southeast Asia into an already overcrowded island.
Another important statistic the article didn't mention: Japanese cities are light-years safer and cleaner than American ones. The comparison of the Japanese reaction to Fukushima and the American reaction to Hurricane Katrina remains instructive.
>In many cities fire trucks are dispatched to medical calls with no fires anywhere in sight.<
A volunteer fireman in Nashville told me medical calls keeps he and his buddies hopping.
And by "medical call" he meant: mopping up assaults among black and white trash in the black neighborhoods in Davidson County.
One typical story he told me involved two guys who got drunk together one night. One stabbed the other in the keister with a knife. When the "firemen" arrived to answer the call, the stabber was weeping that he had just killed his best friend.
The code word for blacks among these "firemen" is: "bubbas." I objected that this word better applies to white trash. "That," said he, "is why we use it."
I second what Jody said about Fingleton. He is a well-known Japan booster who has been writing for a lot longer than a decade. He has been writing since at least the 80's, if not longer. He is known to play fast and loose with his statistics.
All of his books are prominently displayed in the English-language section of the Kinokuniya bookstore in Shinjuku.
Deflation does not inhibit economic growth. The US had constant deflation for a hundred years from the war of 1812 until the Fed was created.
Almost the entire country, and everything that defines every major city was built during that time.
You also can look at places like the Bronx: all the Art Deco buildings on the Grand Concourse were built during the great depression, a period of deflation.
Building rental apartments is great business during deflationary times because every month your rent is worth MORE rather than less!
But the money you owe on the construction loan is worth more every month, too.
Very original thought.
ziel--
For example, all the oil extraction that went on in the U.S. before we became a major oil importer depleted the nation of an important asset.
The US became a net oil exporter again for the first time in many decades in the last fiscal quarter of 2011.
The oil field found in North Dakota, well a combination of further found and make deliverable due to fracking technology and horizontal drilling, is the largest in the world in the last 30 years, with the possible exception of the offshore Brazilian field.
Nobody seems to know about this and for some reason the media don't much talk about it.
The US became a net oil exporter again for the first time in many decades in the last fiscal quarter of 2011.
Don't be so credulous. The USA became a net exporter of refined petroleum products. Every barrel of those exports was offset by several barrels of imported crude oil to the refineries.
This is not a bad thing. Refining oil in the USA and exporting the products makes money for the USA. But it's nothing like being energy independent.
The oil field found in North Dakota
The Bakken just barely broke 500,000 bbl/day of production. At that rate it will be dry in about 20 years (3.65 billion barrels estimated recoverable oil, US Geological Survey: 500,000 bbl/day, 365 days/yr, 20 years).
Nobody seems to know about this and for some reason the media don't much talk about it.
It doesn't mean what you think it means. The people who go nuts over it are as crazy as the free-energy freaks who worship Nicola Tesla.
In the long term a smaller population will probably be good for Japan once they get over the demographic hump, resulting in more affordable real estate, less crowding, and higher wages.
Maybe so, assuming they don't get into some military tangle with an outside power. But barring an unusually lethal flu that comes along and kills off all the old people, getting over that hump is gonna be a bitch.
Building rental apartments is great business during deflationary times because every month your rent is worth MORE rather than less!
Yes, but your renters will be demanding rent decreases every month as a result, in the same way landlords demand rent increases in inflationary times. And when you go to sell your building it will be worth less than you paid, meaning you would have come out farther ahead by stuffing the money into your mattress.
Deflation is thought to be bad for an economy because it discourages people from borrowing money for new ventures. In a fractional reserve system that's probably true since a little deflation results in a deflationary spiral.
But I'm skeptical deflation is bad in the general case. If we really had "sound money" more ventures would be founded using savings, which doesn't seem like such a bad thing. We'll never see that again in the US, of course - the current system allows the government to take wealth right out of your pocket and 95% of the population doesn't even realize it.
Eamonn Fingleton keeps writing economic drivel for the purposes of defending his previous writings on Japan - which have mostly turned out to be untrue.
Japan's current public debt to GDP is currently above 220 percent. It is a disaster waiting to happen. With the ageing population, the constant and steady source of savings to finance this massive deficit is fast disappearing. The net result will be a total disaster for Japan.
Far from being prudent investors, the Japanese Government frittered away the savings of its hard working and inventive people on all kinds of stupid government boondoggles and bridges to nowhere. The bill is now due for payment and it is not looking good.
I'd like to speak to Mr. Fingleton in ten years. He may be in an old people's home by then though and not available for comment.
http://en.wikipedia.org/wiki/National_wealth
Japan's current public debt to GDP is currently above 220 percent.
It's owned by their own people, and dwarfed by their savings.
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