Eamonn Fingleton, Is Japan Faking It?
The Australian Financial Review, Friday 22 November 2002, in the Review
section:
For a decade now, the Western consensus has been that Japan is an economic
basket case. But this is a dramatic misreading of a perennially secretive
society. ...
The truth is that dozens of facts contradict the gloomy consensus. Here are
just a few:
* Living standards increased markedly in Japan in the so-called "lost decade"
of the 199Os, so much so that the Japanese people are now among the world's
richest consumers.
* Japan's trade has continued to expand. Its current account surpluses
totalled $US987 billion in the "disastrous" 1990s. This was nearly 2.4 times the
total recorded in the 1980s when Japan was already seen as the "unstoppable
juggernaut" of world trade.
* Although you would expect the Japanese yen to have declined sharply
against, for instance, the US dollar in recent years, the reverse is the case:
the yen's dollar value has increased 17 per cent since the beginning of the
Tokyo financial crash.
* At last count, the all-important Japanese savings rate, which has been the
main driver of the country's success, was 8.7 per cent of GDP. By comparison,
the rate for the US was 5.7 per cent and for Britain only 4.5 percent. ...
* Japan has continued to invest heavily in its industries and infrastructure.
Investment per job in manufacturing, for instance, has consistently run at about
twice the rate of the US over the past decade.
* ... Japan's net foreign assets have continued to mushroom. As measured by
the International Monetary Fund, they nearly quadrupled in the 11 years to 2000.
... As long as Japan runs the world's largest current account surpluses,
it will remain the world's largest capital exporter. ...
* Japan passed the US in the early 1990s to become the world's largest
foreign aid donor and, as of 1999 ,was paying out 67 per cent more in aid than
the US. The UN is only the most prominent of many international bodies that
depend heavily on Japanese money. (Japan accounted for nearly 20 per cent of the
UN's budget in 2001). Tokyo is reaping a rich reward in terms of rising
influence in everything from the International Whaling Commission to FIFA.
* Corporate Japan's worldwide spending on sponsorship - from motor racing to
universities - has grown by leaps and bounds. In the latter half of the 1990s,
its sponsorship budget in the US alone increased by about 80 per cent In
Britain, an interesting instance of recent Japanese sponsorship is the Asahi
Shimbun newspaper's donation for the British Museum's Great Court. It is hard to
imagine, say, the Guardian, which is roughly the Asahi's British counterpart,
doing anything similar in Tokyo. In fact, the Guardian can't afford a staff
correspondent there.
By contrast, thanks to big increases in advertising in the past decade, not
only can Japanese newspapers like the Asahi afford large bureaeus in Britain but
they can undertake extensive goodwill programs.
... First, consider the claim that Japan's manufacturing industries are being
driven to the wall by China. The mistake analysts make here is to assume that
the Japanese economy is still highly labour-intensive. But Japan is probably the
world's most capital-intensive economy at present. Capital-intensive Japanese
companies supply the sophisticated components, materials and machines without
which labour-intensive Chinese factories would have no exports. Japanese exports
these days are not television sets and pocket calculators but rather machine
tools, electricity-generating plants, railway rolling stock, broadcasting
equipment, telephone switching equipment and internet routers.
Capital goods industries are invisible to the consumer and thus Japan's
dominance in many of them is easy to overlook. But capital goods are the
ultimate fount of the world's wealth and historically the nation that dominates
their manufacture - Britain in the 19th century, America in the first 75 years
of the 20th century - has been ipso facto the world's leading economy. ...
in many of the capital goods industries in which they are strong, Japanese
companies face no significant competition from anywhere, let alone from Third
World nations like China.
Second, what about the claim that the Japanese economy is in the grip of a
deflationary spiral? Actually, what Japan has been experiencing is similar to
the persistent deflation the US experienced in the late 19th century. This was
when the US went from rural backwater to the world's most powerful economy. ...
Third, it is claimed that Japan has been eclipsed in high technology by a
resurgent US. ... All the evidence is that Japan has greatly lengthened its lead
in the past decade. ... . At last count, the title of the world's fastest
computer was held by a weather-forecasting computer made by Tokyo-based NEC. By
contrast, the fastest American super
