The Japanese public debt exceeded one quadrillion yen (US$10.46 trillion) in 2013, more than twice the annual gross domestic product of Japan [1].
>general atmosphere of civility and willingness to come together for a common cause.
Yes, the US could use a bit more civility.
But in Japan, the "willingness to come together" comes at a price - of culturally suppressed individual expression.
I have this thought that I want to express to you but I fear that it will prompt disagreement or come across as confrontational or dismissive when I really mean it in the spirit of compassion. I will do my best:
The words you wrote reflect a state of mind that seeks a negative outcome. I'm sure you don't intend it, but you adopt a half-empty perspective. It's the same tone that the mainstream news media uses when it turns its attention to Japan.
I wish I could convey to you how much that mindset is a symptom of a sickness in your environment. I don't mean to sound condescending, but it was an important revelation for me to learn that my tendency to express unhelpful skepticism and pessimism is, in fact, not inherent to myself but rather is a feature of the condition around me.
I'm sorry if it is too abstract or rude, but I encourage you to seek a more hopeful outlook. We could trade evidence of ruination of east and west all day (night for me), but what would we have accomplished? I'd prefer if we (perhaps naively) focus on those things each side is doing well. That can really move the world forward!
I've been to Japan a few times and I like many aspects of life there (I love Japanese art/sense of aesthetics, for example). I certainly wish the best to all humans, the Japanese people included.
But we are discussing economics, and "hope" does not work in economics. Numbers do, and they do not add up.
Japanese culture does not like confrontation and therefore it tends to hide/gloss over problems, be they economic (the last 20 years of not making bold decisions to get out of the stagnation) or managerial (see the Fukushima disaster initial cover up).
I am just providing a reality-based counterpoint to your over-romanticized, in my opinion, view on Japan. Every country/culture has their pluses/minuses.
> "hope" does not work in economics. Numbers do, and they do not add up.
Economics is not about math, precise and inevitable. Economics is about people and their social interactions.
Economists try to model social interactions with numbers, but don't mistake the map for the territory.
What does it mean in human terms that Japan has high debt?
Is your argument that Japan will inevitably default? Sophisticated traders are willing to lend more money for 30 years at less than half a percent interest [1], so smart people must judge default risk to be very low.
Is your argument that somehow Japan is doomed because of this debt? Even if they default, what does that really mean on a human level? Would millions starve? Would society collapse?
Maybe Japan's history, customs, language and social cohesion are worth more than you think.
And, just for the record, Western stereotypes of Japan as a collectivist society are no longer true [2].
Not sure about "doomed", but you can't spend money you don't have forever, you are taking the money from the future. Also, aging demographics is a big issue, because there will be fewer and fewer people to pay for retirees.
There are well-known hedge funds (check out Kyle Bass) betting against Japan.
There will be painful decisions to make, not just for Japan, but for other indebted countries (most of the developed world, unfortunately).
Nothing lasts forever, so let's talk about your model of how the economy works within your decision horizon.
The BoJ has been printing yen for decades, and the counter-intuitive result is that yen is strong and 30-year interest rates are less than one half of one percent.
Your model predicts imminent catastrophe, yet there is zero evidence that this cannot continue for the foreseeable future.
> you are taking the money from the future
No, we are borrowing from each other in the present. And those lending to Japan apparently think there is an extraordinarily low risk of default over the next 30 years.
> There are well-known hedge funds (check out Kyle Bass) betting against Japan.
And yet the yen is strong and interest rates are low.
When the facts on the ground contradict your mental model of how the world works, maybe it's time to change your model.
This is going off-topic, so I will try to keep it brief:
My "model" is based on common sense.
You can't create prosperity through financial engineering - but you can hide worsening prosperity for years (if you are a central bank). I don't know how long it will take to blow up, but blow up it will.
When actual results differ from what our intuition tells us, we call it "counter-intuitive".
When this happens, it could mean that our intuition is right and reality will eventually conform to how we think things should work.
But more often, it means that there is more going on than we understand, so we should calibrate our thinking to correspond with what is actually happening.
You're free to wait for the territory to change to match your map. As for myself, I find it's more profitable to update my map to match the territory.
But can't we agree that the numbers don't tell the whole story here? Whether it's because of consumer demand or diplomatic pressure, Japan doesn't have the freedom to manage its economy solely on the basis of what's best for Japan.
Also, you're entirely correct about weak management. The quality of Japanese society depends heavily on good stewardship due to the willingness to fall in line. It is basically a feudal arrangement played out in the business realm instead of political.
Take for example, the area where I live, Nagoya. It is home to Toyota, which is mostly a success story in this respect. Mitsubishi, too. When you read about the emissions scandal this week, remember that Mitsubishi also rolled out the X2 stealth fighter this month, and is gearing up for the MRJ regional jet program. These companies operate on a scale that is similar to nation states.
Meanwhile, the local universities are winning the Nobel Prize for little innovations like blue LEDs.
Everywhere I look, I see people living a higher quality of life than I see in America. My Japanese friends range from people who work very hard for very little money to people whose family sits on epic fortunes. When I go to the grocery store, the prices are less than half what they would be in any coastal American city, and the products are vastly higher quality. I bought my car (which gets 80PMG) for about US$10K...new, and it came with an in-dash TV/GPS, four cameras, autonomous stop radar, and regenerative brakes. US$10K off the lot. I never visited the car dealership...they sent a dealer to my house and I count him as a trusted friend now. He comes and picks up the car from time to time to have the fluids changed. Insurance for the car is a few hundred dollars a month, and fuel is about $26 per month for light city commuting. Most of the time, I ride my bike or ride the subway.
I own an apartment in New York City that is worth millions of dollars, but I choose to live here. I understand that there is an article in Bloomberg that shows a picture of a homeless person in Tokyo, but it's just simply not consistent with the reality of my life. You can (fairly) tell me that I'm insulated and willfully ignorant and that I lack data, but I'm still going to represent my perspective because it is at the end of the day more "real" than whatever Bloomberg is saying.
I just want to say one more thing about this, because I'm genuinely enjoying this conversation. Japan is a data-obsessesed society, but it is also superstitious. It's also largely Buddhist, which is a religion that orients toward the "middle way"—i.e., adopts the idea that every thing needs its opposite. It's important to reconcile the paradoxes of life in order to make real progress toward solutions.
The peace of mind may not last too long.
The Japanese public debt exceeded one quadrillion yen (US$10.46 trillion) in 2013, more than twice the annual gross domestic product of Japan [1].
>general atmosphere of civility and willingness to come together for a common cause.
Yes, the US could use a bit more civility. But in Japan, the "willingness to come together" comes at a price - of culturally suppressed individual expression.
[1] https://en.wikipedia.org/wiki/Japan_public_debt