Sunday, Sept. 21, 2008

The Japanese knack for choking in a slump 

Japan used to be held up in the United States as a model example, both of efficient economic management and efficient enterprise management. That economic management image disappeared with the "bubble" burst of the early 1990s.
The claims to superior Japanese enterprise management then took a beating in the late '90s as Japanese managers rushed to study what they saw as superior U.S. management.

Now Japan is emerging in the U.S. as yet another model — this time as a negative example of how not to cope with financial crises brought on by a real estate bubble collapse.

Ben Bernanke, chairman of the U.S. Federal Reserve and who is known to have studied Japan's bubble collapse in detail, sometime ago urged Tokyo to pump more money into its system to put an end to its already decade-long slump — advice still studiously ignored by Japan's conservative economists.

Anthony Faiola, writing in a Washington Post article that ran in The Japan Times on Friday ("Japan shows U.S. what not to do in a crisis"), warns the U.S. about how to avoid becoming another Japan. He says Tokyo waited too long to clean up its delinquent financial institutions and bubble-era loans, and that Japan's economists are amazed by the speed with which Bernanke and the Fed have moved to pump funds into the system and to take over institutions in trouble.

Should they be amazed? Clearly there are parallels between Japan in the '90s and the U.S. today. But Japan's mistakes owed much to something we do not see in the U.S. — serious mistakes in handling economic problems.

Initially Japan had every chance to end its post-bubble slump, quickly and cleanly. Intelligent pump-priming economic management by former Prime Minister Kiichi Miyazawa — a Keynesian economist and a student of my father, the Keynesian economist Colin Clark — saw Japan recover to gain a 4 percent growth rate in 1996 — highest of all OECD countries.

True, his increased spending policies meant some increase in public debt. But that is what Keynesian economics is about — you spend heavily to get out of slumps and cut spending when the economy recovers. As for bubble-era bank bad debts, the 1996 claim that a rising tide floats many stranded boats was clearly working. Bankers have told me that within another year or two much of the problem would have been overcome. The economy was well on the way to full recovery.

Unfortunately Miyazawa's successors set out to make sure the economy did not recover. The rising tide was stopped dead in its flow. Alarmed by the far-from- problematic increase in public debt, the 1997 administration of Ryutaro Hashimoto set out with perfect timing and naivete to import U.S. supply-side economic policies that called for cuts in government spending. They also set about bankrupting a major securities company — Yamaichi Securities — for, in effect, wanting to wait for the rising tide that would have cleaned up its books. Yamaichi's demise spooked the entire financial system. Starved of government and bank funds, the economy went into a predictable tailspin.

Fortunately Hashimoto's successors, Keizo Obuchi and Yoshiro Mori, reverted to the Keynesian policies needed to help a quite impressive 2000-20001 recovery.

But they were soon replaced by the team of Junichiro Koizumi and Heizo Takenaka, who were keen to implement even more ruthlessly U.S. supply-sider fiscal stringency policies and to begin bankrupting even more financial institutions in trouble under the slogan of "structural reform." Stock-market indexes quickly halved in value. Marginal loans quickly became delinquent loans, and the Takenaka policies of forcing disclosure of such loans and mark-to-market accounting created even more bad loans and made even more financial institutions collapse.

Only then did Tokyo set about doing what the U.S. has been doing almost from day one — injecting large amounts of public funds into the collapsed institutions. But Tokyo still clung to its mistaken supply-sider fiscal stringency policies. Meanwhile, in the U.S., the former devotion to dogmatic supply-sider policies with their dislike of government spending and intervention all quickly went out the window the moment trouble struck. The U.S. is now firmly wedded to Keynesian regulatory and pump-priming policies.

In Japan, only now, more than 10 years after the demise of Miyazawa (at the hands of the ruthless power-seeking Ichiro Ozawa) and with the likely election of Taro Aso to the prime ministership, is Japan beginning to rediscover the need for pump-priming policies.

Who is to blame? I begin with the Keidanren conservatives obsessed with the public debt problem. I blame most of Japan's economists (with a few honorable exceptions) who went along with the fiscal stringency nonsense, and who still manage to ignore the advice from Bernanke and three other prominent U.S. economists (Paul Samuelson, Lawrence Klein and Joseph Stiglitz) that deflationary Japan has the right simply to create and spend money needed for government spending without adding to debt. I also blame the Japanese media, the powerful Nihon Keizai Shimbun stable particularly, for their simplistic embrace of supply-sider, structural reform dogma. The Nikkei even managed to run an editorial denouncing Keynesianism as jidai okure (old hat). And I blame a public easily mesmerized by Koizumi's theater politics even as his alleged structural reform debt-reducing policies were pushing Japan deeper into slump and increasing the public debt by an enormous ¥200 trillion.

I also blame the main U.S. and British conservative financial media and commentators with strong influence in Japan, who all wanted to endorse these mistakes with gusto. They at least should have known better.

Unlike America's, Japan's collapse does not harm the world economy greatly. But it has done enormous damage to Japan's prestige and confidence. That its TV stations now rely on endless cooking programs to entertain audiences is one seeming result. That the government is reduced to promoting manga and anime as Japan's contributions to world civilization shows just how far the mighty have fallen.

When the Malaysians and others "look east" for models, they now look to China's economy, not Japan's.

Discuss this Article

いま日本は、アメリカで、また新たなモデルとして台頭している。 今回は否定的な、不動産バブルがもたらした金融危機の扱いの反面教師としてだ。
 日本のバブル崩壊を詳しく研究したことで知られるFRB(アメリカ連邦準備理事会)ベン・バーナンキ議長は先頃日本に対して、すでに10年に及んでいるスランプを終わらせるためにもっと資金を注入せよと要請 日本の保守的エコノミストたちから頑なに無視されているアドバイス を行った。
 彼らが驚嘆する必要があろうか。90年代の日本と今日のアメリカが似ている点があるのは明らかだ。だが日本のまちがいは、アメリカでは見られなかった事態 つまり経済問題の取り扱いで犯したもろもろの重大ミス から生じたものが多い。
 もともと日本は、バブル崩壊後のスランプを、すばやくきれいに終わらせるあらゆるチャンスがあった。宮沢喜一元首相 ケインズ派エコノミストだった私の父コーリン・クラークの弟子で、同じくケインズ派エコノミスト の聡明な、景気回復呼び水資金投入の経済運営によって、96年には日本経済はOECD加盟国で最高の4%成長まで回復した。
 たしかに宮沢の支出拡大政策は公的債務の多少の拡大を意味した。だがそれがケインズ派経済学の真髄だ。 スランプから抜け出すために支出を大幅に拡大し、経済が回復したら支出を削減する。バブル期の銀行の不良債権については、座礁した船の多くが潮位が上がれば浮かび上がれるという説得が奏功したのは明らかだった。銀行家たちは、もう12年もしたら問題の多くは改善されるはずだ、と私に語っていた。経済は確実に全面回復に向かっていた。
 そこに至って、東京はようやく、アメリカではほとんど初日から始動させた処置に手を付けた。 つまり破綻機関に大量の公的資金を注入することである。とはいえ東京はいまでも、まちがったサプライサイド流の緊縮財政政策に固執している。一方アメリカでは、問題が発生した時点で直ちに、それまで信奉していた、政府の支出と介入を嫌うドグマチックなサプライサイド政策をきれいさっぱり捨てた。アメリカはいま、しっかりと、ケインズ派の規制的、景気回復呼び水政策をとっている。
 これはだれの責任か。まず第一に、私は、公的債務問題に取り付かれている経団連の保守派をあげたい。続いては、ほんの少しの尊敬すべき例外を除いて、財政支出削減というナンセンスを唱え、いまだにバーナンキやその他3人の優れた米エコノミスト(ポール・サミュエルソン、ローレンス・クライン、ジョセフ・スティグリッツ)のアドバイスデフレの日本は、債務を増やすことなしに、政府支出に必要な金をつくり使うことができる権利を持っているので、かんたんに実行できる を無視し続けている日本の大半のエコノミストたちだ。そしてまた、日本のメディア、とくに強力な日本経済新聞グループであり、彼等のサプライサイド流構造改革ドグマへの妄信の責任だ。日経はケインズ主義は時代遅れと主張する社説まで掲げた。そして、小泉のいわゆる構造改革債務削減政策が日本をさらに深いスランプへ落とし入れ、公的債務を200兆円という膨大なものに増やしたにもかかわらず、彼の劇場政治に目くらましされた一般大衆の責任も重い。