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September 12, 2005

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Chuckles

Watched and followed the coverage of the elections in Japan all Weekend. Things are looking suprisingly good to me. Most striking is the support Koizumi received from the normally apathetic Japanese youth.
I hold these elections to be important less for the privatization of JP and more because of the restructuring of the LDP and a determined showing of strong Leadership - loved it when I heard that Koizumi called Yoshiro Mori's bluff (I later heard that part of this was staged).
I must say, Koizumi is looking very, very good - and I am really liking this guy right now - after years of such a dismal showing.
All hail the new LDP. Highlights? Horie's loss (not unexpected - something about that guy strikes me as being unneccesarily showy. I dont think he will last, in Business or Politics) and Yasuo Tanaka's beatdown (much deserved, in some respects).
Yet, the question must be asked: Is this response by the Japanese not merely another manifestation of groupism? I spoke to a Japanese lass who confessed to me that she watched Koizumi on Television and he was looking so strong ("like a dictator" were her words), so she found herself agreeing with him and was pro-reform. The response to reform may thus not be such per se, but a response to personality of Koizumi as an embodiment of strength. This brings to mind pre-war connotations (exaggerated no doubt).
Yet, Japan does seem to be in the throes of a real revolution - On the other hand, in Germany, preserving the Welfare State is the face of 5 million unemployed is Schroeder's talking point!
That said - I do believe it will take much more than this to effect a divergence. Should Japan fall into the hands of the far-right (still a threat of some significance) -any hopes of permanently freeing the country from the old guard of Oligarchs will be permanently dashed. This is partly why I am glad Koizumi pulled this off (I understand Shintaro Ishihara initially opposed him, then retracted himself).
Culturally, things are looking good in Japan - with the artistic scene moving against the grain in many respects (think the remarkable success of Haruki Murakami). The poison of reflexive Anti-Americanism thankfully, is something that hasnt taken root in Japan as it has in Germany.

Jim

What is it about Germany? Every time they manage to make something of themselves they manage to self-destruct, whether it's the Third Reich, the Thrity Years War. They have a real talent for this kind of thing. Maybe re-unification (ha!)triggered this - they can't deal with success. I say ha! because there is nothing natural about a union of Saxons and Bavarians and Swabians. At least they have for the time being given up on trying to "join" with Austria.

Factory

"term of misrule by a coalition which has delivered nothing but misery at home"
For all that misrule, Japan was far more misruled by the LDP since the bubble broke, than Germany has been with the current regime. The Schroder government has actually been implementing economic reforms, compared to the LDP doing basically nothing apart from attempting to pork barrel their way out of stagnation.
And IMHO I don't think it's a done deal that the postal reform will get done, and that it will lead to other reforms along the track.

"The fact is that Germans would thank their stars to enjoy unemployment rates of the kind prevalent in Japan"
I'm sure Japan wouldn't have minded the growth rates that Germany has had in the last decade.

Abiola Lapite

" I'm sure Japan wouldn't have minded the growth rates that Germany has had in the last decade."

Har har: this on a day when Japan's GDP growth rate for the past quarter was revised *upwards* to 3.3%. By the way, you *do* realize that Japan's per capita PPP adjusted income per capita is still higher than Germany's after a lost decade, right?

http://www.nationmaster.com/graph-T/eco_gdp_cap

Now the gap looks set to grow and grow.

Randy McDonald

By the way, you *do* realize that Japan's per capita PPP adjusted income per capita is still higher than Germany's after a lost decade, right?

http://www.nationmaster.com/graph-T/eco_gdp_cap

Japan is ahead by 2.5%. It's open to question whether this constitutes a decisive lead. I'd say not; others may hold different opinions.

Abiola Lapite

"I'd say not; others may hold different opinions."

No matter how you view it, the bottom line is that after an entire decade without growth, Japan *still* remains ahead of Germany in PPP-adjusted per capita income while enjoying unemployment rates only half as high, and the gap looks set to widen dramatically as the Japanese economy strongly revives. That speaks to the failure of the German political system even by comparison with a Japanese politics driven by back-room deals and consensus.

Randy McDonald

No matter how you view it, the bottom line is that after an entire decade without growth, Japan *still* remains ahead of Germany in PPP-adjusted per capita income while enjoying unemployment rates only half as high, and the gap looks set to widen dramatically as the Japanese economy strongly revives.

A 2.5% edge in PPP-adjusted per capita income isn't decisive. One should also take into account the costly effects of reunification and the way in which East German income figures depress all-German economic statistics. A proper comparison would compare Japan with West Germany--East Germany hasn't known sixty years of American-assisted capitalist prosperity, after all.

Yes, Japan has an edge. It's not a decisive one, as a look at the Penn World Tables 6.1 http://datacentre.chass.utoronto.ca/pwt/ suggests. Japan shot ahead of Germany in the 1980s, only to see GDP per capita fall even more sharply relative to the United States than Germany in the 1990s. GDP per worker, in the meantime, is one-third higher in Germany than in Japan.

Abiola Lapite

"Japan shot ahead of Germany in the 1980s, only to see GDP per capita fall even more sharply relative to the United States than Germany in the 1990s."

And now it looks set to shoot ahead again, which is the point I'm making.

"GDP per worker, in the meantime, is one-third higher in Germany than in Japan."

This is an elementary economic fallacy. It's easy enough to raise GDP per worker: just raise the cost of hiring labor so high that the least productive members of society are unemployed! That is indeed what has happened in France and Germany, so it's nothing to be boasting about.

dsquared

[Japan *still* remains ahead of Germany in PPP-adjusted per capita income while enjoying unemployment rates only half as high]

"working harder for the same money" isn't considered a good thing out here in the real economy.

[It's easy enough to raise GDP per worker: just raise the cost of hiring labor so high that the least productive members of society are unemployed! That is indeed what has happened in France and Germany]

no, it's part of the story but it's not the whole story.

The German economy is on the turn, by the way; there was something in the Economist about it not so long ago.

Randy McDonald

[Japan/Germany]

"And now it looks set to shoot ahead again, which is the point I'm making."

With respect, I've been reading for a decade about the Japanese economy's impending renaissance, any time now. I'll wait for more than a couple quarters' growth figures.

"This is an elementary economic fallacy. It's easy enough to raise GDP per worker: just raise the cost of hiring labor so high that the least productive members of society are unemployed! That is indeed what has happened in France and Germany, so it's nothing to be boasting about."

A question, before we get any deeper into this part of the debate: Do you grant the stat of GDP per worker any validity whatsoever?

Abiola Lapite

""working harder for the same money" isn't considered a good thing out here in the real economy."

In the "real economy", an unemployed person doesn't take encouragement from knowing that his neighbor with a job is helping boost national GDP per worker, which is why economically insane job-sharing proposals (e.g. the 35-hour week) are so popular in high-productivity places like France. Most of us would rather have a job at the cost of our neighbor earning a little less than watching him make more while we're sitting on our backsides collecting the dole.

"no, it's part of the story but it's not the whole story."

Sure, there's also the "overinvesting in labor-saving capital" aspect because of the risks attending hiring workers one can't fire ... Japan doesn't have Britain's low-education problem.

"A question, before we get any deeper into this part of the debate: Do you grant the stat of GDP per worker any validity whatsoever?"

Not as a bare statistic divorced from employment rates: if we fired everyone in an economy who earned less than $1 million/year, GDP per worker would skyrocket to levels unimaginable anywhere else in the world (at least for that fraction of a second before demand for their services collapsed), but what good would that do anyone? 5 million new low paying jobs for South Africa's under-educated black youths would be devastating for the country's GDP per worker, but can you doubt that whoever delivered them would be worshipped by most South Africans as if he were a living god?

dsquared

[Most of us would rather have a job at the cost of our neighbor earning a little less than watching him make more while we're sitting on our backsides collecting the dole]

depends how generous the dole is ... there's a rather good letter in today's FT pointing out that the USA's employment rate doesn't appear to have delivered a poverty rate better than France or Germany.

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