March 3, 2011

They were lost, but now they're found

You have probably heard that Japan has lost its last two decades (of economic growth). But the unrealistically named Eamonn Fingleton reports that he has found them: they were there all along, just where Japan put them. The Japanese government was just hiding them! Apparently, Japanese stagnation must be a media myth, because although GDP growth has been slow, the yen has improved against the American dollar during the decades previously known as lost, and its current account surplus (whatever that is) has increased fivefold (or quintupulated). Furthermore, everything in Japan is getting better all the time:

The cars on the roads, for instance, are generally much larger and better equipped than in the 1980s (indeed state of the art navigation devices, for instance, are more or less standard on many models). Overseas vacation travel has more than doubled since the 1980s. The Japanese boast the world's most advanced cell phones, and the biggest and best high-definition television screens. Japan's already long life expectancy has increased by nearly two years. Its Internet connections are some of the world's fastest -- something like ten times faster on average than American speeds.

Fingleton believes that the reason for the disparity between slow growth of GDP and the badassness of Japanese cell phones is that the Japanese government has been lowballing its GDP figures, because they don't want the Western world to know how well their doing in order to avoid the "groundswell of opposition" to their growth that they met with in the late 80s. (Japan as a nation has a lot of practice dealing with groundswells.)

Now, I'm neither an economist nor an expert on Japan, but I wonder if maybe there is another explanation. Maybe GDP is not actually a measure of the wealth, well-being, and prosperity of a nation. Maybe it's just a measurement of consumption plus government spending plus investment plus exports minus imports. And maybe it's possible for a country to become more prosperous while its GDP decreases, especially if the government has some control over the direction of the country's economy.

Japan is us. It's an island, it's overpopulated, and it has depleted its natural resources. It's in the state the entire planet will be in a matter of decades if growth is not slowed or stopped. And we should probably try to learn some lessons from what it has done, as it demonstrates that quality of life can be maintained or even grow in the absence of what's conventionally regarded as economic success.

You have to admire the strength of Fingleton's convictions on this one and the lengths he's willing to go to on their behalf. On his blog, he calls out ten individuals he believes have been most responsible for creating and perpetuating the myth of Japanese stagnation, and challenges them to a debate. He even offers to donate $5000 to charity chosen by whoever accepts the challenge. Watch out, economists. Fingleton is naming names and donating to charity.

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