Probably a silly question, but isn't the central bank technically part of the govt? Sure, its "independent", but it is a creature created by the state. So could not one technically say the govt is buying its own debt and printing its own money? God, I wish I was a currency issuer. I'll do some quantitative easing on the bar and stores. 😋
@@MoneyMacro Do you think incentivizing micro, small and medium enterprises through grants, subsidies etc. (USA does that to a an extent with their startups, or at least certain US states do). I feel the big 3 of the Asian Economies i.e. China, Japan, South Korea put too much money in the hands of large corporations who either price out, or flat out just buy and remove smaller competitors. Less competition also incentivizes these companies to lock money in assets like real estate, stock buybacks and dividends and not invest money in R&D or other growth programs.
@@ankitait2 I think you're right. Japan is famous for large mega corporations or keiretsu. Look up the "Big 6," now I bet you will probably find something in your home made by those corporations, unless you refuse to buy Japanese (for whatever political reason).
Great analysis, but I think you have to emphasize the negative impact of high taxes. High taxes have many negative feedbacks, both on corporate investment and growth and personal initiative and growth. The reward for higher revenue and growth are higher taxes - not an incentive at all but a disincentive. This is the perverse logic of socialism and communism. Why work hard and grow when the state will only take what you have earned and squander it? Why work hard and take risks when the state will take care of you in any case? Why bring in another generation of wage slaves when you know their future will not be any better than your own, and more likely worse? People vote with their time as well as their money. Worry about COVID, 'climate change' and other imaginary evils only worsen the disincentive to work hard and take risks. No risk, no reward. In the absence of a reward people do nothing. High taxes are a punishment for being successful and a disincentive for efficient government and good governance.
A country that has been in constant economic crisis for almost 4 decades now and still among one of the richest countries in the world. They must have been insanely rich back in the 80s.
A country that builds up a world-leading technological base can afford to be in constant economic crisis. The real trouble only begins when it starts falling behind technologically and regresses in the global industrial and logistical food-chain. Which is what is now beginning to happen with Japan, though there's still some way to go before this will be felt by the Japanese.
I remember when , on paper , financially Tokyo was more valuable than the entire USA ; and Japan Inc. was going to rule the world. Anxiety over Japan was real. Now when most people think of Japan they think about animae.
They worked so hard that they forgot to have children to inherit and keep the system going. No one thinks they are ready for a kid but you have to do it anyways, luckily people in America are irresponsible enough to have a stable 2.1 birthrate thus making the economy stablish at least more than a bad population country.
You missed few points: Japan missed digital revolution train. 1. Japan is slow to improve worker productivity using advanced IT/network technology. 2. They were slow to invest in growing digital industry like semiconductor, display, smartphone and software. 3. Advent of strong competitors like South Korea, China and even Taiwan. 4. Low worker wage and long work hours, which led to low consumer spendings and low fertility. 5. One-party politics: no political impetus to innovate society and industry.
Fair points. I'm wondering though... don't a lot of these also count for e.g. Germany? Which didn't have that much a fall from grace. With the exception of one-party politics of course. Good point!
Too young sometimes naïve. Many things happening behind closed doors, Japan companies being sold out to foreigners, like how Nissan hired a CEO from Brazil who turned out to be very corrupted and ruined Nissan. Japan is under the stronghold of American control.
I agree Japan did miss digitization train (bus), but that’s like saying Amazon will destroy all book stores… and it was true Amazon was destroying All book stores until Borders went Bankrupt and Barnes and Nobles was the lone survivor and actually did better because they were the last champion of brick and mortar for all those who still know that experience, won’t let that die. Now Amazon has their own brick and mortar stores trying to plunge that knife into them which seems very unsportsmanlike to me… But anyway, I think this example says a lot. EV car revolution will probably kill most of the current players, but it will allow small companies like Mazda a small lease on life as it attracts business from the aging fans of combustion engines. Likewise, a lot future speculation doesn’t take into account how humans can’t let go as they age, and the oldest demographic, is the one that still has money in Japan. I feel the digitization train that was missed was touted as a if you miss it you will be left behind, but I’m not so sure it’s destination was a sure success. My feeling is Japan will actually be a trailblazer because of being on the frontlines of having a slivering population and that will allow them better thread the needle and find the best landing spot between “efficiency at all costs” from AI / Robotics, and not throwing the elderly under the bus because of changing times. And even if they can’t thread this needle, just like stated in the video with all news-outlets self censoring the long bank lines for greater good. Japan had this “best for society hive mind” rare in other societies. If things really got bad, that could kick in and swing popular opinion in a heart beat. If things really got bad, I know you will see many elderly volunteering to no longer become a burden on society. When Fukushima happened, many elderly volunteered (but were rejected) to be onsite communications relays in the contamination area. I think it is human nature to not want to burden those you love, and to find a way to contribute and be remembered.
I live in japan. People here save like crazy. It's actually kind of insane. It would be interesting if you made a video on the japanese housing market. It's quite different from most countries in the west. There is no housing shortage here, even in places in Tokyo and Osaka, which is a blessing if you have lived in any major western city. On the other hand, buildings themselves don't seem to hold value. Investing in a home and making a profit isn't really a thing here. I wonder how that affect things like mobility. If you buy a house here in Japan you are never going to get that investment back unless the land itself goes up in value so why would you ever sell your house and move?
Houses are not supposed to be speculative asset in the first place,why would you think that you should get rich just by buying and selling houses while not building anything in the process.
@@lukaradojevic7195 . Absolutely! My greedy American counterparts can't seem to understand that profiteering of residential RE is the same as leeching on the back of the working class. Its a disgrace that in the US you need to be in debt for a lifetime in order to own your home.
@@MrSupernova111 The comment still points out an interesting aspect: if residental (working class people) also cant turn their home over for profit, doesn't that hurt mobility? I dont know how high is the geographic mobility in Japan, but with higher mobility, the working people have better bargaining power with wages and that would push them up.
@@raczgabor659 If all houses are increasing in value then for the purpose of mobility, owners are just running in place and it shouldn't make a difference. What matters is relative movements - if your rural home goes up 10% or 10k while an urban home goes up 10% or 20k, that home has gotten farther away for you - decreased mobility. Non-owners especially would have decreased mobility over time if we're talking about where they can own, as prices run away from them. So, rising home prices hurts mobility and exacerbates economic inequality while stagnant prices are actually good for mobility. It would be harder to move to another country and buy property if yours has stayed flat while that country is rising though. You also can't use appreciation on your home to subsidize your lifestyle then, so appreciation or bust!
I'm a Japanese high school student and I was benefiting from the boom when my parents were in their twenties I've been in recession since I was born. Damn.
@@El-s So broke folks mentality around here as in they get money, don't know what to do with it, then spend/lose it all and become broke again. Thanks for the reply
We got 50 years of economic stagnation, high stagflation, and the most volatile economy of the world, based on dollar denominated debt that goes to carry trade.
Keep in mind that Japan's "fall" was from 2nd to 3rd place, and even if they fell to 4th or 5th, they'd still be a highly-developed, rich economy with high living standards and a high GDP per capita. It's just that they used to be growing rapidly, and now they're mostly stuck where they are in absolute terms, while falling behind the growth of other countries, which puts their relative position at risk.
@@hectorr4956 Russia rank 11th in the world based on GDP compared to 3rd place Japan. Difference in figures: Japan 5.06 trillion, Russia, 1.48 trillion. Japan's economy is more than three times the size of Russia's!
Japan lost the early market lead they had in Lithography sector rather too easily without even trying. I am a IT professional and we have lot of Japanese clients and I was shocked to see how rudimentary applications and websites were of our Japanese clients. Even phone apps were simply weblinks for their main websites for long. They missed the IT and Digital bus for sure
Yes. One part of it is that software developers also sometimes need to be somewhat good at English in order to thrive in their field. It makes it that much harder. I know people who have quit software development because of this.
The was a thing called the Plaza Accords where Regan basically said "you are gonna nerf your high tech industry or else our Marines are gonna fuck your shit up".
@@johnl9361 But, in the end, your marines got fucked up by the ragtag militias of Afghanistan. Japan was weak. It had no support from other neighbouring countries. USA had support of entire Europe + Australia + New Zealand + Israel etc. Japan has failed at making alliances. It should have made an alliance with China, ASEAN states and both Koreas the moment America threatened them.
Remember "Back to the Future 2"? Bob Zemeckis envisioned 2015 to be when most Americans had to work in Japanese corporations. Because the movie was made in 1989. How things have changed since then.
Hmm yeah but with that golden year coming in with them is the end of a bubble. Because it was just temporary or short term. One thing i noticed is it was because Plaza Accord and the US want to stop Japan succesfull exports industry to destroy USA economy. So by switching the stable rise of the economy they got into traps that give insane boost in short term by borrowing the future this result after the golden era ends Japan enter the depression with no real clue how to get out of it.
Good job!! As a Japanese citizen, I thought that your views are quite comprehensive and well-balanced. I think this is a very good introduction to what happened to the Japanese economy during the last 4 decades, especially the last 3 decades of stagnation.
This was the first video I've seen from your channel. I really appreciate how you ask for feedback from those people perhaps most qualified to give it. Overall this video seemed very in depth and covered many of the often complex mechanisms of economics. I feel like I learned a lot about Japan, modern economies, and how people affect each other. Thanks for your hard work!
in japan: media, individualy, decided not to report a situation in the best interest of japan in portugal: a television channel announced a news that was not entirely true and a bank that was going through difficult times collapsed
@@olympia5758 Banif was a Portuguese bank that went bankrupt in 2015, allegedly due to a news that TVI (second most important television channel in Portugal) released on December 13, 2015, announcing the closure of Banif, in fact, the government Portuguese only mentioned that he was going to investigate the bank and it could be closed if the investegation lead to, but the news said that the bank was going to fail, which resulted in losses of 984 million euros in deposits, according to the Public Ministry of portugal. this is an article from on MP: “Following the news, Banif's liquidity situation deteriorated due to the decrease in customer deposits, which fell by 984 million euros in a week. such content was harmful and offensive to the credibility, consideration and prestige, trust and reputation” of Banif. TVI's news has precipitated the closure of Banif, given the rush of the Bank's customers to withdraw their deposits, as they thought that the bank that only had a government investigation into a problem was going to collapse. this led to the bank actually collapsing.
@@jwadaow The media ruining your life over a comment made 15 years ago is one thing, destroying a whole fucking bank is another. And they weren’t even held accountable for doing it.
@@MoneyMacro Yeh - just suggested the documentary as most people probably won’t have the time to read the whole book and the documentary is here on RUclips. It’s a good overview.
Excellent content. This has to be one of the better, if not best, RUclips video essays discussing Japan's economic stagnation short of a full blown university lecture. Looking forward to your future content!
@@Gnefitisis Apparently the Australian government sold their Tokyo embassy for over AU$600 million dollars during that time and it helped pay off the national debt
I've been living in Japan for 12 years. And the economic health of the average Japanese worker has gotten worse. Poverty in Japan is a growing problem that no one talks about.
@@2001lextalionis this is a big reason why they population stagnest. People can beraly support them self, and people are way over work and over presherd+ the super haircael biasness in Japan makes it even worst. The funny thing that most japanese"incels" are just people whit small company's/independent workers. Who the hole society looks down off
@@xXDESTINYMBXx + we can also seeing it in thier porn . The more kinky and deprive the porn get you know more and more people are getting edicting to this.(I'm not against porn but we can see the reasons why exesive porn usage are coming from and what it's causing). In Japan this case is really bad whan alot of thier porn is really fucked upp
29:45 "When something isn't working, the answer is rarely 'well, let's just do more of it'". Welcome to Japan, where people plan something once, try it, and if it doesn't work, just continue doing it, because it is supposed to work a day or another. Japanese people just hate admitting they were wrong. It is a matter of dignity, even if that is completely counter-productive. PS : I live and work in Japan.
Huh? Sounds more like the USA. Over here people won't have any type of criticism, and the people that make bad choices in life are not held to take responsibility for them, they are instead subsidized. At least in Japan people are very by the book, and more importantly, they believe in personal responsibility and pulling your own weight in this world.
I mostly agree with your comment, although I don't know how much it has to do with "dignity". I've read quite a bit about Japan's 'Pacific War' - WWII - much it written by Japanese historians (in translation). The same thing applied. The brass hats in the halls of power would devise a plan. If it worked once, they'd keep repeating the same strategy over and over despite the most tragic results. (BTW: I live and work in Japan too.)
It's more on because it worked in the past. Look at their high quality products and services back then. But now, the standards are rising but they are not. They stagnated because they became too comfortable with their past glory.
This was very well structured and extremely informative. I'm fascinated by Japan's Economy and Corporate structure, and only grew more fascinated when I visited the nation.
Yep and Japan has one of the lowest crime rates and healthiest populations in the world. Compare that to the U.S. where places like Chicago with 4000 shootings a year and Detroit that are as dangerous and dirty as countries like Iraq and Afghanistan. Not to mention the bridge in Pittsburgh that just collapsed yesterday due to a dilapidated national infrastructure. Have you seen the videos of the miles of packages strewn across L.A. railways from criminals doing whatever they want without consequences? How about the 200 shootings recorded along SF highways last year? Don't even get me started on the million people that have died from COVID and a healthcare system that is 2x more expensive per capita than Japan's but still produces some of the worst health outcomes of any industrialized country. The U.S. has become a real paradise.
@@byoshizaki1025 Yet they have some of the most ideologically retrograde people around and don't innovate anymore, not to mention sexual crime is severely underreported. Yep.
I lived in Japan and one thing I noticed, corporations were expected to over employ people to soak up the numbers of unemployed in society. Young people are paid less money because it’s expected they still live at home with parents. Girls were expected to marry and fall out of the employment market.
I was in Japan in 2019, it looked decades ahead of the US and most of Europe. There might be structural economic issues but the country has one of the best infrastructures in the world and it's an amazing place
What it looks like and what it is like are two very different things, though. The infrastructure is there because the population density allows it, imho (not only that, but it's a prerequisite). That's why the Netherlands have good infrastructure too. Let's talk about working hours, social mobility, ease to open small businesses. I'm not saying Japan is bas, but it's not decades ahead, imho.
problem is that Japan was like a good century ahead of Europe and US back in the 70s, so being a head for only a few decades ahead of the west is not a compliment at this point in time for Japan. Just because the west got continually more fucked doesn’t mean Japanese people are satisfied with their own progress. Japanese people strive to be the best and for its own sake, look at their manufacturing and engineering, American and European cars can only dream of being ok the same quality of Japanese cars.
East Asian countries tend to greatly value appearances (for many cultural reasons that relate to their collectivist roots). Upon further scrutiny, you may find that Japan isn't as advanced as it initially appears.
I'm seeing more and more migrant workers working at shops and convenience stores since Abenomics has started. Your analysis is spot on! Also it's true that there is save and reserve attitude among the youth. Especially because of the prospect that the government pension program might someday fail and we have to support ourselves on our savings. Even if it doesn't fail, we will still be paying more for the program than what we will get in the end since the money goes directly to the more populous baby boomer generation which is currently being served.
It's a complex problem, Germany (where i am from) has easy access to workers who migrate over the land with trains, and can even out the thinning populating with policy on how many people we import. So population is growing, but birthrate is very bad. Japan is locked into an island. But as long as a country can create all goods and services a person needs, it's good to live in that country, and that's true wealth isn't it.
@@ayoCC Looks like Feminism is killing all the so called rich countries with their fake economies, eventually you will start seeing social chaos and eventual civil wars in these countries especially the ones with massive non-white immigration
@@wamnicho Countries can't die with strong systems and infrastructure. In rich countries most people live quiet lives, but 90% are happily enjoying hobbies or passions. I'm not sure why you think those things are destroying the countries.
@@ayoCC countries are made up of people, infrastructure is secondary, without people, the infrastructure can't survive. What's the point of having nice infrastructure when everyone is over 70 years old
@@wamnicho Actually, it is pretty much the other way round. In Europe, the highest fertility rates are in most "feminist" countries, where governments provide enough services like preschools, so that women could get back to work as soon as possible instead of staying home with children. The lowest fertility rates are in fact in more conservative/traditional/catholic countries like Italy or Poland.
Thank you for the video. I currently live in Japan. My knowledge on economics is very limited. However, there are two things I would like to ask/share. One, from my work experience here, I learned that it is quite usual for a Japanese company to have very little operational income year after year. Labour and provider costs typically eat up all the money they made. Labour costs are very high not mainly because of wages, but because of welfare. Japan has this system called welfare society instead of welfare state, in which companies and households are the main safety net, not the state itself. Second, (and about this I would like to ask for your opinion), there is the retirement pension policy. Government consistently states that pension system will not disappear but this will happen by severe cuts on pension amounts. This is often felt by most people as the main reason to save money instead of using it: they consider that they have to save enough in order not to be poor at the age of retirement. But I do not know whether there is a causal relation between pension policy and household savings, and I would like to hear your opinion on that. There are also other reasons to save money, such as healthcare. National healthcare insurance covers 70% of costs, but the patient must pay the other 30%. Which can be a lot of money in case of a serious disease.
3 года назад+209
I've been surprised about how the meaning of the word "Entrepreneurship" is relatively unknown by the japanese population. Young people there are too afraid of raising their own business.
It doesn't help that Japanese business (and on that note business in East Asia as a whole) is deeply rooted in a smothering corporate-aristocracy mindset. You don't have this idea of disruption or start-up culture, instead you have an entrenched ideal of the company as an institution that everyone in society is supposed to work for because these large companies provide for society. This all started with the Zaibatsu - a conglomeration of nationally sanctioned companies owned by a few privileged families at the start of the Meiji period. After their (on paper) dissolution following the defeat of the Empire, they fractured into many smaller, though no less entrenched Keiretsu, which are large companies that operate more like great webs of subsidiaries rather than the out and out monopolies of the Zaibatsu. This web of generational influence, red tape, and outright corruption make starting robust businesses from scratch very difficult in Japan.
3 года назад+47
@@iannordin5250 That explains clearly the stagnation of the japanese economy, since those Keiretsu companies have been favored by generous credits granted by the Window Guidance police from the Bank of Japan. Independent business cannot compete in that environment dominated by big corporations.
@@iannordin5250 how is that different from the fascist system in the West? And capitalism is fascist in nature. It is a system run of, for, & by the monied elites. It is not synonymous with market system. Big business stymies competition & usurps innovation for their benefit. Just look at how small business was shut down but corporations weren’t during the pandemic. Or how hard it is for competitors to break into social media.
@@talisikid1618 In a lot of ways there isn't much difference except for a couple of structural and cultural aspects. Structurally, our mentality here is 'well, some huge honking conglomerate or corporate titan is going to run the show.' It doesn't necessarily need to be some sort of 'traditional' legacy operation, just that some behemoth exists. This contrasts with the 'tradition' aspects of Japanese culture where they have specific keiretsu that will be propped up as zombie operations, something that has plagued the history of Japan over the last few decades. We don't really do zombies in the US outside of specific areas that we consider strategically valuable to the entire nation. Japanese business and central banking have literally propped up companies that should die. That literally have no reason to exist, strategic or otherwise...but they do provide jobs. On your second point, innovation is hard and the technical expertise needed to engage in any market only goes up with time. You can't really expect this high minded ideal of 'competition' when you're talking about things like chip etching, pharmaceuticals, datacom or even more 'traditional' industrial activities that have existed forever like opening up a metallurgy operation. Both require billions in capital to even get off the ground. This is going to continue as things go on and get even more strained. The days of actually breaking an entire new industry segment on a wish and a prayer are somewhat over. Things were simpler back then when this was true. This also brings up the canard that small businesses are somehow 'the backbone' of the American economy. They are not. They never have been. The prime movers in the economy are the largest industrial and commercial concerns that we have. They generate the initial impulse that then causes movement in everything that's connected to it. Saying that small business is the prime mover is like saying the starter motor of your car is the thing that actually propels it down the road.
3 года назад+13
@@talisikid1618 Indeed, USA is following the same recipe from Japan towards a Fascist System where only big corporations succeed with the favor of the goverment. QE and market manipulation are the norm in Wallstreet right now. Corporations are already killing innovation with patents and biased regulations in favor of them. That's why we need to learn the lessons from Japan, because they've experienced the blueprint of the scheme that will be realized to the rest of the world.
I enjoyed your video and finally understanding a bit move. I was sent to Japan in the late 80’s to do some work and training. I saw a booming economy and imagined what it would be like to emigrated; a missed opportunity. Years later what happened? why Japan economy was not getting , now i have a good idea. I still have that 1000 yen note at that time it was like buying a $10 CDN cup of coffee (not the can coffee from the vending machines) . That coffee tasted great.
Absolutely awesome description of Japan's recent economic history! You have a real knack for creating a clear plausible narrative out of a mass of information! Through an orthodox macroeconomic lens, of course. :-) I am in the demography camp: a lot of the things that happened (property bubble, disinvestment, deflation, etc) are explicable as products of the demographic life cycle, with a very big "baby boom" cohort. Japan's "baby boom" peaked around 1950-53, about 10 years earlier than the USA's. It was much more compressed than the Netherlands' (spread out over 1950 - 1970-ish). (Interestingly, Italy, the demographic "Japan of Europe", didn't really have much of a baby boom. Just the bust.) I think that you blur matters a little by using overall population rather than working age population. The "working age" population is also the house-buying, car-buying, and child-goods-and-services spending age population: it is the "economically relevant" population. (Using total population does make for a more linear narrative, of course.) (If cohort size is stable, the difference between working-age and total population would not matter much, but the fact that it was not is to me the reason why we had a property price bubble in Japan and why we are having a property price bubble in much of Europe, North America, and Australia-NZ, starting 15 years ago.) The cause of the property bubble, to me, is the efforts of Japan's "baby boomers" to save for their old age during their peak income years, 40-55. Similarly, the high savings of Japanese companies is a direct result of the decline of Japan's working age (really, "spending age") population. Once that population starts to decline, there is little reason for companies or local governments to invest. As you say, the government could counteract the lack of consumption and investment by increasing transfers to the people who are most likely to circulate them, but it has not done so. No country has yet tried a policy that increases fertility sustainably. I don't think anyone has any idea how.
Thanks! Good point about working and population!! Don't agree about the saving point. This assumes that the money/ credit supply is a physical 'thing' that has to either be saved or consumed. It is not. Check out some of my videos on credit/ money creation of this difference interests you.
@@MoneyMacro Thanks for replying to a very late comment on an old (in Internet Years) video! Also thank you for understanding my point about working age population (WAP) being the economically significant one. I think you did make the point in the video that Japan's "GDP/WAP" growth has been average. Stable or growing WAP has been an implicit background assumption for commerce (ignored in economic and investment theory?) throughout the 20th century. I think that WAP effects are going to become more visible over the course of the next 20 - 40 years, as more of the developed world transitions to static or declining WAPs, the exceptions being economies that integrate large enough numbers of skilled LDC immigrants. For example, the UN World Population Prospects 2019 projects -0,65% per year for Germany's 15-64 WAP for 2020-2040 (population.un.org/wpp/Graphs/Probabilistic/POP/15-64/276). Others in the current top 10 countries by nominal GDP: China, -0,7%, Japan, -0,88%, Italy, -0,9%, Korea, -1,1%. (The US, France, Canada, India, and maybe the UK will carry on as before.) I think these changes are more important than just giving Brazil and Australia a chance to move into the top 10, and reducing global GDP from its trend over the last 20 years. The reason: second order effects might be important. For example, company investment decisions. Investment when the potential market for your products will double in 35 years (2% WAP growth, the "normal") has different risks compared to when the market will halve in 70 years (-1% growth). In turn, there might be third-order effects redirecting firms to specific activities, with effects on productivity and growth. However, I don't know what would be the best analytical toolset to determine whether these downstream effects are as important as I believe. Heterogeneous agent based modelling? :-) You are right to challenge my savings points. They are weak. I will watch your videos--my understanding of money supply is on the level of "banks create money by making loans; the quantity is supply-limited to loans that the banks believe will not fail".
If you're not going to have immigrants. Pay people to have families! People always say it is a full time job so make it so. Obviously it won't just be free money as there will be regulations and such or else that would create broken people.
This was a very interesting video, and I will say that my favorite phrase from it was "that is not my area of expertise" when discussing population growth. Way to be honest about your capability to comment, you're a rare creature here on this platform. respect.
3 года назад+50
Something that may help, modernize the goddamn banking system, there is no reason why you need to go through all these hoops to do basic banking tasks like getting a debit card that doesn't allow cash withdrawals and depending on cash cards that their only use is to withdraw cards with fees on ATMs
That is because government intervention. If government let market falls to bottom, surely the slow growth will create inflation. They intervene instead create a very very slow drop, so it deflated slowly. USA stock market also the same by now. They don't let it fall and corrected, they will have abnormal economy ahead.
I think that is because Japanese people are very frugal and they don't buy and hoard items like people in other countries do. People in Japan tend to live in apartments and just don't spend much money. Even in China there is much more spending but there is a hard limitation as most people also live in small apartments although larger than Japan still nothing comapred to American private homes and culture that is just a massive spending machine. There is a reason how USA built modern China from it's crazy consumption of goods as prices rise in China new countries or old ones can take that market share away form China which is why growth has slowed to a crawl in China and they are making radical changes this year. They know that the American and western consumption machine is leaving China so they are making that transition move faster.
Really interesting information, I have been living in Japan since 2012, renting and with a full time job, I can say there is definitely no much innovation but small improvements and additions in technology, but as you may know, Japan is a very traditional society, birth rates has definitely decreased, I don't think they are having babies and the stagnation is noticeable, however, Macro-economy and Monetary policies are not something I understand much, hence the reason to check your video. Thank you again and I will definitely check some more of your work.
Small improvements without major innovation was how Japan became a power house post WWII. Quality of their cars are fine examples. But this idea of taking others innovation and improves it little by little will ultimately be their down full as well. I work for a Toyota supplier. We know Toyota has just started investing in electrical vehicles R&D. Their quality will for sure be better than Tesla’s but they have lost the brand recognition and will have to buy their batteries to compete. Not to mention all autonomous driving software will need to be outsourced to US companies.
@@howo357 Japan seems to be known more for incremental than radical innovation I think in some areas e.g. their cars adopted direct injection later than German ones, though also because they sell more cars in developing countries where the fuel is dirtier & would damage the more delicate components used by direct injection engines I think
@@howo357 They WERE very innovative. They were the first in the world to recognize the value of semiconductors to achieve miniaturization of items like radios, tape recorders, TVs, toys etc. and also to develop innovative methods to achieve high quality in their manufacturing processes.
@@prasadseshadri9886 semiconductor were discovered by German engineers. And all those things you mentioned weren’t invented by Japan. They improved and made them more accessible. But yes their innovation lies in manufacturing process to achieve higher productivity and quality.
The strange thing is, Japan hasn’t been doing great,but it hasn’t been doing terribly, either. No wage increase, but no price hike, either. Very low unemployment rate (less than 3%). The crime rate has been getting lower during the “lost” decades actually. I personally think slowly shifting from the obsession with economic growth to sustainable, non-wasteful lifestyle is a desirable thing, so I don’t think it’s all negative to lose some excessive steam.
Unemployment in Japan is extremely different than in other countries. Look up the lost generation and the hikikomori problem. The crash in birth rates reflects the malaise, and the situation is just going to get harder as the population aging accelerates and the worker:dependent ratio worsens.
Well that's refreshing ... kodomodachi with an interest in the future and past. It had to be the dragon ball z part .... just kidding. Stay on top of things kiddo.
Good presentation! Walking through decades of Japan’s economy was a help, knew parts of it like Abenomics, but a wholistic picture in this presentation is what we need! Please keep up the good work, thanks!
I searched for Lost Decade and reached here. No Regrets. Awesome use of my 36 minutes. Loved the way you presented different concepts. I would love to see videos where you extrapolate current economic situations.
Thanks!! I am considering making this semi longer format into a series for multiple economies. E.g. EU and China and then discuss several theories when they are relevant. Also, some inflation videos are in the pipeline.
Japan is one of the least trade-dependent economies in the world, only the US has less trade as % of GDP among major economies (but that's because the US economy is so vast that much of the activity becomes "internal"). In that sense, they are the complete opposite of Germany. Japan is also not as financially integrated as Western economies and were not that directly exposed to the subprime crisis, making it even harder to explain why they were one of the hardest hit economies in 2008-09.
@@chunchunmaru07 Check World Bank figures. Less than 18% of Japan's GDP is exports, compared to 44% in Germany. OECD average is 29%. Among major economies only US is less exports dependent than Japan, which is expected of a continent-sized economy. Therefore, one would expect Japan to be less exposed to external shocks, yet they were one of the hardest hit economies in 2008-09.
This is completey false! Looking at % of GDP is a misleading statistic. Japan is #4 in the world in total exports and #5 in total imports as of 2019. And the total size of their country is small! They are completely dependant on outside trade. Japan has very little natural resources of their own and has to import tons of raw materials and goods and food due to this fact. I have been to Japan. The cost of everything there is super high mostly due to having to import almost everything! Japan is known for building electronics and cars which are huge exports for them but guess what? They have to import almost everything to make them!
@@AAONMS1 Looking at export ranking is what's misleading. Japan might be #4 but they are just barely edging ahead of UK and France, much smaller economies, and far behind #3 Germany, which has a smaller economy than Japan but exports more than twice what they do. If Japan further loses in export competitiveness, they could quickly drop to #6 in exports, a very poor showing for the No. 3 economy. Cost of living is not higher than other developed economies. Exception would be food products, due to high import tariffs. Japan does rely a lot on imports of primary products, but those are very low value stuff. OECD data shows that only 11% of Japanese exports depended on imported inputs, much lower than Germany at 20% and France at 22%. So their already limited export sector is much less dependent on imports to produce their products, compared to other major countries. In other words, the Japanese export sector participates less in global supply chains than would be expected. I.e. not very trade-dependent. The reality is Japan's economy is much more insular compared to other major countries except the US.
@@Illuminatorofshadow well... GDP is a fallacy.. or you are telling me that the average Japanese lives better than the average french/British? the majority of people in Japan are not rich...they can barely afford to live. Almost all the GDP is in hands of the super-rich.
Amazing I got this in recommend Plus you did mention Plaza Accord and I'm surprised because none of RUclipsrs explain it or they just flat out didn't know.
Thanks!! I'm surprised they didn't mention it at all. Some of the articles I came across gave it too much credit (in my opinion) but to not mention it at all is on the other extreme end of the spectrum.
@@MoneyMacro Plus your are Top Notch, thank God Algorithms has blessed me here too, in the end your videos are much more researched than any other RUclipsr economics. I applaud your genuine Quality over quantity man and keep pushing for 1K to 500k subs man !
@@MoneyMacro , thanks for this work. I watched that "Prices of Yen" vid a few years ago. At that time something struck me like conspiracy theory. I came across the Plaza Accord in an other video these days, which I had no knowledge of. So I rewatched the "Princes", and yes it's missing, in favor of a vague "interest group" narrative. I seems to me, that the compliance to the Plaza Accord hit Japan especially hard since their society was .. let's say "conservative". The German society wasn't hit that hard at all, though also targeted by the accord.
Most let it slide because they fear the political fallout from it. If that deal are made between another superpower, you will see its mentioned all the time.
He doesn´t mention the factor that explains 90% of what happened. Everything cascade from there also doesn´t mention the fact that japan is a ocupied country that cannot make its own policies when it colides of those of the "big master" leading to some ridiculous episodes like joining the anti-china "quad" or saying they will "fight china" over taiwan. Politics and economics don´t live in separated universs they intertwined. Also could mention that they have no natural resources to speak off and are totaly dependent on the import of energy and raw materials wich means even if japan was not ocupied they would have a hard time resisting the "big master" dirty tricks like the plaza acord
Partly, I definitely read his book. But, I think his argument is more that they did a lot of that on purpose.... to break the power of the state in favour of a wealthy view.
I’ve been living in Japan for the past 11 years. You touched on all the key points. As others have mentioned, there are cultural differences and in particular conservative approaches to about everything for which also continue to hold Japan back behind other countries both in Asia and also globally.
Overall I feel like the Japanese economy is pretty in the middle. I work here and due to COVID a lot of things are changing rapidly. Lots of businesses are floundering and people aren’t spending nearly as much as they had before. I’d be interested in seeing your take post COVID as, due to the Olympics in large part, things have gotten consistently more and more dubious.
While I agree with your monetary conclusions, I didn't see enough about the important fiscal strategies and challenges. Japanese infrastructure (Shinkansen, Highways, Airports) are world leading in terms of function and design upgrades. ( A clear example is comparing USA Airports, or Berlin's new airport with Nagoya or Haneda. )Japan has a strong portfolio of civil infrastructure which has made is easier and more convenient for Japanese. ON the down side is the constant concrete changes made to the coastline, essential to protect it from calamity of Tsunami as witnessed in recent times. The fiscal spending on infrastructure then depletes the reserves while Korean and Chinese manufactures are gaining more market share.
Depends where you are coming from in the US and going to in Japan, same goes for here in Canada. I live in Vancouver, and for what I pay here for an apartment is an insane amount in say Tokyo. Close to double the price in Tokyo then here in Vancouver and in Tokyo much smaller apartments as well then compared to here in Vancouver. I almost moved to Japan myself as I dated a women there for 7 years, but compared to here it is just to expensive in somewhere like Tokyo.
Hello, I am late to the video but enjoyed your opinion on things in Japan. I've been in the country for some time now and think that your overall take on the economic situation is fairly accurate. The cultural and societal issues however have a dramatic effect on the economics here. For example while men earn most of the money here, they hand over most of it to their wives who manage the finances. So spending decisions are largely made by women in the best interests of their family. Corporate decision makers however is still largely the realm of very old men, who do not understand the dynamics of the 21st century in my opinion. The list is very long about additional factors to consider but lets leave that aside as its only a comment on a YT video. Thank you very much for making this content. I enjoyed it very much and wish you well in the future.
Excellent analysis - very clear. Thank you. One variation of "helicopter money" is "expiring helicopter money" which requires a digital currency implementation as China is experimenting with. You could target people with lower income, give them a credit card with a direct account with the central bank. The money on the card has to be spent each month or it expires. This would prevent excessive saving. It can also be used to stimulate spending at local small businesses as South Korea has done recently during the COVID19 pandemic. Food for thought...
Very interesting food for thought. Yeah... I'm thinking about doing a video on central bank digital currencies at some point. In my opinion, they are one of the most interesting developments out there currently.
@@MoneyMacro agree - everyone is focusing on digital currency as subverting central banks but it in fact will be the exact opposite. It will opens new opportunities for flexible and targeted policy implementation of fiat currencies. I can see algorithmic competition between currencies: which currency has better algorithms to implement currency stability, etc. Especially if policies themselves are implemented as algorithms - simple example: allow a digital currency to be traded on a specific market if its exchange rate goes above or below a threshold.
Interesting indeed, but couldn't you just buy extra 'alternative' money with the expiring money and 'save' those? Like non-perishable goods (including real estate), precious metals/raw materials, foreign currency, bonds maybe even long-term stock?
The hard part is that expiring money would be worth less than persistent money, so it'd not work well. I guess you could set a loan against persistent money equal to the VAT rate, and then the loan could just be paid off from VAT collection, with a digital money system this should be able to be implemented. And if people hoard the money, it can just be collected as tax at a higher rate. Tweak the debt to be less than the VAT rate to reduce the spending incentive, set it higher than the VAT rate to add extra impulse to it.
i rate this video 5/5! should be a quality indicator for stuff like that! i truly appreciate your work! this is a very insightful intelligent overview over japanese economy and almost easy to understand! keep it up! i saw some videos from you but now its time to subscribe :D
Well they lost the war. Although Japan isn't the same Japan before so I hope they get better. In the meantime US had a history f**king up our economy and they achieved it and now we're one of the poorest.
the argument for bank rescue has and will always be "it would have been worse letting banks fail" hmm... ever thought about rescue the citizens directly by buying up their home loans and other debt indefinitely through near 0 interest rate kinda like providing liquidity to banks but instead to people, probably would have had the same result but that there is no incentive to do so for their banking buddies.
Yeah, bit ignorant of him to make that claim, specially when there are studies out that show that what you suggest would have been just as, if not more effective a solution to the 2008 GFC.
@@chrisgunther109 Same with his claim of saving money and thus not spending it being bad. Forcing artificial consumption through policy creates perverse incentives that will always will enable reckless spending practices; these do not create long term and sustainable value and will come to bite you back in the ass when the market aims to correct itself via a crash. Keynesians really do hate people saving for future investment.
@@waterbloom1213 Agreed. I think the one possible caveat to your point is that monetary deflation does hurt the economy. 'Incentive to invest' shouldn't have to compete against the money itself increasing in value.
I've been interested in economics for a long time and this video strangely worked to connect a lot of dots for me in what I already knew but didn't understand. Great video
I find it utterly unconvincing that the bursting of an asset bubble and the subsequent debt deflation spiral is why Japan went from very high growth to very low growth. The biggest problems with this story is that it does not make sense when you take into account the ability to eliminate deflationary expectations with central planning. Debt deflation spirals are an artifact of the myopic expectations of individual agents. This problem exists only when the economy is made up of many small individuals and it ceases to exist when a central planner steps in to run the economy. While having a central planner step in to correct the system may not be politically possible in the short run but surely it is possible if the problem persists in the long run. There are many ways central planners can eliminate deflation or demand reduction expectations. There is no way they can not do it if they really wanted to. The fact that the Japanese government could not or did not reverse the decline in growth suggests that the problem was far bigger than just deflationary expectations. There must have been some real supply side reasons that drove the decline of Japanese growth for such a long time.
@@MoneyMacro I watched your entire video and the main argument you are presenting is the debt deflation argument throughout. I find this argument unconvincing and politically motivated (By that I mean not by you but by the original people who proposed this theory). While deflation expectations does have an effect on economics particularly in the short run there is no evidence that it is as substantial a driver of economics in the long run as economies have grown through large amounts of persistent deflation all throughout history. The economy grows from the expansion of aggregate supply and the full utilization of aggregate supply capacity. The under utilization of aggregate supply capacity is a problem that can be corrected by central planning but a correction of this problem doesn't mean a return to persistent growth. Japan hit a point in its growth at which aggregate supply could not grow any further. The simplest argument for why the investments to grow the economy stopped is because their risk adjusted return on investment was below their breakeven cost. This is more than just because people didn't spend money because of deflation expectations. Deflation expectations is not the primary driver of people's thinking process when they spend money, welfare gain is. You have to do a lot of manipulation to your math to get deflationary expectations to change people long run consumption pattern enough to explain a large drop in growth. A simple examination of people's actual thinking will show you that deflation expectations cannot account for so much of people's behavior. What is much more likely is that people simply didn't spend the money because there was insufficient welfare gain in it for them. All deflation expectations does is makes this slightly worse. A simple example to illustrate what I mean. You can try to grow the economy by making more cars. When you measure if doing so grew the economy it depends on the price of cars. If you live in a world with already more cars than people want, additional cars can only be sold at very low prices. If these prices are below the cost of making the cars the economy shrinks rather than grows. A car maker running into this problem will not invest to make more cars. On the surface everything looks like deflation and you could say that the problem is insufficient demand for cars driving a deflation in cars. Is deflationary expectations driving this or the fact that society has exhausted the growth avenue of producing more cars? Deflation is just a convenient scapegoat for running into insufficient welfare gain problems. The economy is having problems coming up with new products and services that sufficiently increase welfare compared to existing alternatives. People not only don't know what to make, they don't know what to invest in to come up with what to make. This is the primary problem holding back growth in Japan and indeed the entire world. Japan is a very advanced country with very smart people that usually runs ahead of other countries. They are also a very frugal and understated people who are not easy to provide welfare enhancing alternatives to. Because of these things Japan is just the first to run into these problems and relatively early on compared to other countries. There is nothing Japan can do about these problems aside from continue to try to be innovative. Trying to address the problem with inflationary policies is a fools errand and will in the long run be more destructive than helpful. Painting the problem as one of debt deflation is just politically expedient because it does less to undermine the existing economic order than admitting that there in an underlying aggregate supply problem.
@@georgesiew2758 It is true that most of my arguments debt-deflation (1990s), deflation expectations (2000s), shrinking population (2010s) can be described as demand side problems... However, I would argue that your insufficient demand for cars example is a demand side argument as well. That being said, okay I think I see your point that there isn't enough innovation in supply any more to drive most advanced economies (including Japan) forward.
A few years ago I wrote an article on how Japan can revice it's economy by embracing deflation: japan-forward.com/japan-should-embrace-deflation-to-revive-the-economy/ In addition, I think the popular 'wisdom' that deflation is bad because it makes people postpone their spending is the one of the worst 'theories' in economics that I hear all the time. It might be true for houses or shares, but not for consumer goods. It assumes that when people see prices fall, they would automatically expect prices to go down even further and delay their purchases. It is much more realistic that people would buy more stuff if prices fall, as they can profit from low prices and they are not sure whether prices will fall further. Even if prices would fall for years, at some point people would spend their money because it is no use to keep hoarding money indefinitely. Also, I personally never saw empirical evidence supporting this popular economic wisdom. On the other hand, I do think that deflation can be a symptom of falling demand or a collapsing banking system. I even agree that deflation can be problematic when there is a lot of debt in the economy, but then we would have to argue whether it is deflation or high debt levels that is causing this problem. Finally, when deflation is caused by rising productivity it won't make it harder for people to pay their debts as the economy will keep growing.
@@semhuizer9404 That whole Theory vs Praxis view is an interesting take. I still am not convinced that deflation can handle any sort of long term debt though and I think this exactly is the problem since prety much all economies have some sort of long term debt standing
What I've noticed in terms of japanese people having babies is that the sheer lack of both facilities and time make it very difficult for young people to have babies. Regardless of daycares built by Abe, finding a daycare is an absolute waiting list hell and incredibly expensive. When looking at it a step back, I see that people are unable to properly date in Japan (Tokyo at least). Most professionals I know work at least 11 hours a day and some change on the Saturday. People are simply too exhausted and stressed to find time for relationships, let alone babies. Maternity leave is actually pretty good but it really depends on the company. Japanese corporations and politics keep holding on to the 80's notion of working yourself into a stupor and it is very difficult to change this culture. It's not that abnormal to find japanese young professionals who haven't dated anyone since graduating college because they are so damn swamped
Very interesting. This is something that I think you start seeing more and more in many big cities. I think it shows that policy makers need to consider multiple factors if they want to influence birth rates and that these factors can be quite different depending on the country.
@@MoneyMacro on the other hand, from what I understand Scandinavian countries have abundant facilities and amazing parental leave and work life balance. However, their birth rates haven't gone up either.
@@Ironborn4 sweden and denmark actually do have a pretty decent birth rate and they will have population growth. Way better than the western average atleast
I remember when I was a kid in the '80s and there was such American interest in Japan. Of course there was all the talk about Japan crushing our economy or whatever with all their Sony Walkmans and Japanese cars, But I also remember how eveyone loved Japanese products and Nintendo and movies about Japan and just everything Japanese. And I had all these T-shirts and clothes and toys with the Japanese flag and Japanese writing on it. And it was all the rage. Everywhere you looked you saw something with that big red ball on it with Japanese writing under it.
I would say one of the few of the reason Japan grew stagnant is due to the fact it expanded and perfected its process and infrastructure too quickly too . It is simply too expensive and risky to tear down something old in the eye of Japanese. For example in Singapore where I live, the old carpark system is a mess while the carpark in the newer one is excellent. The old carpark is usually residing in old city area that have british influence. While the roads and carpark in the new estates is just excellent. Because it was newly build on newly developed lands. In Japan, there seem to be an unwillingness to tear down the old systems for a better system. Might be due to cost, might be due to an perfectionist culture, might be the fear of risk for a new system. For China, there was nothing no existing infrastructure or digital stuff at all. They can just put in the latest most efficient system without caring about the old system. In other words, it is simply easy to build something up from zero.
Japan is super-conservative, so you can't go around offending all the old people who loved that old car park! China on the other hand will pave over your house while you're still inside and dare anyone to say something.
Superb explanation. My goodness. You are brilliant. Please keep the videos coming and also consider writing several books on various economic topic. You are brilliant. You managed to boil down very complex concepts into simple forms.
Haha wow thanks!! I'll keep making videos like this. One on Lebanon's currency crisis is coming up real soon! Took me a bit longer than expected since it is once again a super complex subject.
This is so well researched. Also reminds me of Richard Werner's take on the bubble economy & post-war economic growth. Going to binge-watch all your videos now 😬
Funny that you were born in 1989. It makes me feel old now. I went to Japan in 1990 on a working holiday visa from Canada, I spent a year there and I have to say it was grand experience. I guess I was a migrant worker, teaching english as well as working as a computer programmer. I made a lot of friends and really liked the country and the Japanese people. I had heard about Japan as being the place to go and knew people that made a lot of money at the time thanks to the rising yen. Funny that the Japanese actually say "en" not "yen" but by the time I got there it was slowing down. I recall the huge property bubble and the point about the Tokyo Palace being worth as all of California. We all knew the recent news that the Japanese had bought Rockefeller center and Sony bought Columbia Pictures. I even watched the Gulf War take place when I was in Tokyo so it was interesting to get that frame of reference. Overall your analysis is on, I think you might have left out some minor things. When the Neo-liberals swept to power with Reagan and Thatcher, in the US Volcker raised the rates to fight inflation, Japanese money flew over to the US to take advantage of the rates on US T-bills. Another fact that a Japanese businessman mentioned to me that astounded me and really shows the difference between the Japan and other Western economies was that something like 40% of the GDP is unpaid overtime. The Japanese have a very strong work ethic, our idea of working as little as possible for as much as possible is rather alien to them. The other point is that for a capitalist economy they actually do a lot of central planning and even the big corporates work with each other rather than compete amongst themselves. There is also a problem when doing an analysis of one economy in an age of worldwide interdependence. Each economy is not really isolated, so much depends on trade, energy flows, migration and demographics. I had this feeling that when I was there Japan was a glimpse of the future, like it was 20 years ahead of us. Everything was automated, you had sliding doors and AC in every shop. There were all sorts of vending machines for anything you might need. Yet there were contradictions, like very modern building standards that still used bamboo scaffolding. And on an economy level - Japan heavily invested in infrastructure for rapid transit - and around each station one could take care of all their needs as far as shops and services. But alot of this was done at the expense of household convenience - many homes had no insulation or central heating, and it can get quite cold. People tended to rely on the kotatsu heaters which was a little table that one would eat off and underneath was a little heater to keep your feet warm (in the past it would have been charcoal). I also believe that the intergenerational wealth transfer is fine for Japan, so what if the central bank buys the debt - it is still an asset. The demographic shift is a big challenge for Japan, and it is something other western countries can expect (like Italy). So with an aging population you will have large demographic that no longer produces or consumes a lot (they already got the appliances) and this is an additional drain on the govt funds and there aren't enough young people working to acquire new assets themselves and pay into the pension funds. With Japan it is even worse, as they cannot depend on immigration, there may be some guest workers (when I was there there were a lot of Iranians who did the work that the Japanese did not, like working in the gas stations etc). But as a homogeneous population they do not welcome foreign workers to live and stay. Even now there are 4th generation Koreans who may not take on Japanese names for their kids, and could be deported to a country they've never been to or speak the language. Here is where the US and other western economies have an advantage if they are willing to accept immigrants. The demographics is a tougher challenge for Japan, as there is huge divide between male and female work both in the office and at home. At least when I was there 30yrs ago, Japan was as sexist as America was in the 50s and things didn't look like they were changing. It was typical for women to work as OL oh-eru (office lady) until she would marry a co-worker. This was of course welcomed by the corporation since now the male worker was likely to have a family and was expected to work hard. (Back in the 1950s the Japanese workers had fought for a lifelong jobs and it was expected to work for a company for their entire life) However there is now a large population of young men who are single and equally a large population of single women who have chosen not to marry as it's just too hard a lifestyle (and Japanese men do even less housework then American men). There has been a flight from the small towns and villages and there are many ghost towns with no kids, schools closed and even mannequins put up in various places to make it look like there are people. Positively I have heard of young people moving out to the country to take advantage of cheap housing and a simpler life. (Perhaps with the working from home trend this may continue). As far as money going for bailouts or to stimulate the economy which ends up as dividends or share buybacks (like the US airlines that spent 90% of their spare cash the past few years on stock buybacks) there is an alternative that does not involve raising taxes or bailing out corporates and that is citizen's wealth fund. (So it avoids being a right or left policy) So these days when we have a crash every few years and interest rates really low or even negative - the next time there is a crash, instead of just bailing out the corporates (we just had a 5 trillion bailout) why not issue bonds on say 20% of GDP like 4 trillion (with near zero or negative rates and inflation at 1% it is nearly costless) take that money and create a citizens wealth fund and invest it across the board in an index of blue chip stocks, have it professionally managed and out of reach by politicians. You should be able to earn 6-7% and in 10 years pay off the debt leaving a 4 trillion citizens fund to help people out with, say low interest loans to start business, fund some kind of minimum income etc. And no taxes were raised on anyone. Another thing is rather than handing over our privacy to social media - we know the FAANMGS (fb apple google etc) are 20% of the S&P and enjoy 60% profits, lets sell off the right to use privacy like we do the wireless spectrum for 5 years at a time. And again add this to the citizen's fund, or something similar. People can choose to opt out if they wish. These are some solutions from Economist Mark Blyth and Hedge Fund investor Eric Lonergan in their recent Angrynomics book. ruclips.net/video/0RP5xiORr1U/видео.html
In feminist Korea, men are only allowed bad jobs like construction workers, delivery etc. In Japan, women also do such jobs as seen from videos and photos.What exactly do you want? Send all men to concentration camps?
I've heard that the idea behind increasing consumer taxes was to force price rises so savers would buy now, rather than later. The increases were announced a some time in advance of when they came in, so they could loom in the distance. Personally I always wondered why the Japanese haven't to increase employment by limiting workers hours. I was told they have the longest working week in the world, with an average of 72 hours! if they capped it at 60 thats an extra days work a week per employed person, now available to those not employed. They also have a very low minimum wage, so upping that by the same percentage so the poorest don't loose income, would also put a liitle upwards pressure on wages, particularly for those who spend most of their income. Reduced hours also increases the free time, helpfull for creating families. My other thought was to make it compulsary to pay double time to anyone working over X hours per week. That will increase wages, and costs as well as putting pressure on companies to employmore people to do the same amount of work.
The rotary phone, in 1997, is hilarious. 😂 Although, my family still used one until 1993, ☎️ Japan, surely, had transitioned to touch tone phones, by 1997. LOL
Great analysis! I live in Tokyo. It's odd, the demographic issues are plain to see in many areas of the country but Tokyo is full of waddling pregnant ladies. However the majority of young people here are clearly a bit worried about their futures, not having the stability of their parents or grandparents. This is shown by the fact (sorry forgotten the source) that more young working people live alone than are getting married etc. You see huge blocks of flats designed for single living everywhere. They seem to be in somewhat of a spiral. My feeling from being here and having lived in n various parts of the country is that they're still clinging onto the boom years (outdated practices business cultures) which has left Japanese in industry complacent to the point where it's neighbours of Korea and China are now the leaders in the industries that Japan once owned. They sorely need innovation.
Change isn’t something the Japanese are used to nor particularly adept at. There is historical precedent (Meiji Restoration 1868), but it’s just so hard for them to consider remaking themselves.
@@mensrea1251 LOL! It's obvious you don't know much about Japan. The Japanese had to "remake" themselves entirely after their defeat in WWII, when they went from a military dictatorship that had a state religion and an emperor who was considered a god, to a democracy with no state religion and an emperor who was now an ordinary human being. And Japanese culture has been in a state of flux since then.
As an economic colony of USA, Japan have to surrender in the digital competition, Japan give up the leadership in semiconductor field voluntarily. Then how could you except a good economy development?
I just spent a month in Japan. It is a fantastic country. Financially and demographically it may leave something to be desired, but you wouldn't know it if you visited Japan. Clean, efficient, aesthetic, polite, and very civilized: there is nothing to object to and much to appreciate.
With a staggering mental health, toxic work culture and considerably high sui---- rates to complement that, yaaaaaaay! This is why they say, "Only go to Japan as a tourist. To live there as an actual citizen is another reality".
Sounds exact like what is happening right now. From the start of the video to 7:24 it sounds like americas situation. Im kind of scared because the interest rate hike will blow the stock market
Exactly, and our (and the world's) solution is the great reset. Government will own everything, we will own nothing. But until then, think of how rich you would have been by selling Japanese stocks in 1989 and buying US stocks. And think of how rich I am going to be after selling US stocks this year and buying gold and foreign land.
“Japan’s economy seems to be doing quite well for its citizens. “ that is true if you are a pensioner. Japan’s poverty rate is increasing yearly without fail. The increase in single parent households has a lot to do with this and once you are on the bottom in Japan, it’s social doctrine makes it difficult to rise up out of their social situation. It’s difficult for men as well since if they do not get a decent job after they enter the work force or they get laid off they are relegated to low wage jobs from then on. Japan has many ways to waste the talents of its people.
One problem not mentioned is the competition from China and South Korea in areas where Japan was once dominant. Consumer electronics used to be dominated by Japan, but now Japan doesn't even have one large LCD factory left.
@@MoneyMacro But no Tokusatsu references (except for one, Godzilla 1954). That's still a huge entertainment medium in Japan and gather recognition around the world.
I've been living and working in Japan since 1975. Although I have been all but uninterested in economics, I naturally have experienced the roller-coaster ride and sometimes taken some pummeling from it. I remember when Japan seemed so far behind the USA, then when it got so far in such a short time I was proud to be here; then I unfortunately went free-lance almost in perfect synchronization with the bubble burst and experienced the "lost decade" full force and ended becoming much more fiscally conservative as a result. This video made me understand that all these things just didn't happen by coincidence... About immigration, while I understand how opening the floodgates creates problems, Japan's downright hostility to the notion of allowing average (non-rich) foreigners to reside normally in peace and just make a living is not helping AT. ALL.
I've lived in Japan since 1988. I'm from Canada. I remember when ordinary blue collar working people could afford a home in Canada, now it costs 1 million dollars for a dilapidated shack in Toronto or Vancouver. I just recently bought a gorgeous 3 bedroom home on a half acre lot in Saitama, Japan for $150,000! The same home would have cost me at least 10 times as much in my native, Canada. I honestly don’t care about anything but the cost of living, including education, healthcare etc. For that Japan is far better than Canada, my home and native land. Moving to Japan was the best decision I’ve ever made.
@@maxamaxa194 Actually, I chose to live in Saitama. I've been all over Japan. I've lived in Setagaya Ward in Tokyo, Kushiro in Hokkaido and have travelled extensively throughout Japan. Chichibu, Saitama is one of the best places I've ever had the pleasure of being. To live here is a dream come true. It's a quaint traditional town with cobble-stoned streets lined with family run shops (not big corporation boxes like Costco or Aeon malls). There are literally hundreds of original restaurants and bars where you can enjoy various kinds of atmospheres in warm welcoming surroundings. There are reggae bars, jazz bars, soul music bars, enka bars, whiskey bars, live music is featured in many of these clubs and never disappoints! There is no Starbucks, but there are dozens of coffee shops that serve gourmet coffee that is brewed with care. There are family run tatami shops, kimono shops, architects etc. The Ara River is pristine there as it has yet to flow through the industrial areas of Kumagaya and Tokyo where it becomes filthy with run off and factory waste. The fishing is outstanding, the green low lying mountains are gorgeous and full of awesome hiking paths. My kids enjoy camping along the river and hiking in the mountains. My eldest son and I enjoy riding our motorcycles through the gorgeous winding roads that navigate the Chichibu mountain range. If we want to enjoy the buzz and throng of Tokyo and all it has to offer we are a 90 minute luxury express train ride away from Ikebukuro for a reasonable charge of ￥1,300. I often go into Tokyo to see a concert or sporting event. The express train is never crowded and the seats are absolutely luxurious and the passing scenery is let in by the huge seat to ceiling windows. Ahhh yes, Chichibu...a little bit of heaven on earth! I honestly wouldn't want to live anywhere else.
Demographics definitely played a part in the Japanese economic slowdown. However, a flexible government that could plan ahead well, would be able to gather options and squeeze out generally slow but stable economic growth from a shrinking, ageing population Part of the blame has to fall on the inability of the Japanese government.
Very insightful video. I'd love to visit Japan one day. I've been very interested to understand Japan's economy more, especially regarding stagflation. Thanks for the breakdown!
This was very well researched! You must have taken a lot of time making this video and overall I agree with your points. As someone living in Japan who understands conversational Japanese I will add a few observations of my own. It is concerned bad form in Japan to discuss issues of politics and economics! You will never hear anyone discussing anything ‘serious’ like this around the dinner table. The reason for this is because another person may feel uncomfortable or disagree with something even if they say nothing. The problem of course is that if these topics cannot be discussed at a public level, then how can things change or improve? That is why things continue as they are. Please do not misunderstand me. I am not criticizing Japan. Cultures around the world are simply different. In my home country we tend to discuss whatever is on our minds! That is not done in Japan. It is considered rude and it is avoided. In the year 2000, when I first came to Japan, my Japanese phone was incredible. I could send emails! Today, most Japanese you see on the street have Apple iPhones. Why? When I asked a Japanese business man back then, “Why don’t you sell these amazing phones overseas?” He looked at me very strangely and said, “These phones can only be used in Japan.” Japan unfortunately, missed a lot of trends in technology because it did not see the international market for such products and trends. Sony had all the technology to create the products that Apple developed. The digitization as been very slow. Twenty years ago cashless payments were common in N.Z, but they are just starting to take off here. Banking is in the dark ages. I have been waiting ten days just to ‘register’ a foreign remittance! A lot of this is because of a culture of carrying cash. It is slowly changing thankfully. The standard of living is not as high as most people think. Foreigners have an image of bullet trains and robots in their heads, so they imagine Japan to be a very wealthy country. When I first came to Japan, all I saw were all the women with designer hand bags and I thought “Wow”. The reality is tens of millions of middle class homes here have no insulation! There is no government healthy homes program. They are freezing cold in winter and stifling in summer. Few have solar panels. Because of high electricity bills, many ‘middle class’ people still use kerosene heaters that are not exactly healthy indoors to stay warm and to heat hot water. There are no green leafy suburbs even in the wealthiest areas. No wide streets like in the West with old mature trees for shade. Recently, some children were killed because a drunk driver drove his truck into them by accident. There was nowhere for them to walk on but the road unfortunately. I feel incredibly sad for the poor parents. Lack of investment, entrepreneurs and start up businesses. In the U.S, there is some new high flying tech company being listed every other day on the Nasdaq. The same is true in China. Here, there are very few new companies being started and listed. This may be because of high taxes and regulations and a deep rooted fear of new ventures. In the West there are a lot of family offices with billions and billions of dollars to invest! There is really no such thing here. There are also virtually no non-profit or charitable institutions here like the Cancer Society for instance like you would see in other advanced, developed nations. These organizations do a lot of good, but they are largely absent here. It may be that culturally there was not really such a tradition of non-profit groups such as Churches.Then you have the inheritance tax, sales tax etc. Japan seems to be a place where capital comes to die. They could turn things around by having a more competitive tax and business environment, but I fear they are running out of time. Why? They do not discuss topics that are uncomfortable or that may cause another person to disagree.
Have you seen what happen to American social cohesion during Trump era where politics was shoved into everyones face and some outlets even encouraged people to Ruin thanks giving Meals by talking about Trump? At the rate America is going right now, Japan won't have to worry about missing the train, they'll be thankful they avoided the train crash.
@@silverhawkscape2677 Yes, you are absolutely right. The biggest threat to the United States is internal division. That is one problem that Japan doesn’t have! It is a very orderly society and that is definitely a huge strength for the stability of the country. The West and the East are simply very different. In the West we are always discussing and debating things. We would feel trapped and frustrated if we couldn’t express our opinions. It is not part of the Japanese culture to do so because harmony is more important to them than anything else.
Japanese homes depreciate, so people aren't going to take effort and money to build it well. They will just tear it down and rebuild few decades down the road, if natural disaster hasn't torn it down for them.
Just subscribed another excellent video to go with your rebuttal of EE, now going to watch Dutch via USA to hopefully get ammo against the future Great (not) UK/US trade deal.
I've worked in Japan at a small, centuries-old company for the past 5 years. Awesome video, and I don't have any major disagreements (who's the actual researcher here? XD). I think there is one piece the puzzle in the approach to risk here, which I have picked up on in interacting with colleagues. If one part of our business is booming, the common response is "How can we hedge against that?" I. E. Seeing success as a risk rather than something you should push for as a competitive advantage. And not seeing risk as something that is essential for success. Maybe it's just my company, but in line with the tendency to save that you talked about, from my experience there is a different form of risk aversion that goes counter to what I took for granted in the USA. Intuitively I feel that this approach to risk might explain some of the confusion behind why Japan's economy has been so stagnant for so long. Additionally it seems like there is a fundamentally different role of the company in society here--like it's their job to not take too much risk, lest the workers be out of work and out on the streets. TLDR I would say there are definitely some cultural factors at play here, unaccounted for or unanticipated by Western economic theory.
Indeed, I agree the Japanese are highly risk averse, culturally, politically, and in business. I'm sure in your experience you've witnessed how inefficient Japanese workers are just because they want to show they're working hard for super long hours, and only leaving whenever the boss or director leaves.
@@vankyre I know that's a common thing and gets a lot of mention, but it seems like in my company there at least isn't a lot of putting on a show of working. People go home relatively on time, and those who consistently work overtime for the most part just seem like they actually have things to do/ they want to work hard. It seems like what I would sense from a Western perspective as inefficiency comes more from this "horenso" process--the need to confirm, consult on, and report every little decision--and the extreme lack of task delegation and independent responsibility. So a lot of time and effort is put into reading the room, and doing things the "right way," rather than taking action (myself included!). Again, I think it might just be my company--really old company but different from what you read about "traditional" Japanese business practices in some ways.
@@theveldtunderground that's good to hear! It sounds like your company's a bit more progressive than the typical ones in Japan. I know the govt has tried to address karoshi, and companies are starting to change.
Thank you for your well researched video on the Economy of Japan. I have three observations to make and would much appreciate your views on the matter, please: 1. When the Central Bank ofJapan began to buy Public Debt (i.e. financing Government's fiscal policy), you seemed to take a negative view of that. Isn' t this better than owing money to rich investors, some of whom are likely to be foreigners (though in the case of Japan, only a small portion of the debt is owed to foreigners, I believe). 2.Why not direct the fiscal benefits to the weaker elements of the society, for better housing, better health care and even a boost to their pocket money to spend over and above the essentials? 3. Why the obsession with ever increasing consumption, especially in the context of environmental impact of consumption. Can we not develop a model that deals with economic activity (country wide, region wide, world wide) to target a certain standard of living and, once that is met for an aggregate (say a nation), to use the surplus productive capacity to meet needs beyond borders? Thank you.
Exactly you literally cannot produce an infinite amount of things. Just fulfill the needs of your populace and innovate on needs such as healthcare, education and entertainment instead of churning out car #10000/10001 max cars possible in the worls
Would be great to analyze the 'future' prospects of Japan. The history lesson was a good start, what about foreigners moving to Japan to escape the collapse of the west.
This was one of the best video explaining our Nation’s current situation If you wish to know about the core reasons of our people’s Saving Habits look into the educations during WW2 and the banking interest rate back in 1970-1980 , also the current education system in Japan about investments and financial education I’m telling you , it’s really terrible
This is a great analysis of the economy of Japan! I saw the princes of the yen, which gives a nice description of the events but blames it too much on evil central bank conspiracy theories in my opinion. I hope the EU will learn from this case study and not fall in the same trap. Yearly helicopter money to all the people (or the government) of about 2% of the money supply sounds like a better alternative than the fractional reserve system. In the meantime I will just assume deflation will happen.
Well done on this level-headed, clear and succinct analysis! Great to learn about the big picture and trends from time to time. Now I wonder about what the future holds. If more Brits can think this clearly I am sure it things will get better for the country.
Some very good points. I have lived in Japan and prior to Covid took students there each year for educational purposes. I think the biggest challenge to their economy is demography. The ridiculous 'free market' reforms of European nations and the US would destroy Japan's infrastructure.
purely from economic and demographic perspective it could be a definition by the book of all of the problems, but there are far more complications than that, I have flicked you an email and look forward to discussing it!
This is the ultimate destiny of a capitalistic economy left unchecked. Corporations eventually hit the ceiling of growth, and to sqeeze out more they begin to overexploit the workforce, pay less, make the govornment cut taxes and regulations. But this tactic is short-sighted. It actually leads to the economy collapse. As workforce gets more exploited and taxed, it begins to spend less, less procreate. Due to decreasing spending coupled with the depopulation the economy begins to shrink. Cap. governments all over the world instead of preventing corporations from overexploiting existing population try to solve the problem by importing cheap low-quality labor force from countries with lower standards of living - these are much more exploitable. So, as you can see, if there is no pushback the capitalism devolves into modern day slavery. The ultimate way of dealing with such crisis for capitalism is causing massive destructive wars - essentially raising everything to the ground, clearing the space for "new growth". Take nature's forest fires as an analogy. We already went through this in hisory - that was WW2. The issue is the next cleansing the earth might not survive.
@@alexxx4434 Most of the issues with our economy is due to government over-regulation. Not capitalism. Guarantee you remove multiple government regulations on the healthcare and housing industry and stop the government from bailing out companies we’d have a crash and recover far better from it as the free market takes its natural course. Also the modern day slavery analogy is stupid. That “modern day slavery” lifted millions out of poverty. But go off
@@Frostmear Deregulate and the corporations will exploit, abuse and monopolise more. "Free market" is a pipe dream preached by liberals in a propaganda campaign to free corprations' hands.
@@alexxx4434 You’ve never taken an economics class and it shows. Clearly there must be anti monopoly regulations in place to avoid such occurrences, but as of right now many government regulations ruin competition. Removing regulations to encourage economic competition will greatly benefit the economy and livelihoods for everyone. The “free market” is the reason why you’re sitting on your phone or computer criticizing capitalism. Without the free market there’s less innovation or business competition.
@@Frostmear You never understood real economics, you only regurgitate liberal lies you've been taught. Free markets do not exits: markets always get controlled, either by governments or by monopolies, and without reglatons markets are being routinely manipulated by its players.
Maybe I missed it but there should be some discussion about how people in Japan are overworked and have no time to spend money. Also, no one in Japan ever enters the job market, they just stay with their first job out of college until they retire 40 years later. These are major issues that I think can explain the economy of Japan very simply.
I feel that the rest of the world's industrial countries will eventually follow Japan's path when it comes to the economy. Immigration is pretty much irrelevant, unless governments decide to bring in literally millions of immigrants. Even that won't make much of a difference, because within a couple of generations immigrants have roughly the same birth rate as the native population. Growth is addicting to politicians, because it enables them to perpetuate unsustainable policies, and therefore they're desperately trying to fix a machine that's working pretty much exactly as designed. Japan has simply reached the limit of its growth potential. All that's left is volatile paper growth.
"Even that won't make much of a difference, because within a couple of generations immigrants have roughly the same birth rate as the native population." I believe it's within a generation, hell some immigrants are already coming from countries with below replacement rates and don't have children when they get here.
Nice well-thought out video. But window-guideance happened when the Bank of Japan was under the Ministry of Fianance, and so could be used as a tool to stimulate the economy more freely. It has since been tuned down after the Bank became independent of the MoF.
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Probably a silly question, but isn't the central bank technically part of the govt? Sure, its "independent", but it is a creature created by the state. So could not one technically say the govt is buying its own debt and printing its own money? God, I wish I was a currency issuer. I'll do some quantitative easing on the bar and stores. 😋
@@리주민 For sure. While technically independent... they very often practically are not independent.
@@MoneyMacro Do you think incentivizing micro, small and medium enterprises through grants, subsidies etc. (USA does that to a an extent with their startups, or at least certain US states do). I feel the big 3 of the Asian Economies i.e. China, Japan, South Korea put too much money in the hands of large corporations who either price out, or flat out just buy and remove smaller competitors. Less competition also incentivizes these companies to lock money in assets like real estate, stock buybacks and dividends and not invest money in R&D or other growth programs.
@@ankitait2 I think you're right. Japan is famous for large mega corporations or keiretsu. Look up the "Big 6," now I bet you will probably find something in your home made by those corporations, unless you refuse to buy Japanese (for whatever political reason).
Great analysis, but I think you have to emphasize the negative impact of high taxes. High taxes have many negative feedbacks, both on corporate investment and growth and personal initiative and growth. The reward for higher revenue and growth are higher taxes - not an incentive at all but a disincentive. This is the perverse logic of socialism and communism. Why work hard and grow when the state will only take what you have earned and squander it? Why work hard and take risks when the state will take care of you in any case? Why bring in another generation of wage slaves when you know their future will not be any better than your own, and more likely worse? People vote with their time as well as their money. Worry about COVID, 'climate change' and other imaginary evils only worsen the disincentive to work hard and take risks. No risk, no reward. In the absence of a reward people do nothing. High taxes are a punishment for being successful and a disincentive for efficient government and good governance.
A country that has been in constant economic crisis for almost 4 decades now and still among one of the richest countries in the world. They must have been insanely rich back in the 80s.
A country that builds up a world-leading technological base can afford to be in constant economic crisis. The real trouble only begins when it starts falling behind technologically and regresses in the global industrial and logistical food-chain. Which is what is now beginning to happen with Japan, though there's still some way to go before this will be felt by the Japanese.
Hence why the US sanctioned them
Japan's GDP/capita was higher than US and all of Europe (except Switzerland obviously) at late 80s until 90s.
@@BWong1234 collect 50 cents
As an economic colony of USA, Japan have to surrender in the digital competition, Japan give up the leadership in semiconductor field voluntarily.
I remember when , on paper , financially Tokyo was more valuable than the entire USA ; and Japan Inc. was going to rule the world. Anxiety over Japan was real. Now when most people think of Japan they think about animae.
@@pinkcichlid Oh yes, good point.
@@MGood-ij1hi I think hot coffee from vending machines.
Oh, and panties.
And porn...
They worked so hard that they forgot to have children to inherit and keep the system going. No one thinks they are ready for a kid but you have to do it anyways, luckily people in America are irresponsible enough to have a stable 2.1 birthrate thus making the economy stablish at least more than a bad population country.
@@knowvoid9958 we don't really have a sustainable birth rate, we just subsidize it with immigration
You missed few points: Japan missed digital revolution train.
1. Japan is slow to improve worker productivity using advanced IT/network technology.
2. They were slow to invest in growing digital industry like semiconductor, display, smartphone and software.
3. Advent of strong competitors like South Korea, China and even Taiwan.
4. Low worker wage and long work hours, which led to low consumer spendings and low fertility.
5. One-party politics: no political impetus to innovate society and industry.
Fair points. I'm wondering though... don't a lot of these also count for e.g. Germany? Which didn't have that much a fall from grace.
With the exception of one-party politics of course. Good point!
Too young sometimes naïve. Many things happening behind closed doors, Japan companies being sold out to foreigners, like how Nissan hired a CEO from Brazil who turned out to be very corrupted and ruined Nissan. Japan is under the stronghold of American control.
I agree Japan did miss digitization train (bus), but that’s like saying Amazon will destroy all book stores… and it was true Amazon was destroying All book stores until Borders went Bankrupt and Barnes and Nobles was the lone survivor and actually did better because they were the last champion of brick and mortar for all those who still know that experience, won’t let that die. Now Amazon has their own brick and mortar stores trying to plunge that knife into them which seems very unsportsmanlike to me…
But anyway, I think this example says a lot. EV car revolution will probably kill most of the current players, but it will allow small companies like Mazda a small lease on life as it attracts business from the aging fans of combustion engines.
Likewise, a lot future speculation doesn’t take into account how humans can’t let go as they age, and the oldest demographic, is the one that still has money in Japan.
I feel the digitization train that was missed was touted as a if you miss it you will be left behind, but I’m not so sure it’s destination was a sure success. My feeling is Japan will actually be a trailblazer because of being on the frontlines of having a slivering population and that will allow them better thread the needle and find the best landing spot between “efficiency at all costs” from AI / Robotics, and not throwing the elderly under the bus because of changing times.
And even if they can’t thread this needle, just like stated in the video with all news-outlets self censoring the long bank lines for greater good. Japan had this “best for society hive mind” rare in other societies.
If things really got bad, that could kick in and swing popular opinion in a heart beat. If things really got bad, I know you will see many elderly volunteering to no longer become a burden on society. When Fukushima happened, many elderly volunteered (but were rejected) to be onsite communications relays in the contamination area. I think it is human nature to not want to burden those you love, and to find a way to contribute and be remembered.
one word. Plazza accord.
@@miraphycs7377 that is two words.
I live in japan. People here save like crazy. It's actually kind of insane. It would be interesting if you made a video on the japanese housing market. It's quite different from most countries in the west. There is no housing shortage here, even in places in Tokyo and Osaka, which is a blessing if you have lived in any major western city. On the other hand, buildings themselves don't seem to hold value. Investing in a home and making a profit isn't really a thing here. I wonder how that affect things like mobility. If you buy a house here in Japan you are never going to get that investment back unless the land itself goes up in value so why would you ever sell your house and move?
Houses are not supposed to be speculative asset in the first place,why would you think that you should get rich just by buying and selling houses while not building anything in the process.
@@lukaradojevic7195 . Absolutely! My greedy American counterparts can't seem to understand that profiteering of residential RE is the same as leeching on the back of the working class. Its a disgrace that in the US you need to be in debt for a lifetime in order to own your home.
@@MrSupernova111 The comment still points out an interesting aspect: if residental (working class people) also cant turn their home over for profit, doesn't that hurt mobility? I dont know how high is the geographic mobility in Japan, but with higher mobility, the working people have better bargaining power with wages and that would push them up.
@@raczgabor659 If all houses are increasing in value then for the purpose of mobility, owners are just running in place and it shouldn't make a difference. What matters is relative movements - if your rural home goes up 10% or 10k while an urban home goes up 10% or 20k, that home has gotten farther away for you - decreased mobility. Non-owners especially would have decreased mobility over time if we're talking about where they can own, as prices run away from them. So, rising home prices hurts mobility and exacerbates economic inequality while stagnant prices are actually good for mobility. It would be harder to move to another country and buy property if yours has stayed flat while that country is rising though. You also can't use appreciation on your home to subsidize your lifestyle then, so appreciation or bust!
japan，china not japan，japan is part of china🇨🇳you learn history go
I'm a Japanese high school student and I was benefiting from the boom when my parents were in their twenties I've been in recession since I was born. Damn.
at least Japan didn't go from rich to poor country
@@delvinrb worse, they went from a young country to an old country
Me, an Italian: first time?
Also the pension or rent system of Japan is problematic.
@@holgerjahndel3623 what is that system?
"There are 4 types of economies: Developed, undeveloped, Japan and Argentina" - Simon Kuznets
Okay, I with a burgeoning interest in economic knowledge, what is like one sentence that will basically inform me of Argentinian economics?
Basically, their economy gets out of the mud, they don’t spend it properly, ultra inflation, economical downturn, repeat
@@El-s So broke folks mentality around here as in they get money, don't know what to do with it, then spend/lose it all and become broke again. Thanks for the reply
I'm argentinian :,(
We got 50 years of economic stagnation, high stagflation, and the most volatile economy of the world, based on dollar denominated debt that goes to carry trade.
Keep in mind that Japan's "fall" was from 2nd to 3rd place, and even if they fell to 4th or 5th, they'd still be a highly-developed, rich economy with high living standards and a high GDP per capita. It's just that they used to be growing rapidly, and now they're mostly stuck where they are in absolute terms, while falling behind the growth of other countries, which puts their relative position at risk.
china ,usa , even russia has more money, japan is too small and dont really like anybody esle , soo they lose
@@hectorr4956 Russia doesn't have as much money as Japan.
@@Aristocles22 russia could wipe japan off the map in 3 hours what are you talking about
@@hectorr4956 Russia has nuclear weapons, but that doesn't mean it's rich.
@@hectorr4956 Russia rank 11th in the world based on GDP compared to 3rd place Japan. Difference in figures: Japan 5.06 trillion, Russia, 1.48 trillion. Japan's economy is more than three times the size of Russia's!
Japan lost the early market lead they had in Lithography sector rather too easily without even trying.
I am a IT professional and we have lot of Japanese clients and I was shocked to see how rudimentary applications and websites were of our Japanese clients.
Even phone apps were simply weblinks for their main websites for long.
They missed the IT and Digital bus for sure
What technology do you work in?
Yes. One part of it is that software developers also sometimes need to be somewhat good at English in order to thrive in their field. It makes it that much harder. I know people who have quit software development because of this.
Many Japanese companies still use fax machines as well, it's kind of an odd feature of modern Japan.
The was a thing called the Plaza Accords where Regan basically said "you are gonna nerf your high tech industry or else our Marines are gonna fuck your shit up".
@@johnl9361 But, in the end, your marines got fucked up by the ragtag militias of Afghanistan. Japan was weak. It had no support from other neighbouring countries. USA had support of entire Europe + Australia + New Zealand + Israel etc. Japan has failed at making alliances. It should have made an alliance with China, ASEAN states and both Koreas the moment America threatened them.
Remember "Back to the Future 2"? Bob Zemeckis envisioned 2015 to be when most Americans had to work in Japanese corporations. Because the movie was made in 1989. How things have changed since then.
huh wow, I guess the same is true in Die Hard too with Nakatomi Plaze
Blade Runner, Cyberpunk 2077.
Switch Japan for China
MCFLY!!!!
Just change the Japon for China, nothing has changed.
The 1980's thru the 1990's were Japan's Golden Years.
The days of the Sony Walkman!
Thanks for the video.
Hmm yeah but with that golden year coming in with them is the end of a bubble. Because it was just temporary or short term. One thing i noticed is it was because Plaza Accord and the US want to stop Japan succesfull exports industry to destroy USA economy. So by switching the stable rise of the economy they got into traps that give insane boost in short term by borrowing the future this result after the golden era ends Japan enter the depression with no real clue how to get out of it.
Sony's walkman was to the 80-ies what iPhone's been to the 2010's
1970's-1990's were the golden age mine you.
Until the Plaza Accords
It seems there is no magic wands to revive the economy, but to produce tangible goods and services for the consumers.
Good job!!
As a Japanese citizen, I thought that your views are quite comprehensive and well-balanced. I think this is a very good introduction to what happened to the Japanese economy during the last 4 decades, especially the last 3 decades of stagnation.
Thanks!! Very happy to hear that.
A very generous response.
@@MoneyMacroyou left out usa intervention
china number one🇨🇳，you are chinese，not japan，japan is part of china
This was the first video I've seen from your channel. I really appreciate how you ask for feedback from those people perhaps most qualified to give it. Overall this video seemed very in depth and covered many of the often complex mechanisms of economics. I feel like I learned a lot about Japan, modern economies, and how people affect each other. Thanks for your hard work!
The algorithm has lead me here, this channel is gonna get big soon
same here
Hail to the algorithm.
Same with me here , algorithms is a God sent, this time..
Good topic ,great content, I learn a lot .
But not Japan
Same bro. Economics explained is gonna have a homie!
in japan: media, individualy, decided not to report a situation in the best interest of japan
in portugal: a television channel announced a news that was not entirely true and a bank that was going through difficult times collapsed
Wait, what? Please elaborate more on this. I am interested.
@@olympia5758 Banif was a Portuguese bank that went bankrupt in 2015, allegedly due to a news that TVI (second most important television channel in Portugal) released on December 13, 2015, announcing the closure of Banif, in fact, the government Portuguese only mentioned that he was going to investigate the bank and it could be closed if the investegation lead to, but the news said that the bank was going to fail, which resulted in losses of 984 million euros in deposits, according to the Public Ministry of portugal.
this is an article from on MP:
“Following the news, Banif's liquidity situation deteriorated due to the decrease in customer deposits, which fell by 984 million euros in a week. such content was harmful and offensive to the credibility, consideration and prestige, trust and reputation” of Banif.
TVI's news has precipitated the closure of Banif, given the rush of the Bank's customers to withdraw their deposits, as they thought that the bank that only had a government investigation into a problem was going to collapse. this led to the bank actually collapsing.
@@Duck-wc9de Wow, that is fucked up. And was TVI even held accountable for destroying the bank? That's just so unfair.
The media has got worse since then.
@@jwadaow The media ruining your life over a comment made 15 years ago is one thing, destroying a whole fucking bank is another. And they weren’t even held accountable for doing it.
There is an award winning documentary about this called “princes of the yen”
It's one of my sources (the book that is) :)
The book is really great and explain far more the mechanism underlying the took over
@@MoneyMacro Yeh - just suggested the documentary as most people probably won’t have the time to read the whole book and the documentary is here on RUclips. It’s a good overview.
ruclips.net/video/5-IZZxyb1GI/видео.html
The documentary is so good.
Excellent content. This has to be one of the better, if not best, RUclips video essays discussing Japan's economic stagnation short of a full blown university lecture. Looking forward to your future content!
It wasn’t the Kyoto Palace = California. It was the Tokyo Chiyoda Palace.
Still... fucking crazy
Yeah someone else noticed as well. My bad. I stand corrected
@@Gnefitisis Apparently the Australian government sold their Tokyo embassy for over AU$600 million dollars during that time and it helped pay off the national debt
@@Sean-ll5cm lol genius
Great neutral read of Japan's economy over the past 40 years.
Thanks!
I agree Erik
I've been living in Japan for 12 years. And the economic health of the average Japanese worker has gotten worse. Poverty in Japan is a growing problem that no one talks about.
yup, its not getting any better either.
its especially hard for children and single mothers
@@2001lextalionis this is a big reason why they population stagnest. People can beraly support them self, and people are way over work and over presherd+ the super haircael biasness in Japan makes it even worst. The funny thing that most japanese"incels" are just people whit small company's/independent workers. Who the hole society looks down off
@@xXDESTINYMBXx fuck I hate Taiping on the phone
@@xXDESTINYMBXx + we can also seeing it in thier porn . The more kinky and deprive the porn get you know more and more people are getting edicting to this.(I'm not against porn but we can see the reasons why exesive porn usage are coming from and what it's causing). In Japan this case is really bad whan alot of thier porn is really fucked upp
@@yuvalgabay1023 I just say ntr to this
Wow this video was so well made! Thanks so much for breaking this down into digestible chunks or sections. Really helpful for casual viewers like me.
29:45 "When something isn't working, the answer is rarely 'well, let's just do more of it'".
Welcome to Japan, where people plan something once, try it, and if it doesn't work, just continue doing it, because it is supposed to work a day or another.
Japanese people just hate admitting they were wrong. It is a matter of dignity, even if that is completely counter-productive.
PS : I live and work in Japan.
Sounds just like me lol
Unfortunately its true.
Huh? Sounds more like the USA. Over here people won't have any type of criticism, and the people that make bad choices in life are not held to take responsibility for them, they are instead subsidized. At least in Japan people are very by the book, and more importantly, they believe in personal responsibility and pulling your own weight in this world.
I mostly agree with your comment, although I don't know how much it has to do with "dignity". I've read quite a bit about Japan's 'Pacific War' - WWII - much it written by Japanese historians (in translation). The same thing applied. The brass hats in the halls of power would devise a plan. If it worked once, they'd keep repeating the same strategy over and over despite the most tragic results. (BTW: I live and work in Japan too.)
It's more on because it worked in the past. Look at their high quality products and services back then. But now, the standards are rising but they are not. They stagnated because they became too comfortable with their past glory.
This was very well structured and extremely informative. I'm fascinated by Japan's Economy and Corporate structure, and only grew more fascinated when I visited the nation.
Yep and Japan has one of the lowest crime rates and healthiest populations in the world. Compare that to the U.S. where places like Chicago with 4000 shootings a year and Detroit that are as dangerous and dirty as countries like Iraq and Afghanistan. Not to mention the bridge in Pittsburgh that just collapsed yesterday due to a dilapidated national infrastructure.
Have you seen the videos of the miles of packages strewn across L.A. railways from criminals doing whatever they want without consequences? How about the 200 shootings recorded along SF highways last year?
Don't even get me started on the million people that have died from COVID and a healthcare system that is 2x more expensive per capita than Japan's but still produces some of the worst health outcomes of any industrialized country. The U.S. has become a real paradise.
@@byoshizaki1025 Yet they have some of the most ideologically retrograde people around and don't innovate anymore, not to mention sexual crime is severely underreported. Yep.
I lived in Japan and one thing I noticed, corporations were expected to over employ people to soak up the numbers of unemployed in society. Young people are paid less money because it’s expected they still live at home with parents. Girls were expected to marry and fall out of the employment market.
Not Western. But practical ideas.
Do the young there still marry?
@@beezelsub Imfamously, not since the 90's. The rates of marriage and childbirth remain terribly low no matter what has been tried.
@@nomobobby Have they tried not overworking their population?
@@qewiu830karoushi....the progressive one is in eg Paolo interview
I was in Japan in 2019, it looked decades ahead of the US and most of Europe. There might be structural economic issues but the country has one of the best infrastructures in the world and it's an amazing place
What it looks like and what it is like are two very different things, though. The infrastructure is there because the population density allows it, imho (not only that, but it's a prerequisite). That's why the Netherlands have good infrastructure too. Let's talk about working hours, social mobility, ease to open small businesses.
I'm not saying Japan is bas, but it's not decades ahead, imho.
problem is that Japan was like a good century ahead of Europe and US back in the 70s, so being a head for only a few decades ahead of the west is not a compliment at this point in time for Japan. Just because the west got continually more fucked doesn’t mean Japanese people are satisfied with their own progress. Japanese people strive to be the best and for its own sake, look at their manufacturing and engineering, American and European cars can only dream of being ok the same quality of Japanese cars.
the real reason is the plaza accord
East Asian countries tend to greatly value appearances (for many cultural reasons that relate to their collectivist roots). Upon further scrutiny, you may find that Japan isn't as advanced as it initially appears.
I'm seeing more and more migrant workers working at shops and convenience stores since Abenomics has started. Your analysis is spot on!
Also it's true that there is save and reserve attitude among the youth. Especially because of the prospect that the government pension program might someday fail and we have to support ourselves on our savings. Even if it doesn't fail, we will still be paying more for the program than what we will get in the end since the money goes directly to the more populous baby boomer generation which is currently being served.
It's a complex problem, Germany (where i am from) has easy access to workers who migrate over the land with trains, and can even out the thinning populating with policy on how many people we import. So population is growing, but birthrate is very bad. Japan is locked into an island. But as long as a country can create all goods and services a person needs, it's good to live in that country, and that's true wealth isn't it.
@@ayoCC Looks like Feminism is killing all the so called rich countries with their fake economies, eventually you will start seeing social chaos and eventual civil wars in these countries especially the ones with massive non-white immigration
@@wamnicho Countries can't die with strong systems and infrastructure. In rich countries most people live quiet lives, but 90% are happily enjoying hobbies or passions.
I'm not sure why you think those things are destroying the countries.
@@ayoCC countries are made up of people, infrastructure is secondary, without people, the infrastructure can't survive. What's the point of having nice infrastructure when everyone is over 70 years old
@@wamnicho Actually, it is pretty much the other way round. In Europe, the highest fertility rates are in most "feminist" countries, where governments provide enough services like preschools, so that women could get back to work as soon as possible instead of staying home with children. The lowest fertility rates are in fact in more conservative/traditional/catholic countries like Italy or Poland.
Thank you for the video. I currently live in Japan. My knowledge on economics is very limited. However, there are two things I would like to ask/share. One, from my work experience here, I learned that it is quite usual for a Japanese company to have very little operational income year after year. Labour and provider costs typically eat up all the money they made. Labour costs are very high not mainly because of wages, but because of welfare. Japan has this system called welfare society instead of welfare state, in which companies and households are the main safety net, not the state itself. Second, (and about this I would like to ask for your opinion), there is the retirement pension policy. Government consistently states that pension system will not disappear but this will happen by severe cuts on pension amounts. This is often felt by most people as the main reason to save money instead of using it: they consider that they have to save enough in order not to be poor at the age of retirement. But I do not know whether there is a causal relation between pension policy and household savings, and I would like to hear your opinion on that. There are also other reasons to save money, such as healthcare. National healthcare insurance covers 70% of costs, but the patient must pay the other 30%. Which can be a lot of money in case of a serious disease.
I've been surprised about how the meaning of the word "Entrepreneurship" is relatively unknown by the japanese population. Young people there are too afraid of raising their own business.
It doesn't help that Japanese business (and on that note business in East Asia as a whole) is deeply rooted in a smothering corporate-aristocracy mindset. You don't have this idea of disruption or start-up culture, instead you have an entrenched ideal of the company as an institution that everyone in society is supposed to work for because these large companies provide for society.
This all started with the Zaibatsu - a conglomeration of nationally sanctioned companies owned by a few privileged families at the start of the Meiji period. After their (on paper) dissolution following the defeat of the Empire, they fractured into many smaller, though no less entrenched Keiretsu, which are large companies that operate more like great webs of subsidiaries rather than the out and out monopolies of the Zaibatsu.
This web of generational influence, red tape, and outright corruption make starting robust businesses from scratch very difficult in Japan.
@@iannordin5250 That explains clearly the stagnation of the japanese economy, since those Keiretsu companies have been favored by generous credits granted by the Window Guidance police from the Bank of Japan. Independent business cannot compete in that environment dominated by big corporations.
@@iannordin5250 how is that different from the fascist system in the West? And capitalism is fascist in nature. It is a system run of, for, & by the monied elites. It is not synonymous with market system. Big business stymies competition & usurps innovation for their benefit. Just look at how small business was shut down but corporations weren’t during the pandemic. Or how hard it is for competitors to break into social media.
@@talisikid1618 In a lot of ways there isn't much difference except for a couple of structural and cultural aspects. Structurally, our mentality here is 'well, some huge honking conglomerate or corporate titan is going to run the show.' It doesn't necessarily need to be some sort of 'traditional' legacy operation, just that some behemoth exists. This contrasts with the 'tradition' aspects of Japanese culture where they have specific keiretsu that will be propped up as zombie operations, something that has plagued the history of Japan over the last few decades. We don't really do zombies in the US outside of specific areas that we consider strategically valuable to the entire nation. Japanese business and central banking have literally propped up companies that should die. That literally have no reason to exist, strategic or otherwise...but they do provide jobs.
On your second point, innovation is hard and the technical expertise needed to engage in any market only goes up with time. You can't really expect this high minded ideal of 'competition' when you're talking about things like chip etching, pharmaceuticals, datacom or even more 'traditional' industrial activities that have existed forever like opening up a metallurgy operation. Both require billions in capital to even get off the ground. This is going to continue as things go on and get even more strained. The days of actually breaking an entire new industry segment on a wish and a prayer are somewhat over. Things were simpler back then when this was true. This also brings up the canard that small businesses are somehow 'the backbone' of the American economy. They are not. They never have been. The prime movers in the economy are the largest industrial and commercial concerns that we have. They generate the initial impulse that then causes movement in everything that's connected to it. Saying that small business is the prime mover is like saying the starter motor of your car is the thing that actually propels it down the road.
@@talisikid1618 Indeed, USA is following the same recipe from Japan towards a Fascist System where only big corporations succeed with the favor of the goverment. QE and market manipulation are the norm in Wallstreet right now. Corporations are already killing innovation with patents and biased regulations in favor of them. That's why we need to learn the lessons from Japan, because they've experienced the blueprint of the scheme that will be realized to the rest of the world.
I enjoyed your video and finally understanding a bit move. I was sent to Japan in the late 80’s to do some work and training. I saw a booming economy and imagined what it would be like to emigrated; a missed opportunity. Years later what happened? why Japan economy was not getting , now i have a good idea. I still have that 1000 yen note at that time it was like buying a $10 CDN cup of coffee (not the can coffee from the vending machines) . That coffee tasted great.
Absolutely awesome description of Japan's recent economic history! You have a real knack for creating a clear plausible narrative out of a mass of information! Through an orthodox macroeconomic lens, of course. :-)
I am in the demography camp: a lot of the things that happened (property bubble, disinvestment, deflation, etc) are explicable as products of the demographic life cycle, with a very big "baby boom" cohort.
Japan's "baby boom" peaked around 1950-53, about 10 years earlier than the USA's. It was much more compressed than the Netherlands' (spread out over 1950 - 1970-ish). (Interestingly, Italy, the demographic "Japan of Europe", didn't really have much of a baby boom. Just the bust.)
I think that you blur matters a little by using overall population rather than working age population. The "working age" population is also the house-buying, car-buying, and child-goods-and-services spending age population: it is the "economically relevant" population. (Using total population does make for a more linear narrative, of course.)
(If cohort size is stable, the difference between working-age and total population would not matter much, but the fact that it was not is to me the reason why we had a property price bubble in Japan and why we are having a property price bubble in much of Europe, North America, and Australia-NZ, starting 15 years ago.)
The cause of the property bubble, to me, is the efforts of Japan's "baby boomers" to save for their old age during their peak income years, 40-55.
Similarly, the high savings of Japanese companies is a direct result of the decline of Japan's working age (really, "spending age") population. Once that population starts to decline, there is little reason for companies or local governments to invest.
As you say, the government could counteract the lack of consumption and investment by increasing transfers to the people who are most likely to circulate them, but it has not done so.
No country has yet tried a policy that increases fertility sustainably. I don't think anyone has any idea how.
Thanks! Good point about working and population!!
Don't agree about the saving point. This assumes that the money/ credit supply is a physical 'thing' that has to either be saved or consumed. It is not. Check out some of my videos on credit/ money creation of this difference interests you.
@@MoneyMacro Thanks for replying to a very late comment on an old (in Internet Years) video! Also thank you for understanding my point about working age population (WAP) being the economically significant one. I think you did make the point in the video that Japan's "GDP/WAP" growth has been average.
Stable or growing WAP has been an implicit background assumption for commerce (ignored in economic and investment theory?) throughout the 20th century. I think that WAP effects are going to become more visible over the course of the next 20 - 40 years, as more of the developed world transitions to static or declining WAPs, the exceptions being economies that integrate large enough numbers of skilled LDC immigrants.
For example, the UN World Population Prospects 2019 projects -0,65% per year for Germany's 15-64 WAP for 2020-2040 (population.un.org/wpp/Graphs/Probabilistic/POP/15-64/276). Others in the current top 10 countries by nominal GDP: China, -0,7%, Japan, -0,88%, Italy, -0,9%, Korea, -1,1%. (The US, France, Canada, India, and maybe the UK will carry on as before.) I think these changes are more important than just giving Brazil and Australia a chance to move into the top 10, and reducing global GDP from its trend over the last 20 years.
The reason: second order effects might be important. For example, company investment decisions. Investment when the potential market for your products will double in 35 years (2% WAP growth, the "normal") has different risks compared to when the market will halve in 70 years (-1% growth). In turn, there might be third-order effects redirecting firms to specific activities, with effects on productivity and growth.
However, I don't know what would be the best analytical toolset to determine whether these downstream effects are as important as I believe. Heterogeneous agent based modelling? :-)
You are right to challenge my savings points. They are weak. I will watch your videos--my understanding of money supply is on the level of "banks create money by making loans; the quantity is supply-limited to loans that the banks believe will not fail".
If you're not going to have immigrants.
Pay people to have families! People always say it is a full time job so make it so. Obviously it won't just be free money as there will be regulations and such or else that would create broken people.
This was a very interesting video, and I will say that my favorite phrase from it was "that is not my area of expertise" when discussing population growth. Way to be honest about your capability to comment, you're a rare creature here on this platform. respect.
Something that may help, modernize the goddamn banking system, there is no reason why you need to go through all these hoops to do basic banking tasks like getting a debit card that doesn't allow cash withdrawals and depending on cash cards that their only use is to withdraw cards with fees on ATMs
Great video! I really appreciated all the Anime references as well.
omg animac!
Glad to find this channel. You did great in this case study explanation, it helped me alot considering my non-economics background.
It's always a balancing act for me to go deep but to remain accessible. So, I'm delighted to hear this William!!.
Japan: trying to boost up inflation for decades and failed.
Other countries: Oh no, inflation out of control!
That is because of the US.
@Federal Bureau of Investigation printer go brrrrr...
That is because government intervention. If government let market falls to bottom, surely the slow growth will create inflation. They intervene instead create a very very slow drop, so it deflated slowly. USA stock market also the same by now. They don't let it fall and corrected, they will have abnormal economy ahead.
I think that is because Japanese people are very frugal and they don't buy and hoard items like people in other countries do. People in Japan tend to live in apartments and just don't spend much money. Even in China there is much more spending but there is a hard limitation as most people also live in small apartments although larger than Japan still nothing comapred to American private homes and culture that is just a massive spending machine. There is a reason how USA built modern China from it's crazy consumption of goods as prices rise in China new countries or old ones can take that market share away form China which is why growth has slowed to a crawl in China and they are making radical changes this year. They know that the American and western consumption machine is leaving China so they are making that transition move faster.
As US Inflation it.
Really interesting information, I have been living in Japan since 2012, renting and with a full time job, I can say there is definitely no much innovation but small improvements and additions in technology, but as you may know, Japan is a very traditional society, birth rates has definitely decreased, I don't think they are having babies and the stagnation is noticeable, however, Macro-economy and Monetary policies are not something I understand much, hence the reason to check your video. Thank you again and I will definitely check some more of your work.
Small improvements without major innovation was how Japan became a power house post WWII. Quality of their cars are fine examples. But this idea of taking others innovation and improves it little by little will ultimately be their down full as well. I work for a Toyota supplier. We know Toyota has just started investing in electrical vehicles R&D. Their quality will for sure be better than Tesla’s but they have lost the brand recognition and will have to buy their batteries to compete. Not to mention all autonomous driving software will need to be outsourced to US companies.
@@howo357 Absolutely agree with your response.
@@howo357 Japan seems to be known more for incremental than radical innovation I think in some areas e.g. their cars adopted direct injection later than German ones, though also because they sell more cars in developing countries where the fuel is dirtier & would damage the more delicate components used by direct injection engines I think
@@howo357 They WERE very innovative. They were the first in the world to recognize the value of semiconductors to achieve miniaturization of items like radios, tape recorders, TVs, toys etc. and also to develop innovative methods to achieve high quality in their manufacturing processes.
@@prasadseshadri9886 semiconductor were discovered by German engineers. And all those things you mentioned weren’t invented by Japan. They improved and made them more accessible. But yes their innovation lies in manufacturing process to achieve higher productivity and quality.
The strange thing is, Japan hasn’t been doing great,but it hasn’t been doing terribly, either.
No wage increase, but no price hike, either. Very low unemployment rate (less than 3%). The crime rate has been getting lower during the “lost” decades actually.
I personally think slowly shifting from the obsession with economic growth to sustainable, non-wasteful lifestyle is a desirable thing, so I don’t think it’s all negative to lose some excessive steam.
We need to tell all the economists around the world this. Growth is not always required.
You must e kidding, while daily needs still keep higher despite deflation, there almost no middle class in kapan now
B-but numbers go vroom
Unemployment in Japan is extremely different than in other countries. Look up the lost generation and the hikikomori problem. The crash in birth rates reflects the malaise, and the situation is just going to get harder as the population aging accelerates and the worker:dependent ratio worsens.
Have you talked to the real people living in japan?
Not the rich ones but those who are struggling.
Ther are so miserable
私は日本の高校生です。非常にわかりやすかったです。ありがとうございました。
Great to hear that! You are welcome.
Sansei
Well that's refreshing ... kodomodachi with an interest in the future and past. It had to be the dragon ball z part .... just kidding. Stay on top of things kiddo.
Good presentation!
Walking through decades of Japan’s economy was a help, knew parts of it like Abenomics, but a wholistic picture in this presentation is what we need!
Please keep up the good work, thanks!
Abenomics is just spin and for the elite to get their hands on the final crumbs. No trickle down
I searched for Lost Decade and reached here. No Regrets. Awesome use of my 36 minutes. Loved the way you presented different concepts. I would love to see videos where you extrapolate current economic situations.
Thanks!! I am considering making this semi longer format into a series for multiple economies. E.g. EU and China and then discuss several theories when they are relevant. Also, some inflation videos are in the pipeline.
Wow, finally an indepth video made easy to understand on the topic of recent Japanese economic history. Thank you.
Japan is one of the least trade-dependent economies in the world, only the US has less trade as % of GDP among major economies (but that's because the US economy is so vast that much of the activity becomes "internal"). In that sense, they are the complete opposite of Germany. Japan is also not as financially integrated as Western economies and were not that directly exposed to the subprime crisis, making it even harder to explain why they were one of the hardest hit economies in 2008-09.
@@chunchunmaru07 Check World Bank figures. Less than 18% of Japan's GDP is exports, compared to 44% in Germany. OECD average is 29%. Among major economies only US is less exports dependent than Japan, which is expected of a continent-sized economy.
Therefore, one would expect Japan to be less exposed to external shocks, yet they were one of the hardest hit economies in 2008-09.
This is completey false! Looking at % of GDP is a misleading statistic. Japan is #4 in the world in total exports and #5 in total imports as of 2019. And the total size of their country is small! They are completely dependant on outside trade. Japan has very little natural resources of their own and has to import tons of raw materials and goods and food due to this fact. I have been to Japan. The cost of everything there is super high mostly due to having to import almost everything! Japan is known for building electronics and cars which are huge exports for them but guess what? They have to import almost everything to make them!
@@AAONMS1 Looking at export ranking is what's misleading. Japan might be #4 but they are just barely edging ahead of UK and France, much smaller economies, and far behind #3 Germany, which has a smaller economy than Japan but exports more than twice what they do. If Japan further loses in export competitiveness, they could quickly drop to #6 in exports, a very poor showing for the No. 3 economy.
Cost of living is not higher than other developed economies. Exception would be food products, due to high import tariffs. Japan does rely a lot on imports of primary products, but those are very low value stuff.
OECD data shows that only 11% of Japanese exports depended on imported inputs, much lower than Germany at 20% and France at 22%. So their already limited export sector is much less dependent on imports to produce their products, compared to other major countries. In other words, the Japanese export sector participates less in global supply chains than would be expected. I.e. not very trade-dependent.
The reality is Japan's economy is much more insular compared to other major countries except the US.
Japan had their own subprime crisis
@@Illuminatorofshadow well... GDP is a fallacy.. or you are telling me that the average Japanese lives better than the average french/British? the majority of people in Japan are not rich...they can barely afford to live. Almost all the GDP is in hands of the super-rich.
Amazing I got this in recommend
Plus you did mention Plaza Accord and I'm surprised because none of RUclipsrs explain it or they just flat out didn't know.
Thanks!! I'm surprised they didn't mention it at all. Some of the articles I came across gave it too much credit (in my opinion) but to not mention it at all is on the other extreme end of the spectrum.
@@MoneyMacro Plus your are Top Notch, thank God Algorithms has blessed me here too, in the end your videos are much more researched than any other RUclipsr economics.
I applaud your genuine Quality over quantity man and keep pushing for 1K to 500k subs man !
@@MoneyMacro , thanks for this work. I watched that "Prices of Yen" vid a few years ago. At that time something struck me like conspiracy theory. I came across the Plaza Accord in an other video these days, which I had no knowledge of. So I rewatched the "Princes", and yes it's missing, in favor of a vague "interest group" narrative. I seems to me, that the compliance to the Plaza Accord hit Japan especially hard since their society was .. let's say "conservative". The German society wasn't hit that hard at all, though also targeted by the accord.
Most let it slide because they fear the political fallout from it. If that deal are made between another superpower, you will see its mentioned all the time.
He doesn´t mention the factor that explains 90% of what happened.
Everything cascade from there also doesn´t mention the fact that japan is a ocupied country that cannot make its own policies when it colides of those of the "big master" leading to some ridiculous episodes like joining the anti-china "quad" or saying they will "fight china" over taiwan.
Politics and economics don´t live in separated universs they intertwined.
Also could mention that they have no natural resources to speak off and are totaly dependent on the import of energy and raw materials wich means even if japan was not ocupied they would have a hard time resisting the "big master" dirty tricks like the plaza acord
Isn't that Richard Werner argument about how the Japanese economy lost steam through the central back policy?
Partly, I definitely read his book. But, I think his argument is more that they did a lot of that on purpose.... to break the power of the state in favour of a wealthy view.
@@MoneyMacro so did the bankers intentionally bankrupted their bank so they can rip off the Japanese people? Like the S and L scandal?
@@jobsanchez9989 I've never seen any convincing evidence that points to that.
finally brought myself to watch this video, and i have to say i thoroughly enjoyed it. i'll be sticking around for more of this, great job!
I’ve been living in Japan for the past 11 years. You touched on all the key points. As others have mentioned, there are cultural differences and in particular conservative approaches to about everything for which also continue to hold Japan back behind other countries both in Asia and also globally.
Yet they have the best standard of living in Asia.
@@talisikid1618 Not really, South Korea and Singapore are ahead now.
Think the people & companies became more conservative after being hit hard financially/traumatised by the property market collapse in the late-1980s
Liberalism is a disease. It won't make Japan a better place to live.
@@onlyfacts4999 No. China is leading Asia now.
Overall I feel like the Japanese economy is pretty in the middle. I work here and due to COVID a lot of things are changing rapidly. Lots of businesses are floundering and people aren’t spending nearly as much as they had before. I’d be interested in seeing your take post COVID as, due to the Olympics in large part, things have gotten consistently more and more dubious.
Hey Lad ! That was really nice ! Keep up the good work !
Thanks!! Will do.
While I agree with your monetary conclusions, I didn't see enough about the important fiscal strategies and challenges. Japanese infrastructure (Shinkansen, Highways, Airports) are world leading in terms of function and design upgrades. ( A clear example is comparing USA Airports, or Berlin's new airport with Nagoya or Haneda. )Japan has a strong portfolio of civil infrastructure which has made is easier and more convenient for Japanese. ON the down side is the constant concrete changes made to the coastline, essential to protect it from calamity of Tsunami as witnessed in recent times. The fiscal spending on infrastructure then depletes the reserves while Korean and Chinese manufactures are gaining more market share.
The timing is perfect, I can go back to Japan from US with fraction of my wealth here in US, and live an amazingly comfortable life.
Depends where you are coming from in the US and going to in Japan, same goes for here in Canada. I live in Vancouver, and for what I pay here for an apartment is an insane amount in say Tokyo. Close to double the price in Tokyo then here in Vancouver and in Tokyo much smaller apartments as well then compared to here in Vancouver. I almost moved to Japan myself as I dated a women there for 7 years, but compared to here it is just to expensive in somewhere like Tokyo.
Hello, I am late to the video but enjoyed your opinion on things in Japan. I've been in the country for some time now and think that your overall take on the economic situation is fairly accurate. The cultural and societal issues however have a dramatic effect on the economics here. For example while men earn most of the money here, they hand over most of it to their wives who manage the finances. So spending decisions are largely made by women in the best interests of their family. Corporate decision makers however is still largely the realm of very old men, who do not understand the dynamics of the 21st century in my opinion. The list is very long about additional factors to consider but lets leave that aside as its only a comment on a YT video.
Thank you very much for making this content. I enjoyed it very much and wish you well in the future.
Excellent analysis - very clear. Thank you.
One variation of "helicopter money" is "expiring helicopter money" which requires a digital currency implementation as China is experimenting with.
You could target people with lower income, give them a credit card with a direct account with the central bank. The money on the card has to be spent each month or it expires. This would prevent excessive saving. It can also be used to stimulate spending at local small businesses as South Korea has done recently during the COVID19 pandemic.
Food for thought...
Very interesting food for thought. Yeah... I'm thinking about doing a video on central bank digital currencies at some point. In my opinion, they are one of the most interesting developments out there currently.
@@MoneyMacro agree - everyone is focusing on digital currency as subverting central banks but it in fact will be the exact opposite. It will opens new opportunities for flexible and targeted policy implementation of fiat currencies. I can see algorithmic competition between currencies: which currency has better algorithms to implement currency stability, etc. Especially if policies themselves are implemented as algorithms - simple example: allow a digital currency to be traded on a specific market if its exchange rate goes above or below a threshold.
Interesting indeed, but couldn't you just buy extra 'alternative' money with the expiring money and 'save' those? Like non-perishable goods (including real estate), precious metals/raw materials, foreign currency, bonds maybe even long-term stock?
@@jiriwichern Yep, but I guess less people would do that in relation to just not spendind the money you earn, since it requires extra work.
The hard part is that expiring money would be worth less than persistent money, so it'd not work well. I guess you could set a loan against persistent money equal to the VAT rate, and then the loan could just be paid off from VAT collection, with a digital money system this should be able to be implemented.
And if people hoard the money, it can just be collected as tax at a higher rate. Tweak the debt to be less than the VAT rate to reduce the spending incentive, set it higher than the VAT rate to add extra impulse to it.
i rate this video 5/5! should be a quality indicator for stuff like that! i truly appreciate your work! this is a very insightful intelligent overview over japanese economy and almost easy to understand! keep it up! i saw some videos from you but now its time to subscribe :D
Plaza accords, this is what happens when you let another country control your money.
Well they lost the war. Although Japan isn't the same Japan before so I hope they get better. In the meantime US had a history f**king up our economy and they achieved it and now we're one of the poorest.
@@pauloazuela8488 Our country being...?
The alternative is more tariffs and the US inflating on their own. Same effect.
@@chrisgunther109
Maybe Argentina
the argument for bank rescue has and will always be "it would have been worse letting banks fail" hmm... ever thought about rescue the citizens directly by buying up their home loans and other debt indefinitely through near 0 interest rate kinda like providing liquidity to banks but instead to people, probably would have had the same result but that there is no incentive to do so for their banking buddies.
Yeah, bit ignorant of him to make that claim, specially when there are studies out that show that what you suggest would have been just as, if not more effective a solution to the 2008 GFC.
Iceland did something different but similar.
Agreed, trying to intervene and manipulate natural financial corrections just creates more market distortions.
@@chrisgunther109
Same with his claim of saving money and thus not spending it being bad.
Forcing artificial consumption through policy creates perverse incentives that will always will enable reckless spending practices; these do not create long term and sustainable value and will come to bite you back in the ass when the market aims to correct itself via a crash.
Keynesians really do hate people saving for future investment.
@@waterbloom1213 Agreed. I think the one possible caveat to your point is that monetary deflation does hurt the economy. 'Incentive to invest' shouldn't have to compete against the money itself increasing in value.
I've been interested in economics for a long time and this video strangely worked to connect a lot of dots for me in what I already knew but didn't understand. Great video
Thank you! I'm very glad to hear that.
I literally watched this last night and thought Abe would do great things. Woke up this morning and he’s been assassinated.
It’s a dark world. That’s why we need to cherish these people more when they’re here
Yes that was sad.
I find it utterly unconvincing that the bursting of an asset bubble and the subsequent debt deflation spiral is why Japan went from very high growth to very low growth. The biggest problems with this story is that it does not make sense when you take into account the ability to eliminate deflationary expectations with central planning.
Debt deflation spirals are an artifact of the myopic expectations of individual agents. This problem exists only when the economy is made up of many small individuals and it ceases to exist when a central planner steps in to run the economy. While having a central planner step in to correct the system may not be politically possible in the short run but surely it is possible if the problem persists in the long run. There are many ways central planners can eliminate deflation or demand reduction expectations. There is no way they can not do it if they really wanted to. The fact that the Japanese government could not or did not reverse the decline in growth suggests that the problem was far bigger than just deflationary expectations. There must have been some real supply side reasons that drove the decline of Japanese growth for such a long time.
The argument I make is that debt-deflation was the main force driving stagnation in the 90s ... not in the decades after ....
@@MoneyMacro I watched your entire video and the main argument you are presenting is the debt deflation argument throughout. I find this argument unconvincing and politically motivated (By that I mean not by you but by the original people who proposed this theory).
While deflation expectations does have an effect on economics particularly in the short run there is no evidence that it is as substantial a driver of economics in the long run as economies have grown through large amounts of persistent deflation all throughout history. The economy grows from the expansion of aggregate supply and the full utilization of aggregate supply capacity. The under utilization of aggregate supply capacity is a problem that can be corrected by central planning but a correction of this problem doesn't mean a return to persistent growth.
Japan hit a point in its growth at which aggregate supply could not grow any further. The simplest argument for why the investments to grow the economy stopped is because their risk adjusted return on investment was below their breakeven cost. This is more than just because people didn't spend money because of deflation expectations.
Deflation expectations is not the primary driver of people's thinking process when they spend money, welfare gain is. You have to do a lot of manipulation to your math to get deflationary expectations to change people long run consumption pattern enough to explain a large drop in growth. A simple examination of people's actual thinking will show you that deflation expectations cannot account for so much of people's behavior. What is much more likely is that people simply didn't spend the money because there was insufficient welfare gain in it for them. All deflation expectations does is makes this slightly worse.
A simple example to illustrate what I mean. You can try to grow the economy by making more cars. When you measure if doing so grew the economy it depends on the price of cars. If you live in a world with already more cars than people want, additional cars can only be sold at very low prices. If these prices are below the cost of making the cars the economy shrinks rather than grows. A car maker running into this problem will not invest to make more cars. On the surface everything looks like deflation and you could say that the problem is insufficient demand for cars driving a deflation in cars. Is deflationary expectations driving this or the fact that society has exhausted the growth avenue of producing more cars?
Deflation is just a convenient scapegoat for running into insufficient welfare gain problems. The economy is having problems coming up with new products and services that sufficiently increase welfare compared to existing alternatives. People not only don't know what to make, they don't know what to invest in to come up with what to make. This is the primary problem holding back growth in Japan and indeed the entire world.
Japan is a very advanced country with very smart people that usually runs ahead of other countries. They are also a very frugal and understated people who are not easy to provide welfare enhancing alternatives to. Because of these things Japan is just the first to run into these problems and relatively early on compared to other countries. There is nothing Japan can do about these problems aside from continue to try to be innovative. Trying to address the problem with inflationary policies is a fools errand and will in the long run be more destructive than helpful. Painting the problem as one of debt deflation is just politically expedient because it does less to undermine the existing economic order than admitting that there in an underlying aggregate supply problem.
@@georgesiew2758 It is true that most of my arguments debt-deflation (1990s), deflation expectations (2000s), shrinking population (2010s) can be described as demand side problems...
However, I would argue that your insufficient demand for cars example is a demand side argument as well.
That being said, okay I think I see your point that there isn't enough innovation in supply any more to drive most advanced economies (including Japan) forward.
A few years ago I wrote an article on how Japan can revice it's economy by embracing deflation: japan-forward.com/japan-should-embrace-deflation-to-revive-the-economy/
In addition, I think the popular 'wisdom' that deflation is bad because it makes people postpone their spending is the one of the worst 'theories' in economics that I hear all the time. It might be true for houses or shares, but not for consumer goods. It assumes that when people see prices fall, they would automatically expect prices to go down even further and delay their purchases. It is much more realistic that people would buy more stuff if prices fall, as they can profit from low prices and they are not sure whether prices will fall further. Even if prices would fall for years, at some point people would spend their money because it is no use to keep hoarding money indefinitely. Also, I personally never saw empirical evidence supporting this popular economic wisdom.
On the other hand, I do think that deflation can be a symptom of falling demand or a collapsing banking system. I even agree that deflation can be problematic when there is a lot of debt in the economy, but then we would have to argue whether it is deflation or high debt levels that is causing this problem. Finally, when deflation is caused by rising productivity it won't make it harder for people to pay their debts as the economy will keep growing.
@@semhuizer9404 That whole Theory vs Praxis view is an interesting take. I still am not convinced that deflation can handle any sort of long term debt though and I think this exactly is the problem since prety much all economies have some sort of long term debt standing
I have binge-watched your entire channel. Love your content
Thanks Sayan, love to hear it.
What I've noticed in terms of japanese people having babies is that the sheer lack of both facilities and time make it very difficult for young people to have babies. Regardless of daycares built by Abe, finding a daycare is an absolute waiting list hell and incredibly expensive. When looking at it a step back, I see that people are unable to properly date in Japan (Tokyo at least). Most professionals I know work at least 11 hours a day and some change on the Saturday. People are simply too exhausted and stressed to find time for relationships, let alone babies. Maternity leave is actually pretty good but it really depends on the company. Japanese corporations and politics keep holding on to the 80's notion of working yourself into a stupor and it is very difficult to change this culture. It's not that abnormal to find japanese young professionals who haven't dated anyone since graduating college because they are so damn swamped
Very interesting. This is something that I think you start seeing more and more in many big cities. I think it shows that policy makers need to consider multiple factors if they want to influence birth rates and that these factors can be quite different depending on the country.
@@MoneyMacro on the other hand, from what I understand Scandinavian countries have abundant facilities and amazing parental leave and work life balance. However, their birth rates haven't gone up either.
@@Ironborn4 sweden and denmark actually do have a pretty decent birth rate and they will have population growth. Way better than the western average atleast
@@robertjonker8131 learn something new everyday. I always thought the Scandinavian countries were doing very poorly in terms of birth rates
"Ah finally I can go home..."
* phone call from boss * : "HEy nIKo lET's gO dRInKinG!"
I remember when I was a kid in the '80s and there was such American interest in Japan. Of course there was all the talk about Japan crushing our economy or whatever with all their Sony Walkmans and Japanese cars, But I also remember how eveyone loved Japanese products and Nintendo and movies about Japan and just everything Japanese. And I had all these T-shirts and clothes and toys with the Japanese flag and Japanese writing on it. And it was all the rage. Everywhere you looked you saw something with that big red ball on it with Japanese writing under it.
Nice video! I don’t agree with most of your analysis, but I appreciate how thorough and informative the presentation is.
I appreciate that Atirix. I am not an arbiter of truth so disagreement is certainly possible. Great that you found it informative nonetheless!
I would say one of the few of the reason Japan grew stagnant is due to the fact it expanded and perfected its process and infrastructure too quickly too . It is simply too expensive and risky to tear down something old in the eye of Japanese.
For example in Singapore where I live, the old carpark system is a mess while the carpark in the newer one is excellent. The old carpark is usually residing in old city area that have british influence. While the roads and carpark in the new estates is just excellent. Because it was newly build on newly developed lands.
In Japan, there seem to be an unwillingness to tear down the old systems for a better system. Might be due to cost, might be due to an perfectionist culture, might be the fear of risk for a new system.
For China, there was nothing no existing infrastructure or digital stuff at all. They can just put in the latest most efficient system without caring about the old system.
In other words, it is simply easy to build something up from zero.
"In other words, it is simply easy to build something up from zero."
This is basically how the US came to be.
@@roger_isaksson Singapore also have Indians. Yuk.
@@PomegranateChocolate No, you're yuk.
Japan is super-conservative, so you can't go around offending all the old people who loved that old car park!
China on the other hand will pave over your house while you're still inside and dare anyone to say something.
@@chrisgunther109 So how do you explain the phenomenon of nail house in China?
Superb explanation. My goodness. You are brilliant. Please keep the videos coming and also consider writing several books on various economic topic. You are brilliant. You managed to boil down very complex concepts into simple forms.
Haha wow thanks!! I'll keep making videos like this. One on Lebanon's currency crisis is coming up real soon! Took me a bit longer than expected since it is once again a super complex subject.
the real reason is the plaza accord, which destroyed japans economy
thanks man for great video, I got a lot of answers I was looking for in very convenient format
This is so well researched. Also reminds me of Richard Werner's take on the bubble economy & post-war economic growth. Going to binge-watch all your videos now 😬
Awesome, thanks!! I read Werner's book. He has some great insights. Even though I don't agree with all of his conclusions.
the real reason is the plaza accord, which destroyed japans economy
Funny that you were born in 1989. It makes me feel old now. I went to Japan in 1990 on a working holiday visa from Canada, I spent a year there and I have to say it was grand experience. I guess I was a migrant worker, teaching english as well as working as a computer programmer. I made a lot of friends and really liked the country and the Japanese people. I had heard about Japan as being the place to go and knew people that made a lot of money at the time thanks to the rising yen. Funny that the Japanese actually say "en" not "yen" but by the time I got there it was slowing down. I recall the huge property bubble and the point about the Tokyo Palace being worth as all of California. We all knew the recent news that the Japanese had bought Rockefeller center and Sony bought Columbia Pictures. I even watched the Gulf War take place when I was in Tokyo so it was interesting to get that frame of reference.
Overall your analysis is on, I think you might have left out some minor things. When the Neo-liberals swept to power with Reagan and Thatcher, in the US Volcker raised the rates to fight inflation, Japanese money flew over to the US to take advantage of the rates on US T-bills.
Another fact that a Japanese businessman mentioned to me that astounded me and really shows the difference between the Japan and other Western economies was that something like 40% of the GDP is unpaid overtime. The Japanese have a very strong work ethic, our idea of working as little as possible for as much as possible is rather alien to them. The other point is that for a capitalist economy they actually do a lot of central planning and even the big corporates work with each other rather than compete amongst themselves.
There is also a problem when doing an analysis of one economy in an age of worldwide interdependence. Each economy is not really isolated, so much depends on trade, energy flows, migration and demographics.
I had this feeling that when I was there Japan was a glimpse of the future, like it was 20 years ahead of us. Everything was automated, you had sliding doors and AC in every shop. There were all sorts of vending machines for anything you might need. Yet there were contradictions, like very modern building standards that still used bamboo scaffolding. And on an economy level - Japan heavily invested in infrastructure for rapid transit - and around each station one could take care of all their needs as far as shops and services. But alot of this was done at the expense of household convenience - many homes had no insulation or central heating, and it can get quite cold. People tended to rely on the kotatsu heaters which was a little table that one would eat off and underneath was a little heater to keep your feet warm (in the past it would have been charcoal).
I also believe that the intergenerational wealth transfer is fine for Japan, so what if the central bank buys the debt - it is still an asset.
The demographic shift is a big challenge for Japan, and it is something other western countries can expect (like Italy). So with an aging population you will have large demographic that no longer produces or consumes a lot (they already got the appliances) and this is an additional drain on the govt funds and there aren't enough young people working to acquire new assets themselves and pay into the pension funds. With Japan it is even worse, as they cannot depend on immigration, there may be some guest workers (when I was there there were a lot of Iranians who did the work that the Japanese did not, like working in the gas stations etc). But as a homogeneous population they do not welcome foreign workers to live and stay. Even now there are 4th generation Koreans who may not take on Japanese names for their kids, and could be deported to a country they've never been to or speak the language. Here is where the US and other western economies have an advantage if they are willing to accept immigrants.
The demographics is a tougher challenge for Japan, as there is huge divide between male and female work both in the office and at home. At least when I was there 30yrs ago, Japan was as sexist as America was in the 50s and things didn't look like they were changing. It was typical for women to work as OL oh-eru (office lady) until she would marry a co-worker. This was of course welcomed by the corporation since now the male worker was likely to have a family and was expected to work hard. (Back in the 1950s the Japanese workers had fought for a lifelong jobs and it was expected to work for a company for their entire life) However there is now a large population of young men who are single and equally a large population of single women who have chosen not to marry as it's just too hard a lifestyle (and Japanese men do even less housework then American men). There has been a flight from the small towns and villages and there are many ghost towns with no kids, schools closed and even mannequins put up in various places to make it look like there are people. Positively I have heard of young people moving out to the country to take advantage of cheap housing and a simpler life. (Perhaps with the working from home trend this may continue).
As far as money going for bailouts or to stimulate the economy which ends up as dividends or share buybacks (like the US airlines that spent 90% of their spare cash the past few years on stock buybacks) there is an alternative that does not involve raising taxes or bailing out corporates and that is citizen's wealth fund. (So it avoids being a right or left policy)
So these days when we have a crash every few years and interest rates really low or even negative - the next time there is a crash, instead of just bailing out the corporates (we just had a 5 trillion bailout) why not issue bonds on say 20% of GDP like 4 trillion (with near zero or negative rates and inflation at 1% it is nearly costless) take that money and create a citizens wealth fund and invest it across the board in an index of blue chip stocks, have it professionally managed and out of reach by politicians. You should be able to earn 6-7% and in 10 years pay off the debt leaving a 4 trillion citizens fund to help people out with, say low interest loans to start business, fund some kind of minimum income etc. And no taxes were raised on anyone.
Another thing is rather than handing over our privacy to social media - we know the FAANMGS (fb apple google etc) are 20% of the S&P and enjoy 60% profits, lets sell off the right to use privacy like we do the wireless spectrum for 5 years at a time. And again add this to the citizen's fund, or something similar. People can choose to opt out if they wish.
These are some solutions from Economist Mark Blyth and Hedge Fund investor Eric Lonergan in their recent Angrynomics book. ruclips.net/video/0RP5xiORr1U/видео.html
In feminist Korea, men are only allowed bad jobs like construction workers, delivery etc. In Japan, women also do such jobs as seen from videos and photos.What exactly do you want? Send all men to concentration camps?
I've heard that the idea behind increasing consumer taxes was to force price rises so savers would buy now, rather than later. The increases were announced a some time in advance of when they came in, so they could loom in the distance.
Personally I always wondered why the Japanese haven't to increase employment by limiting workers hours. I was told they have the longest working week in the world, with an average of 72 hours! if they capped it at 60 thats an extra days work a week per employed person, now available to those not employed. They also have a very low minimum wage, so upping that by the same percentage so the poorest don't loose income, would also put a liitle upwards pressure on wages, particularly for those who spend most of their income. Reduced hours also increases the free time, helpfull for creating families.
My other thought was to make it compulsary to pay double time to anyone working over X hours per week. That will increase wages, and costs as well as putting pressure on companies to employmore people to do the same amount of work.
Wonderful information.
Respect from Taiwan.
a province of china
The rotary phone, in 1997, is hilarious. 😂
Although, my family still used one until 1993, ☎️ Japan, surely, had transitioned to touch tone phones, by 1997. LOL
rotary phones are awesome.
Great analysis! I live in Tokyo. It's odd, the demographic issues are plain to see in many areas of the country but Tokyo is full of waddling pregnant ladies. However the majority of young people here are clearly a bit worried about their futures, not having the stability of their parents or grandparents. This is shown by the fact (sorry forgotten the source) that more young working people live alone than are getting married etc. You see huge blocks of flats designed for single living everywhere. They seem to be in somewhat of a spiral. My feeling from being here and having lived in n various parts of the country is that they're still clinging onto the boom years (outdated practices business cultures) which has left Japanese in industry complacent to the point where it's neighbours of Korea and China are now the leaders in the industries that Japan once owned. They sorely need innovation.
Glad to see you learning about Japan, James. :)
Japanese innovation is now an oxymoron
@@rachelar There are cities in Japan that specialize in innovation.
Change isn’t something the Japanese are used to nor particularly adept at. There is historical precedent (Meiji Restoration 1868), but it’s just so hard for them to consider remaking themselves.
@@mensrea1251 LOL! It's obvious you don't know much about Japan. The Japanese had to "remake" themselves entirely after their defeat in WWII, when they went from a military dictatorship that had a state religion and an emperor who was considered a god, to a democracy with no state religion and an emperor who was now an ordinary human being. And Japanese culture has been in a state of flux since then.
Financial overspeculation, then they bailed them out instead of allowing the crash to happen.
As an economic colony of USA, Japan have to surrender in the digital competition, Japan give up the leadership in semiconductor field voluntarily. Then how could you except a good economy development?
That's like the states. That's why bail outs dont work.
@@wangyingsen458 Voluntarily, or couldn't compete with prices coming out of Korea and Taiwan?
Sounds about right.
America! We proved it doesn't work.
I just spent a month in Japan. It is a fantastic country. Financially and demographically it may leave something to be desired, but you wouldn't know it if you visited Japan. Clean, efficient, aesthetic, polite, and very civilized: there is nothing to object to and much to appreciate.
With a staggering mental health, toxic work culture and considerably high sui---- rates to complement that, yaaaaaaay!
This is why they say, "Only go to Japan as a tourist. To live there as an actual citizen is another reality".
It seems the USA is going through this right now. Also, thanks, learned a lot.
I do agree with your video, as I live in Japan currently.
Sounds exact like what is happening right now. From the start of the video to 7:24 it sounds like americas situation. Im kind of scared because the interest rate hike will blow the stock market
I think Biden has got it, with guaranteed jobs for everyone and the Green New Deal
why little red dote can make it singapore thanks.
Exactly, and our (and the world's) solution is the great reset. Government will own everything, we will own nothing.
But until then, think of how rich you would have been by selling Japanese stocks in 1989 and buying US stocks. And think of how rich I am going to be after selling US stocks this year and buying gold and foreign land.
let me ask you thwse, how could you say us is experiencing now? and what can you say about economy of china, is it good?
“Japan’s economy seems to be doing quite well for its citizens. “ that is true if you are a pensioner. Japan’s poverty rate is increasing yearly without fail. The increase in single parent households has a lot to do with this and once you are on the bottom in Japan, it’s social doctrine makes it difficult to rise up out of their social situation.
It’s difficult for men as well since if they do not get a decent job after they enter the work force or they get laid off they are relegated to low wage jobs from then on.
Japan has many ways to waste the talents of its people.
Japan sucks
@@Arquiteto-em-Sao-Paulo Brazil is not that bad tbh that is why Japanese immigrated there before. It is just corrupt like my country 💩
They need new, young, innovative corporations; not to just keep protecting the ancient conglomerates.
@@Arquiteto-em-Sao-Paulo Brazil doesn't seem to have a very bright future like Japan either.
As an American, now I know what to look for it too. Thanks
One problem not mentioned is the competition from China and South Korea in areas where Japan was once dominant. Consumer electronics used to be dominated by Japan, but now Japan doesn't even have one large LCD factory left.
Loved the anime references in this great documentary
My favourite from each respective decade :)
@@MoneyMacro
But no Tokusatsu references (except for one, Godzilla 1954). That's still a huge entertainment medium in Japan and gather recognition around the world.
@@whathell6t I need to have a look at Tokusatsu then :)
interestingly Japan became a soft-power powerhouse in all aspects these decades.
At the expense of its people.
Yes!
"What are you doing," mom
WHAT ARE YOU DOING," mom
"It's called a body pillow, jeez," Japanese hard power.
Not to the extent that S. Korea has developed its soft power. Hallyu took over Japan for over two decades by now.
@@jacquelinepak6510 the fuck is a hallyu
I've been living and working in Japan since 1975. Although I have been all but uninterested in economics, I naturally have experienced the roller-coaster ride and sometimes taken some pummeling from it. I remember when Japan seemed so far behind the USA, then when it got so far in such a short time I was proud to be here; then I unfortunately went free-lance almost in perfect synchronization with the bubble burst and experienced the "lost decade" full force and ended becoming much more fiscally conservative as a result. This video made me understand that all these things just didn't happen by coincidence... About immigration, while I understand how opening the floodgates creates problems, Japan's downright hostility to the notion of allowing average (non-rich) foreigners to reside normally in peace and just make a living is not helping AT. ALL.
@Impersonal Immigrant Those closet doors swing open at the sound of money jingling, though!
@k k indeed.
I've lived in Japan since 1988. I'm from Canada. I remember when ordinary blue collar working people could afford a home in Canada, now it costs 1 million dollars for a dilapidated shack in Toronto or Vancouver. I just recently bought a gorgeous 3 bedroom home on a half acre lot in Saitama, Japan for $150,000! The same home would have cost me at least 10 times as much in my native, Canada. I honestly don’t care about anything but the cost of living, including education, healthcare etc. For that Japan is far better than Canada, my home and native land. Moving to Japan was the best decision I’ve ever made.
@@gordonbgraham that's true and all but then you have to live in saitama
@@maxamaxa194 Actually, I chose to live in Saitama. I've been all over Japan. I've lived in Setagaya Ward in Tokyo, Kushiro in Hokkaido and have travelled extensively throughout Japan. Chichibu, Saitama is one of the best places I've ever had the pleasure of being. To live here is a dream come true. It's a quaint traditional town with cobble-stoned streets lined with family run shops (not big corporation boxes like Costco or Aeon malls). There are literally hundreds of original restaurants and bars where you can enjoy various kinds of atmospheres in warm welcoming surroundings. There are reggae bars, jazz bars, soul music bars, enka bars, whiskey bars, live music is featured in many of these clubs and never disappoints! There is no Starbucks, but there are dozens of coffee shops that serve gourmet coffee that is brewed with care. There are family run tatami shops, kimono shops, architects etc. The Ara River is pristine there as it has yet to flow through the industrial areas of Kumagaya and Tokyo where it becomes filthy with run off and factory waste. The fishing is outstanding, the green low lying mountains are gorgeous and full of awesome hiking paths. My kids enjoy camping along the river and hiking in the mountains. My eldest son and I enjoy riding our motorcycles through the gorgeous winding roads that navigate the Chichibu mountain range. If we want to enjoy the buzz and throng of Tokyo and all it has to offer we are a 90 minute luxury express train ride away from Ikebukuro for a reasonable charge of ￥1,300. I often go into Tokyo to see a concert or sporting event. The express train is never crowded and the seats are absolutely luxurious and the passing scenery is let in by the huge seat to ceiling windows. Ahhh yes, Chichibu...a little bit of heaven on earth! I honestly wouldn't want to live anywhere else.
Demographics definitely played a part in the Japanese economic slowdown.
However, a flexible government that could plan ahead well, would be able to gather options and squeeze out generally slow but stable economic growth from a shrinking, ageing population
Part of the blame has to fall on the inability of the Japanese government.
Very insightful video. I'd love to visit Japan one day. I've been very interested to understand Japan's economy more, especially regarding stagflation. Thanks for the breakdown!
You would love Japan. The food the sites the history the people. And did I mention the food!
This was very well researched! You must have taken a lot of time making this video and overall I agree with your points.
As someone living in Japan who understands conversational Japanese I will add a few observations of my own.
It is concerned bad form in Japan to discuss issues of politics and economics! You will never hear anyone discussing anything ‘serious’ like this around the dinner table. The reason for this is because another person may feel uncomfortable or disagree with something even if they say nothing. The problem of course is that if these topics cannot be discussed at a public level, then how can things change or improve? That is why things continue as they are. Please do not misunderstand me. I am not criticizing Japan. Cultures around the world are simply different. In my home country we tend to discuss whatever is on our minds! That is not done in Japan. It is considered rude and it is avoided.
In the year 2000, when I first came to Japan, my Japanese phone was incredible. I could send emails! Today, most Japanese you see on the street have Apple iPhones. Why? When I asked a Japanese business man back then, “Why don’t you sell these amazing phones overseas?” He looked at me very strangely and said, “These phones can only be used in Japan.” Japan unfortunately, missed a lot of trends in technology because it did not see the international market for such products and trends. Sony had all the technology to create the products that Apple developed. The digitization as been very slow. Twenty years ago cashless payments were common in N.Z, but they are just starting to take off here. Banking is in the dark ages. I have been waiting ten days just to ‘register’ a foreign remittance! A lot of this is because of a culture of carrying cash. It is slowly changing thankfully.
The standard of living is not as high as most people think. Foreigners have an image of bullet trains and robots in their heads, so they imagine Japan to be a very wealthy country. When I first came to Japan, all I saw were all the women with designer hand bags and I thought “Wow”. The reality is tens of millions of middle class homes here have no insulation! There is no government healthy homes program. They are freezing cold in winter and stifling in summer. Few have solar panels. Because of high electricity bills, many ‘middle class’ people still use kerosene heaters that are not exactly healthy indoors to stay warm and to heat hot water. There are no green leafy suburbs even in the wealthiest areas. No wide streets like in the West with old mature trees for shade. Recently, some children were killed because a drunk driver drove his truck into them by accident. There was nowhere for them to walk on but the road unfortunately. I feel incredibly sad for the poor parents.
Lack of investment, entrepreneurs and start up businesses. In the U.S, there is some new high flying tech company being listed every other day on the Nasdaq. The same is true in China. Here, there are very few new companies being started and listed. This may be because of high taxes and regulations and a deep rooted fear of new ventures. In the West there are a lot of family offices with billions and billions of dollars to invest! There is really no such thing here. There are also virtually no non-profit or charitable institutions here like the Cancer Society for instance like you would see in other advanced, developed nations. These organizations do a lot of good, but they are largely absent here. It may be that culturally there was not really such a tradition of non-profit groups such as Churches.Then you have the inheritance tax, sales tax etc. Japan seems to be a place where capital comes to die. They could turn things around by having a more competitive tax and business environment, but I fear they are running out of time. Why? They do not discuss topics that are uncomfortable or that may cause another person to disagree.
Have you seen what happen to American social cohesion during Trump era where politics was shoved into everyones face and some outlets even encouraged people to Ruin thanks giving Meals by talking about Trump?
At the rate America is going right now, Japan won't have to worry about missing the train, they'll be thankful they avoided the train crash.
@@silverhawkscape2677 Yes, you are absolutely right. The biggest threat to the United States is internal division. That is one problem that Japan doesn’t have! It is a very orderly society and that is definitely a huge strength for the stability of the country. The West and the East are simply very different. In the West we are always discussing and debating things. We would feel trapped and frustrated if we couldn’t express our opinions. It is not part of the Japanese culture to do so because harmony is more important to them than anything else.
Japanese homes depreciate, so people aren't going to take effort and money to build it well. They will just tear it down and rebuild few decades down the road, if natural disaster hasn't torn it down for them.
Very interesting point of view, thanks for sharing.
@@silverhawkscape2677 well it looks like trump is back 2024 😂
Just subscribed another excellent video to go with your rebuttal of EE, now going to watch Dutch via USA to hopefully get ammo against the future Great (not) UK/US trade deal.
Outstanding report , very well explained also. I’m subscribed ! 👍
13:50 this how you escape from a self-fulfiling prophecy... They basically saved the country that day.
I've worked in Japan at a small, centuries-old company for the past 5 years. Awesome video, and I don't have any major disagreements (who's the actual researcher here? XD).
I think there is one piece the puzzle in the approach to risk here, which I have picked up on in interacting with colleagues. If one part of our business is booming, the common response is "How can we hedge against that?" I. E. Seeing success as a risk rather than something you should push for as a competitive advantage. And not seeing risk as something that is essential for success.
Maybe it's just my company, but in line with the tendency to save that you talked about, from my experience there is a different form of risk aversion that goes counter to what I took for granted in the USA.
Intuitively I feel that this approach to risk might explain some of the confusion behind why Japan's economy has been so stagnant for so long. Additionally it seems like there is a fundamentally different role of the company in society here--like it's their job to not take too much risk, lest the workers be out of work and out on the streets.
TLDR I would say there are definitely some cultural factors at play here, unaccounted for or unanticipated by Western economic theory.
Indeed, I agree the Japanese are highly risk averse, culturally, politically, and in business. I'm sure in your experience you've witnessed how inefficient Japanese workers are just because they want to show they're working hard for super long hours, and only leaving whenever the boss or director leaves.
@@vankyre I know that's a common thing and gets a lot of mention, but it seems like in my company there at least isn't a lot of putting on a show of working. People go home relatively on time, and those who consistently work overtime for the most part just seem like they actually have things to do/ they want to work hard.
It seems like what I would sense from a Western perspective as inefficiency comes more from this "horenso" process--the need to confirm, consult on, and report every little decision--and the extreme lack of task delegation and independent responsibility. So a lot of time and effort is put into reading the room, and doing things the "right way," rather than taking action (myself included!).
Again, I think it might just be my company--really old company but different from what you read about "traditional" Japanese business practices in some ways.
@@theveldtunderground that's good to hear! It sounds like your company's a bit more progressive than the typical ones in Japan. I know the govt has tried to address karoshi, and companies are starting to change.
Thank you for your well researched video on the Economy of Japan. I have three observations to make and would much appreciate your views on the matter, please:
1. When the Central Bank ofJapan began to buy Public Debt (i.e. financing Government's fiscal policy), you seemed to take a negative view of that. Isn' t this better than owing money to rich investors, some of whom are likely to be foreigners (though in the case of Japan, only a small portion of the debt is owed to foreigners, I believe).
2.Why not direct the fiscal benefits to the weaker elements of the society, for better housing, better health care and even a boost to their pocket money to spend over and above the essentials?
3. Why the obsession with ever increasing consumption, especially in the context of environmental impact of consumption. Can we not develop a model that deals with economic activity (country wide, region wide, world wide) to target a certain standard of living and, once that is met for an aggregate (say a nation), to use the surplus productive capacity to meet needs beyond borders? Thank you.
Exactly you literally cannot produce an infinite amount of things. Just fulfill the needs of your populace and innovate on needs such as healthcare, education and entertainment instead of churning out car #10000/10001 max cars possible in the worls
This is one of the best videos I have seen in a while
Would be great to analyze the 'future' prospects of Japan. The history lesson was a good start, what about foreigners moving to Japan to escape the collapse of the west.
This was one of the best video explaining our Nation’s current situation
If you wish to know about the core reasons of our people’s Saving Habits look into the educations during WW2 and the banking interest rate back in 1970-1980 , also the current education system in Japan about investments and financial education
I’m telling you , it’s really terrible
Plaza Accord is the biggest reason. Japanese leaders were and still are American puppets.
@@zurinarctus1329 I for one look forward with eagerness to the day we americans pack up and finally leave Japan .. and Germany for that matter
Cool man. Love your opinion. Cool Japanese dude! 😁
Daiki, I don't know but I often go to Japan, and this country is magnificent. So something must be right.
@@robbatayaki5505 but do you live and work there ? There is a difference between front end and back end
This is a great analysis of the economy of Japan! I saw the princes of the yen, which gives a nice description of the events but blames it too much on evil central bank conspiracy theories in my opinion. I hope the EU will learn from this case study and not fall in the same trap. Yearly helicopter money to all the people (or the government) of about 2% of the money supply sounds like a better alternative than the fractional reserve system. In the meantime I will just assume deflation will happen.
Thanks!! I really like Werner's other book: a new paradigm in macroeconomics. But, yeah, I then filter out the most intense conspiracy stuff 🙈
Well done on this level-headed, clear and succinct analysis! Great to learn about the big picture and trends from time to time. Now I wonder about what the future holds. If more Brits can think this clearly I am sure it things will get better for the country.
Some very good points. I have lived in Japan and prior to Covid took students there each year for educational purposes. I think the biggest challenge to their economy is demography. The ridiculous 'free market' reforms of European nations and the US would destroy Japan's infrastructure.
What "ridiculous free market reforms" are you talking about?
purely from economic and demographic perspective it could be a definition by the book of all of the problems, but there are far more complications than that, I have flicked you an email and look forward to discussing it!
Sounds like we are heading the same way too looking at the current housing and stock prices
This is the ultimate destiny of a capitalistic economy left unchecked.
Corporations eventually hit the ceiling of growth, and to sqeeze out more they begin to overexploit the workforce, pay less, make the govornment cut taxes and regulations. But this tactic is short-sighted. It actually leads to the economy collapse. As workforce gets more exploited and taxed, it begins to spend less, less procreate. Due to decreasing spending coupled with the depopulation the economy begins to shrink. Cap. governments all over the world instead of preventing corporations from overexploiting existing population try to solve the problem by importing cheap low-quality labor force from countries with lower standards of living - these are much more exploitable.
So, as you can see, if there is no pushback the capitalism devolves into modern day slavery.
The ultimate way of dealing with such crisis for capitalism is causing massive destructive wars - essentially raising everything to the ground, clearing the space for "new growth". Take nature's forest fires as an analogy. We already went through this in hisory - that was WW2. The issue is the next cleansing the earth might not survive.
@@alexxx4434 Most of the issues with our economy is due to government over-regulation. Not capitalism. Guarantee you remove multiple government regulations on the healthcare and housing industry and stop the government from bailing out companies we’d have a crash and recover far better from it as the free market takes its natural course. Also the modern day slavery analogy is stupid. That “modern day slavery” lifted millions out of poverty. But go off
@@Frostmear Deregulate and the corporations will exploit, abuse and monopolise more. "Free market" is a pipe dream preached by liberals in a propaganda campaign to free corprations' hands.
@@alexxx4434 You’ve never taken an economics class and it shows. Clearly there must be anti monopoly regulations in place to avoid such occurrences, but as of right now many government regulations ruin competition. Removing regulations to encourage economic competition will greatly benefit the economy and livelihoods for everyone. The “free market” is the reason why you’re sitting on your phone or computer criticizing capitalism. Without the free market there’s less innovation or business competition.
@@Frostmear You never understood real economics, you only regurgitate liberal lies you've been taught. Free markets do not exits: markets always get controlled, either by governments or by monopolies, and without reglatons markets are being routinely manipulated by its players.
Maybe I missed it but there should be some discussion about how people in Japan are overworked and have no time to spend money. Also, no one in Japan ever enters the job market, they just stay with their first job out of college until they retire 40 years later. These are major issues that I think can explain the economy of Japan very simply.
Racism and xenophobia toward foreigners doesent help neither…
I feel that the rest of the world's industrial countries will eventually follow Japan's path when it comes to the economy. Immigration is pretty much irrelevant, unless governments decide to bring in literally millions of immigrants. Even that won't make much of a difference, because within a couple of generations immigrants have roughly the same birth rate as the native population.
Growth is addicting to politicians, because it enables them to perpetuate unsustainable policies, and therefore they're desperately trying to fix a machine that's working pretty much exactly as designed. Japan has simply reached the limit of its growth potential. All that's left is volatile paper growth.
Time to sell robots to the world.
"Even that won't make much of a difference, because within a couple of generations immigrants have roughly the same birth rate as the native population."
I believe it's within a generation, hell some immigrants are already coming from countries with below replacement rates and don't have children when they get here.
The US gets many of its immigrants from very high birthrate places such as Africa and Latin America.
@@seandelaney1700 Latin America birthrate as a whole is below 2.1. African average fell from 6.5 to 4.1
@@seandelaney1700 Latin America no longer has replacement birth rates anymore
Very intellectual discussion but relatable at the same time. Thank you for this highly informative video.
My pleasure!
Nice well-thought out video.
But window-guideance happened when the Bank of Japan was under the Ministry of Fianance, and so could be used as a tool to stimulate the economy more freely.
It has since been tuned down after the Bank became independent of the MoF.
the real reason is the plaza accord, which destroyed japans economy