13 Jul 2015

Japan's Lost Decades; there are many radical changes but the inertia from past success prevented some ideal changes.

Authors : Yoichi Funabashi, Barak Kushner
Published : 2015-04-20
The phrase 'A Lost Decade' got suddenly popular in Japan as it spotted the depressing mood of political and economic standstill after the asset bubble burst in early '90s. Including a first decade of twenty-first century, despite the era of the Koizumi administration with many reforms, that disappointing notion expanded to 'Lost Decades' these days.

However, this book which is the key deliverable out of the 'Japan's Lost Decades' project by Rebuild Japan Initiative Foundation (RJIF, a globally well-ranked independent thinktank in Tokyo), shows actually dynamic (many) changes in how Japan runs its political, economical, and social systems, in contrast with the static and passive implication of the word 'lost'.

This book, Examining Japan's Lost Decades, was written in plain essays by about 20 experts in population, macro/micro economics, economic policy, labour market, education, energy and nuclear power plant, political system, national security, trade, regional politics, US-Japan coalition, history problems, foreign affairs, and vision/values. The target readers are well-educated but non-experts who are keen to understand Japan from the bubble burst (and mechanisms behind) before recent Abe administration.

Those essays are highly interlinked, and this network of chapters would provide utterly unique perspectives on actual changes (and un-changes) in Japan. In reality, Japan was not standstill at all; rather, it aimed for reforms of systems optimised for the high-growth and cold-war era and realised a lot. For example, changes are explicit in the flexibility Japan's labour market, its political system regarding general election and the power of Cabinet Office, and its foreign policy on national security after the miserable failure in the Gulf war. However, the inertia of great success in the past, especially in corporate management and education, did not allow Japan to escape from the legacy of the success experience, as referred as 'Japan As Number One' by Ezra Vogel.

What's more, the fundamental commonality among those 'lost' areas (to be precise, areas that Japan has lost) is procrastination of addressing issues critical for its systems (e.g. ageing and declining population) in pursuit of interests of inner circle, meaning lack of sound governance and appropriate pressure from external players. In other words, negative 'externality' of economics has been at work in multiple layers of the Japanese society.  

This 'externality' problem is certainly not unique only to this era of Japan; but it keep recurring for the very long history of humankind. Therefore it is too naive to say that we find 'one-fits-for-all' solutions to this. Instead, well-educated people in twenty-first century have to learn from this dynamic modern history of Japan through 17 chapters of this book, and must obtain each own takeaway from those mistakes and failures Japan has made.

Japan as No.1
Author : Ezra F Vogel 
Published: 1980-09

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