Recently at Reason.tv: Turning Japanese—Is America creating its own "Lost Decade" of economic stagnation?

June 25, 2009

It wasn't that long ago that everyone in America believed that Japan would soon overtake the United States as the dominant economic force on the planet. When the Japanese stock market rallied to historic heights in late 1989 and Japanese investors even bought Rockefeller Center in New York, it all seemed like a done deal.

But then...the Nikkei Index tanked, the nation's economy collapsed, the government responded with an ever-changing mix of tax hike and tax cuts, stimulus spending on infrastructure, massive bailouts of businesses, and more. None of it worked and Japan entered what's been called its "Lost Decade," a seemingly endless period of economic stagnation.

What are the lessons for the U.S. from Japan's experience? Reason Foundation policy analyst Anthony Randazzo is the co-author of the recent study "Avoiding an American Lost Decade: Lessons from Japan's bubble and recession" and a July 2009 cover story for Reason magazine, "Turning Japanese: Japan's post-bubble policies produced a 'lost decade.' So why is President Obama emulating them?"

As Randazzo explains, both the causes of and official responses to Japan's bubble and economic slump eerily anticipate exactly what the U.S. government is doing. Worse still, the Obama administration and Congress seem dead-set against the sorts of policies-across-the-board taxes on personal and business income, reductions in long-term and unsustainable government debt, and allowing damaged firms to go bankrupt-that would help revivify the American economy.

Is America on the verge of its own lost decade? Sadly, the government seems to be doing everything it can to make that happen.

Approximately 3.30 minutes long. Produced by Dan Hayes and Nick Gillespie; graphics by Meredith Bragg.

For embed code, audio podcast, iPod and HD versions, and more videos, go here.

Comments

DHS Thinks I\'m a Terrorist|6.25.09 @ 10:01AM|#

I cannot let this thread go by without mentioning an excelent manga that deals with this very topic. Yes, it is political in nature and would even call it libertarian. It is a brilliant read and gives the story from the Japanese perspective. It is called Akumetsu.

http://www.onemanga.com/Akumetsu/1/00/

Xeones|6.25.09 @ 10:12AM|#

Dude, if you're gonna be posting manga links up in here, i might have to agree with the DHS.

DHS Thinks I\'m a Terrorist|6.25.09 @ 10:21AM|#

Xeones, I rarely do that. But this manga is actually very much on topic. It is about this very subject.

Kyle Jordan|6.25.09 @ 10:21AM|#

Or at least post some hentai along side the serious links.

Flex Nasty B.I.G.|6.25.09 @ 10:36AM|#

Fewer talking head interviews, more demonstrations of logic. It's an entertaining video but not likely to change the minds of any of my non-libertarian friends. Which is the goal, right?

Shannon Love|6.25.09 @ 10:39AM|#

These types of solutions are created for the sake of politicians. Regardless of supposed political philosophy, no politicians wants to "waster a crisis." If something bad happens, they want to be perceived as doing something of vital necessity so that people will think of themselves as dependent on the politician.

This is one of the systemic faults caused by government's dependence on power-motive to function. Politicians cannot seriously propose a "do nothing" or "reduce government" solution because they can't ignore an opportunity for power any more than private individual can ignore money on the table.

Mike|6.25.09 @ 12:23PM|#

The lesson of the Japanese experience of the 90's is: Keyneseanism doesn't work.

|6.25.09 @ 2:12PM|#

We're done with France now and have moved on to Japan, I see. At least there's an actual basis for comparing us to Japan instead of just "LOL FRANCE!!!"