For years I have held that Japan’s “slump” is a media myth. I have twice in the past extended an invitation to the principal proponents of the slump story to join me in a live one-on-one debate. I have had no takers. This time, as I have announced in a guest blog at the Atlantic, I am adding an extra twist that should have them banging down my door.
An invitation to:
• Kenneth Courtis, investment banker
• Bill Emmott, author of The Sun Also Sets
• Robert Alan Feldman, author of The Weakening of Japan
• Richard Katz, author of The System that Soured
• Alexander Kinmont, author of The Irrelevance of Japan
• Paul Krugman, author of It’s Baaack! Japan’s Slump and the Return of the Liquidity Trap
• Edward Lincoln, author of Arthritic Japan
• Michael Porter, author of Can Japan Compete?
• Peter Tasker, author of Can Japan Survive?
• Gillian Tett, author of Saving the Sun
As 2011 marks the 20th anniversary of the great Tokyo real estate crash, this is an appropriate time to review what has really happened to Japan during its alleged “two lost decades.”
As you know, I am the only Tokyo-based observer who can document a record of having publicly predicted the crash. I have moreover been almost alone in arguing since the beginning that the crash was a purely financial affair that did not hinder progress in the real economy.
Only the most obvious evidence of such progress is that in the twenty years to 2010, Japan multiplied its current account surplus more than five-fold — and did so in the teeth of intensifying competition from South Korea, Taiwan, Germany, and, of course, China.
As for the United States, by a remarkable coincidence, it also multiplied its current account balance more than five-fold — its current account deficit, that is!
Evidence of Japan’s progress is also apparent in currency markets. Although from the early 1990s on, a resurgent America supposedly turned the tables on an egregiously mismanaged Japan, the yen has not fallen against the dollar. Quite the reverse, it has rocketed by more than 65 percent. Japan’s economic leadership is notably reflected in China’s import numbers. Not only is Japan China’s largest source of imports ($160 billion worth as of 2010, according to the CIA Factbook) but it is almost unique among manufacturing nations in running a balanced trade account with China (actually on Beijing’s numbers Japan enjoys a bilateral surplus). China’s numbers testify to the fact that even with some of the highest wages in the world, Japan is the world’s leading or only supplier of a vast array of state-of-the-artmanufactured products.
Many other similarly impressive statistics could be cited. So how do we reconcile such statistics with the story of Japan’s alleged two decades of “stagnation”? We can’t, of course. Surprising though this may appear to unacclimatized Westerners, all the evidence is that the Japanese economy’s true growth performance has been systematically, if counterintuitively, understated in the last twenty years.