Back in March of this year I did a posting here saying that Japan will be back, and ever since then I have been keeping a particular eye out for Japan news in whatever media stuff came my way. The most startling thing I has spotted so far was an article in the November issue of Prospect, by Eamonn Fingleton, called “Japan’s fake funk”, which says that Japan never went away, and the only surprise will be when the West realises it. This article was subsequently made available here at Financial Review. (My thanks to John Ray for supplying the link to this.) Whatever you think of this piece, it certainly makes fascinating reading. Here’s how it starts:
FOR A DECADE now, the western consensus has been that Japan is an economic basket case. But this is a dramatic misreading of a perennially secretive society. Indeed, it may come to be seen as one of the most significant misreadings in economic history.
Fingleton goes on to argue that Japan’s alleged economic woes are just that – alleged – and that actually Japan is doing very well thank you. It is racing ahead in numerous vital technologies, its standard of living is not at all in decline, and its financial woes are greatly exaggerated. Economically, says Fingleton, Japan has now overtaken the USA.
Why then do the Japanese still send out SOS messages? Because, says Fingleton, it suits them to. Being regarded as a basket case means that they get an easy ride diplomatically from the USA, while they cosy up to the Chinese, who are in Fingleton’s opinion about to emerge any decade now as the world’s dominant economy.
Fingleton is the author of In Praise of Hard Industries, published in 1999, which denounced the internet stock fad for being a fad, so he has something of a pedigree. But is he right?
Or is he just the latest in a long line of dirigiste-inclined self-deluders who regard only certain parts of the economy (in his case big and complicated machines) as being “real” (as opposed to “information” which he reckons is not so real), in the same way that people used to say that only agriculture was real and that manufacturing, and then “finance”, was economic frippery by comparison.
This emailer to Brunton et al. (“Trader”) dismisses Fingleton’s piece as “nonsense”, for all the usual financial reasons that we’ve become familiar with. Fingleton regards people like “Trader” as self-deluders.
Other commentators have made much of Japan’s alleged demographic woes, in the form of a rapidly aging population.
Well, who is right?
If the technological facts assembled by Fingleton are right – Japan racing ahead in “key technologies”, like supercomputers, machine tools, and so forth – then if Japan is in decline, it is in a very odd sort of decline, caused, it would seem, by them financing high technology for the rest of us at a loss, and thus becoming the world’s best informed paupers. Sort of technological monks, you might say.
I don’t know what the truth is about all this, but I would like to very much. Comments?