Order from a Major Online Bookstore
Ultimate Book Price Comparison Engine
Save Your Time And Money
| AnyBook4Less.com | Order from a Major Online Bookstore |
|
| Home | Store List | FAQ | Contact Us | | ||
| Ultimate Book Price Comparison Engine Save Your Time And Money |
||
 |
Title: Japanese Phoenix: The Long Road to Economic Revival by Richard Katz ISBN: 0765610744 Publisher: M.E.Sharpe Pub. Date: October, 2002 Format: Paperback Volumes: 1 List Price(USD): $24.95 |
Average Customer Rating: 5
Rating: 5
Summary: An excellent explanation of the Japanese economic mess
Comment: Summary:
The author provides excellent insights why the Japanese economy faltered. The economic miracle of the eighties did not grow much after 1989. He suggests economic reforms that would restore sustainable economic growth. But, he indicates such reforms are unlikely until Japan reforms its political system first. This means splitting the powerful LDP into two parties. This will not happen shortly. But, the building pressure for political reform as a result of the ongoing faltering economy is immense. Thus, Mr. Katz is confident it will happen.
Abstract: Japan has gone from experiencing the "Japanese miracle" in the eighties to being in the economic doghouse since 1989. During the eighties, Japan economy grew at 4% per year with little inflation and unemployment. During the nineties, Japan experienced no economic growth, suffered deflation due to weak consumer demand; and. its share of World GDP and World exports shrunk. Japan sustainable growth rate has decreased from 4% in the eighties to only 1% in 2000, on its way to only 0.5% by 2010. Japan?s GDP grew by only 0.3% per annum since 1997. Why did this economic decline occurr? There are really two Japanese economies. One consists of the super efficient exporting industries, including automobiles and consumer electronics. The other consists of the much larger domestic sector which employs 80% of labor force. The domestic sector is protected from competition by an anticompetitive regulatory environment that allows price collusion and restricts all imports. This sector includes food processing, retailing, wholesaling , finance, farming, and other services. Within these domestic industries, Japan?s productivity is between 50% to 66% lower than in the U.S.
During the eighties the productive exporting sector was carrying the inefficient domestic sector. But, in the nineties, the exporting sector progressively outsourced manufacturing overseas to lower its costs and remain competitive. As a result, the lagging domestic sector employing a rising percentage of the labor force caused a decline in Japanese productivity.
Japan suffers many structural problems. Its companies are overleveraged, and have over invested in nonproductive investments. This has caused Japan chronic nonperforming loans (NPLs) problem. These NPLs represent a staggering 20% of GDP. The banking system generates these NPLs faster than it can charge them off. This crisis has been going on since 1989. Both the government and the banking industry have refused to make the tough decisions to resolve these NPLs. The allocation of credit is fraught with conflict of interests. Risk management is lackluster. The banking industry is the weakest among industrialized nations.
Why are current monetary and fiscal stimuli not working? The Japanese central bank has maintained short term interest rates close to 0% for most of the past decade. The government has run large budget deficits (around 6% of GDP) for several years. But, despite these measures, economic growth has remained flat. The reason is industry suffers from excess capacity. As a result, loan demand is close to zero and so is the resulting economic growth.
Is the U.S. likely to experience the same fate? Some believe that the U.S. economy is experiencing a decade later the same economic ills as Japan. Mr. Katz makes a convincing case that the U.S. and Japan are on different economic paths. As mentioned, Japan economy is plagued by NPLs representing 20% of GDP. Japan?s banking sector is weak. Also, its long term sustainable economic growth rate is only 1%. Meanwhile, the U.S. has no NPLs problem, as NPLs represent only 2.4% of GDP. It has a well capitalized banking system. Also, its long term sustainable growth rate remains robust at 4%. Contrary to Japan, the U.S. has the most competitive domestic markets. All sectors are fully exposed to invigorating price competition from both domestic and international competitors.
What will it take for Japan to redress their situation? Mr. Katz suggests the following economic reform:
1) Resolve the NPLs by making a large capital infusion into the banking system. This capital infusion would come with the implementation of tough banking regulations including: implementing better accounting disclosure and rigorous classification of bad assets. These measures would instill a sound credit culture within the banking industry.
2) Cut individual income taxes to boost consumer demand.
3) Boost unemployment compensation to allow for the necessary rise in unemployment resulting from the elimination of excess capacity.
4) Promote forces of globalization to enhance competition within domestic economy. Deregulate domestic industries. Eliminate price collusion. This would increase the supply side efficiency and also increase real purchasing power of consumers by lowering monopolistic pricing.
How likely are the above reforms to occur? Mr. Katz mentions that some of these reforms have been attempted. But, any progressive regulatory step has been associated with two steps backward. The deregulation of the financial sector in 1999 was too timid. Since 1999, there has been a rise in ?financial socialism? as government bodies mediate 45% of deposits and 35% of loans. Thus, competition within the financial sector has actually weakened since 1999.
Mr. Katz indicates that political reform has to occur before successful economic reform can take place. This entails that the LDP will have to split into two parties. Japan is the only democracy that has been ruled by a single party since 1945. You need political competition before you can stimulate economic competition. Mr. Katz believe the LDP will inevitably split up because the LDP can not survive flat economic growth for another decade.
Rating: 5
Summary: Important Information on Japan
Comment: The author seems very knowlegeabl on Japan, how it got to be an economic superpower and the recent decade of stagnation. Gives you a quick overview of both. It seems sad that such creative people are mired in a horrible slump out of which they can not come out unless they change the way the think. A must book for anyone who wants to know why Japan is in such a sad state.
 |
Title: Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance by Akio Mikuni, R. Taggart Murphy, Michael H. Armacost ISBN: 0815702221 Publisher: The Brookings Institution Pub. Date: 01 September, 2002 List Price(USD): $38.95 |
 |
Title: Arthritic Japan: The Slow Pace of Economic Reform by Edward J. Lincoln ISBN: 0815700733 Publisher: The Brookings Institution Pub. Date: 15 September, 2001 List Price(USD): $18.95 |
 |
Title: Japan, the System That Soured : The Rise and Fall of the Japanese Economic Miracle by Richard Katz ISBN: 0765603101 Publisher: M.E.Sharpe Pub. Date: July, 1998 List Price(USD): $29.95 |
 |
Title: Saving the Sun : A Wall Street Gamble to Rescue Japan from Its Trillion-Dollar Meltdown by Gillian Tett ISBN: 006055424X Publisher: HarperBusiness Pub. Date: 02 September, 2003 List Price(USD): $26.95 |
 |
Title: How Asia Got Rich : Japan and the Asian Miracle by Edith Buchanan Terry, Chalmers A. Johnson ISBN: 076560356X Publisher: M.E.Sharpe Pub. Date: September, 2002 List Price(USD): $28.95 |
Thank you for visiting www.AnyBook4Less.com and enjoy your savings!
Copyright� 2001-2021 Send your comments
