As alleged populism spreads the globe, one nation, Japan, stands alone.
Economists struggle to figure out why.
In Japan Resists the Populist Tide, Plender says Japan’s immunity to a virus consuming other developed countries is remarkable.
After December’s No vote in the Italian referendum, the rise of Donald Trump and the British vote to leave the EU, it appears that the political landscape of the developed world is being redesigned by the victims of globalisation and technological change. Anger towards political elites is pervasive. Yet a few rage-free zones remain, of which Japan is the most conspicuous. How come this country, whose economy has been in the doldrums for two decades and where the suicide rate is vastly higher than the global average, is not in the grip of anti-establishment populism?
The docility of the Japanese certainly appears counter-intuitive. This is, after all, a country that has suffered from debilitating deflation since the late 1990s and where wages have lagged behind productivity growth for years. Since the bursting of Japan’s notorious bubble in the 1990s, the loss of wealth has been huge. Richard Koo, chief economist of the Nomura Research Institute, has estimated the cumulative loss of wealth on shares and real estate between 1990 and 2015 at ¥1,500tn ($12.8tn) — three times America’s loss measured in relation to gross domestic product in the 1930s depression.
Please Think
It would behoove economic writers bemoaning deflation to stop for a mere second to ponder two facts.
- Consumers love falling prices.
- The Bank of Japan has failed in its idiotic mission to spur price inflation
Counter-Intuitive Madness
Instead of pondering why nearly the entire Japanese nation has not embraced inflation, Plender ought to look into a mirror in search of the problem.
Consumers like falling prices. Despite decades of Japanese central bank madness, Japanese consumers are actually happy.
No Conundrum
There is no conundrum. It is the ruling class wealthy and politicians that suffer from lack of inflation.
Since Plender believes otherwise, I invite him to my challenge: “Prove Rising Prices Provide an Overall Economic Benefit”.
Recall that the BIS did a study and found routine deflation was not any problem at all.
“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the BIS study.
It’s asset bubble deflation that is damaging.
And in central banks’ seriously misguided attempts to fight routine consumer price deflation, central bankers create very destructive asset bubbles that eventually collapse.
When those bubble burst, and they will, it will trigger debt deflation, which is what central banks ought to fear.
For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?
Meanwhile economically illiterate writers bemoan deflation, as do most economists and central banks. The final irony in this ridiculous mix is central bank policies stimulate massive wealth inequality fueled by soaring stock prices.
Mike “Mish” Shedlock
Would you know why the national debt has been reduced by $200 billion since yesterday
Sent from my iPhone
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Had not seen that
Getting ready to board a plane
Happy new year all
Mish
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Why is so called populism always referred to as something dirty? Surely it is just the result of democracy but not the sort the establishment want or believe is in the best interest for them.
The other side of populism must be unpopulism!
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Our country is not a democracy and that’s a good thing. It’s a constitutional republic that protects individual rights against the gang rule of the stupid majority; in theory anyway. In practice, Japanese-Americans in WWII were rounded up, their businesses and other property confiscated, and they were confined in prison camps. That’s populism and it’s an ugly thing.
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Only the historically ignorant would look at the situation in early 1942 and use 2016 standards to judge their actions. This was not “one world” in 1942.
1. Many interned were NOT citizens.
2. Many who were citizens were ony citizens because their mother gave birth to them shortly after arriving. Would you be a loyal Saudi if your mother had you when your dad was working a gig there?
3. Japanese on the West coast in the exclusion zone were the ones confined. They were free in the rest of the nation.
4. Japanese inside the exclusion zone were allowed to migrate out of it, rather than be imprisoned. Many simply could not afford to or lacked contacts outside of their local insular communities.
5. A Japanese American citizen on an isolated island near Hawaii DID run amok with a Japanese pilot who crash landed there after Pearl Harbor. There is no proof this would not have happened had there been no exclusion zone created. In fact, many were found to be patriots TO JAPAN, as would be expected.
6. The other few hundred thousand in the Hawaiian islands were NOT interned.
7. Americans in Japan and conquered territories were interned, beaten, raped, starved, and murdered. Japanese internees were treated relatively well and many reported fond memories of the experience, being children at the time. Foreign nationals in all warring nations were held or subject to intense interrogation or deportation. Isn’t your thinking we’re special “populism”? The reason Japan didn’t intern Americans who were Japanese citizens was that you generally could not become a Japanese citizen if you weren’t born there to Japanese.
8. Most property was not confiscated, it was sold at a loss due to buyers knowing the pressure they were under to sell quickly. When it was, it was local crook politicians doing it. Just like they do to Americans of anglo birth when they can find a rationalization.
9. Japanese American men of military age were invited to swear an allegiance oath and join our military. Many did (442nd infantry regiment) , but many did not. This illustrates that many indeed were not loyal.
10. All internees were released by the end of 1943, when the military threat to the coast was removed by the war’s events. So why would they do that if it were a mere excercise in “populism”.
11. “Populism” is not necessarily a bad thing. It’s called self-interest and most nations on earth engage in it. Since we stopped doing that the standard of living for working class Americans and immigrants has fallen drastically. The negative connotation came from aggressive nationalism like that of Japan and Germany. Minding your own business and controlling your borders and looking out for your citizens is simply rational and it is a good thing.
12. Thousands of Italian and German Americans were also interned. It was impossible to intern all of them, as they were too numerous, so only those judged most at risk were held. Just like in Hawaii.
But enjoy sitting on your high horse with your college degree and good paying job while HS grads and others sit collecting welfare and other benefits and wasting their lives away, and recent immigrants work for low wages for the rest of their lives. I’m sure they appreciate your noble principles.
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Land and house price too. Poorer don’t own land & generally and find themselves unable to afford a house. When they can afford their own house their kids probably have to move away to afford (in uk) and there goes a basic building brick of supportive societies, local family networks.
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Yup.
That the asset pumpers have gone a long way towards suckering the indoctrinati into considering “real estate” as an “asset”, rather than “roof over ones head” a consumable, does in no way mean that higher prices for the latter is some sort of a good thing.
Of course, neither is paying a higher price for a machine or organization who will produce a set number of consumer goods in the future……
The price of a anything, regardless of whether arbitrarily classified as an “asset” or a “consumable”, is a reflection of it’s scarcity. And the less scarcity it faces, the wealthier a society is. Period, and without exceptions.
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Even more important, Japan is a highly homogeneous ethnoState, and hence a high trust society. Virtually no foreigners are allowed to settle in Japan, even fewer become citizens. Mosques are illegal. Foreign troublemakers are immediately deported. Japan will still be Japan when Western ‘multi-cultural’ countries have devolved into barbarism.
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BINGO!
It amazing the logical contortions these propagandist go through to avoid obvious truth.
Manufactured cognitive dissonance
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The “elites” the-more-immigration-the-better mantra is a big part of it. Do not forget the “skillful” handling of the economy, either. The globalisation, the fake news…
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Wishful thinking. Check out this list, with pictures: https://en.wikipedia.org/wiki/List_of_mosques_in_Japan
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Pyrrhus Japan does indeed have some mosques. Absolutely agree on Japan being a closed society for the most part. Foreigners are at best tolerated. You can indeed settle in Japan if you at married to a Japanese or you are in large business that hires Japanese. Having spent 7 years in the Far East most of these countries are the same to be honest, not just Japan. Women are commodities in many of these countries, especially when the first child is a female. In some countries they are sold still today or worse abandoned especially in China.
My first wife was Japanese and her father ran Datsun. Looking back I should have let her father kidnap her, but I foiled his plans. A long story but true. Business is war for them back in my days of living there. Looking back Japan did just what China is doing buying over priced properties all over the USA and when the bubble really pops they too will end up like Japan. Not sure how many of you remember when the same people claimed just like Japan would rule the world. Chinese middle class are now doing the same thing buying home in North America when the bubble has not popped.
Of all the places I live in the Far East the Japanese were by far the most racist. They actually think we Americans are stupid and lazy. Japan is deflating because the citizens cannot afford to buy their expensive stuff and I mean expensive.
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Mish,
I am always surprised that in these vignettes no one addresses the impact of distorted low interest rates on crushing the capacity of the middle class to save, and thus “invest.” Savings are “investment” as opposed to consumption. The goods sold are different in character, but it does not reflect a decrease in economic activity….the Keynesians notwithstanding.
Further, the middle class is much more likely to “invest” in new ventures and first time home establishment if they have savings; and interest accrual increases the incentives to save.
And finally, inflation destroys those savings, thus decreasing that “investment” activity.
John Goodrich
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Japan:
No illegal immigrants. Absolutely NO muslim immigrants. They just deported the last of a few muslim troublemakers. Any immigrants that come to Japan have to pass rigorous tests and have to contribute to their society.
Their society and culture is one of teamwork. And they are proud of what their society has accomplished. They are very proud to be Japanese.
No identify politics. No racial politics. No Japanese guilt. No class warfare. No “that could have been my son” about a crime. No “illegals can vote and won’t be prosecuted.” No leaders that are above the law (they actually go to jail on fairly regular basis) and no leaders ignoring laws they don’t like and making up laws they wished they had. No Japenese leaders go around the world apologizing for Japan.
Basically – the thought process of the democrat party doesn’t exist there.
They understand all their welfare is helping their own.
They have a declining population FOR NOW. In 20, 50 or 100 years it could be the opposite problem. But Japan will be inhabited by Japanese with a Japanese culture a 100 years from now.
Germany, France, the UK, the USA can not make that statement.
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Yes, they have no immigrants to blame, that takes away a big part of populism/rage.
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economists identify only those things that ensure their employment. Even if we did know why Japan has this anomaly I fail to see how it changes any forward developments.
It’s absurd as why sales of red Christmas bulbs exceeded that of yellow bulbs. Mindless monkeys making themselves to be intellectual charlatans.
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How come peaceful Buddhist monks are not in the throes of populist rage? Maybe it is not in their nature.
It was such a tumultuous year in politics, but i saw none of that when i often went to the 99 cent only store. Just people trying to get by.
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I think you hit the nail on the head Mish. The world is struggling under asset inflation and rising CPI while wages languish. Japans private debt to GDP is also lower than many (half that of Australia, 16% lower than the USA) which means its population is less financially stressed than many. Would be interesting to compare private debt to median wage or disposable income vs debt obligation, if such charts exist.
Clearly financial stress and hopelessness (poverty) has always driven revolution.
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Many of the “suicides” in Japan are mafia murders for insurance money. The police have no incentive to investigate these hits. Also, the longevity stats are inaccurate; a number of years ago the government sent out surveyors to congratulate Japan’s centurions and it turned out that loads of them were actually dead (but their families were still collecting their benefits). Until a few years ago it was standard for Japanese doctors to not tell cancer patients that they had cancer (they would treat them, but not tell them; naturally this kept them from being able to pursue alternative treatments).
There is a lot going on under the surface in Japan that is not so pretty:
“KITAKYUSHU, Japan — In a thin notebook discovered along with a man’s partly mummified corpse this summer was a detailed account of his last days, recording his hunger pangs, his drop in weight and, above all, his dream of eating a rice ball, a snack sold for about $1 in convenience stores across the country.
“3 a.m. This human being hasn’t eaten in 10 days but is still alive,” he wrote. “I want to eat rice. I want to eat a rice ball.”
These were not the last words of a hiker lost in the wilderness, but those of a 52-year-old urban welfare recipient whose benefits had been cut off. And his case was not the first here.” (http://www.nytimes.com/2007/10/12/world/asia/12japan.html).
People who do not have the sort of social safety net that we are accustomed to, are frightened people (the man’s social workers knowingly and intentionally let him starve to death, and afterwards said they thought they did the right thing). They do not rebel.
Also there is the issue of the Japanese “untouchable” caste; they are still a separate society in Japan, despite being genetically Japanese, other Japanese will not marry them and elaborate genealogies are kept to make sure that “regular” Japanese don’t accidentally marry them (https://en.wikipedia.org/wiki/Burakumin). They were used as forced labor at Fukushima.
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If asset deflation is “the problem” shouldn’t the loss of $12.8T (300% of GDP) in stocks and real estate over the last 15 years be an issue?
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Touche!!!
In reality asset bubbles are the problem. Them deflating, as in going from asset bubble to not asset bubble, is hence a good development.
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Probably because most economists have no appreciation for this culture. Japan is not capitalism with warts it is communism with beauty spots.
Japan’s society is breaking down much more rapidly than many think. The only reason the population doesn’t revolt is that the political system here won’t allow it. The youth are always told to respect their elders and running against the grain risks ostracism, a risk they won’t take.
Please take a looks at the crime series I wrote on Japan. This is what is really going on. While small vs other countries the growth rates reveal huge festering problems. When the voting population gets old enough we’ll see policy geared toward higher welfare – it will be ugly.
http://www.custprd.com/rsch/Crime%20in%20Japan%20-%20Geriatric%20Jailbirds.pdf
http://www.custprd.com/rsch/Crime%20in%20Japan%20-%20Nuclear%20Family.pdf
http://www.custprd.com/rsch/Crime%20in%20Japan%20-%20Police%20Yakuza%20Drugs%20Financial%20Crime.pdf
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Japan is racially and culturally homogeneous. Their politicians are not working to destroy Japanese culture and people by allowing their islands to be invaded by an army of islamist insurgents disguised as migrants. That is all.
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You don’t have to “rage” against your leaders when you’re already looking out for your own citizens by not allowing mass immigration to destroy a generation. Not hard to figure out at all. Of course those who feel immune to immigration’s effects (how many economists swim the Rio Grande to get here and do forecasts for $8/hour?) are always in favor of open borders.
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Rising interest rates will convert many to populist, and/or increase hara-kiri by establishment leaders. As soon as the bond vigilantes finish with Europe, it will be off to Japan (2018-2020).
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Yes, CPI deflation makes shoppers happy. Shoppers love sales. The average person gains from CPI deflation.
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Demographics and culture are both different in Japan. The entire country pretty much consists of old people by now, but in very stark difference to the West, most of them haven’t fallen for the charade that younger, unrelated, people somehow “owe” them something just because they are old. So there is less generation warfare baked in for the populists to tap into. Simply because it’s unseemly to support some political hack whose promises are solely to rob someone else on your behalf just because you “paid in”, or some other silly excuse.
Then, the incredibly low birthrates over the past generations, combined with a economy consisting of an outsized share of world class companies, allows every single young (as in maximum rebel potential) male to have the world beating down his door with what anywhere else would be considered spectacular job offers. To the point where many would argue it’s just too easy to put off picking any job. As in, “I’m not really feeling all that hyped about that potential $million/year job at XXX investment bank, so I’m just going to spend a year or so turning my Kei car into a permanent residence for now. While driving aimlessly around taking pictures of suburban ponds with my 1950s mechanical camera….Maybe I’ll be interested in a job sometime later. Judging by my entire life’s worth of past experience, there’ll still be plenty of offers….”
The lack of a wildly successful asset pumping scheme for over a generation, has also prevented much of the economic stratification that has lead to populism’s appeal in the West. In the West, as in Japan for a brief spurt in the 80s, the big “winners” have been so almost exclusively on account of asset pumping. Meaning, most fortunes, and even most money itself, has largely been made not as a result of doing anything particularly productive nor useful, but rather by being the beneficiary of loot taken from the rest of society by debasement. Once that route to getting rich is more heavily curtailed, as it has been in Japan for awhile, differences between people’s outcomes aren’t really all that great. Leading to less cat fighting for the purpose of getting on the right side of the Fed’s and government’s redistribution policies, in favor of simply getting on with making do as best one can by doing something useful.
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Japan also does not have millions of muslims many of whom hate the non-muslim way of life and too many of whom are permanently unemployed with the situation even worsening for 2nd and 3dr generations in european welfare countries with political correctness that stops talk about problems if one leftist-green snowflake thinks saying facts is racist if facts show certain groups in a not so nice light.
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Furthering european rage are also the terrorism attacks, gang rapes and hundreds of rapes and many many assaults committed by asylum seekers and also many muslim youth from the 2nd and 3rd generations.
In Sweden police does NOTHING to immigrant youths destroying police cars and throwing stones at police, firemen and ambulance personnel.
Police just withdraw and no stone throwers are ever punished, cops hit with stones and injured sometimes badly get sick leave and many police officers are quitting if they are told to do policing in swedens immigrant ghettoes filled with welfare recipients. Complete self destruction by Sweden in the name of political correctness.
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Reasonable country would lock up every last stone thrower and make sure that if the stone thrower does not yet have a citizenship that he will never get it and if the stone thrower has his parents homelands citizenship and swedish citizenship then the swedish citizenship is cancelled and in both of those cases the stone throwers, rapists, assaulters etc. would be deported.
Sweden just wonders that maybe the police are racists because so many stones are thrown at them in the immigrant ghettoes filled with immigrants who came through the loose, lax and incompetent asylum system and the family re-unification system giving way straight to welfare.
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Country can STOP family re-unifications to welfare like Denmark has done and country can STOP giving citizenships to welfare bums like Denmark did by starting to demand 4,5 years of working during the last 5 years before denmarks citizenship can be applied for.
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Full agreement
Japan has a lot of problem, but it is free from Islam and immigration
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First — Japanese society is almost a cult. Not only are mosques not allowed, any foreign born person (even if they have Japanese ancestry) is viewed with suspicion. To question the cult leaders is to risk being ostracized.
Second — Japan’s population is imploding. Many small towns and villages lack enough occupants to bother staging a protest. Ghost towns and ghost villages don’t have protests, and no one would be there to report a protest if there was one.
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The Japanese are a non-confrontational people. Culturally, the group matters more than the individual and true feelings don’t surface. It is rare to see any kind of protest in Japan, though once in a while you do see some (i.e., right-wing minority that protests the Kuril Islands, nuclear disaster cover-up of Fukushima, etc.). The country also matters more than the individual, so the Japanese are very patriotic.
No doubt, the Japanese people feel the slow motion train wreck, but seem to have accepted this is the new reality. Similar to the US where we have two economies (NY, LA, SF vs. the red states), only the big cities in Japan are doing “ok”.
I guess like in the US, things need to get really bad until riots occur and true revamping of the useless, corrupt system starts.
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The Japanese are a non-confrontational people. Culturally, the group matters more than the individual and true feelings don’t surface. It is rare to see any kind of protest in Japan, though once in a while you do see some (i.e., right-wing minority that protests the Kuril Islands, nuclear disaster cover-up of Fukushima, etc.). The country also matters more than the individual, so the Japanese are very patriotic.
No doubt, the Japanese people feel the slow motion train wreck, but seem to have accepted this is the new reality. Similar to the US where we have two economies (NY, LA, SF vs. the red states), only the big cities in Japan are doing “ok”.
I guess like in the US, things need to get really bad until riots occur and true revamping of the useless, corrupt system starts.
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Japan has an a fast ageing population of so called boomers and a low birth rate so it is rapidly reducing in size. Age brings wisdom, hopefully – and this cohort remembers the horrors of WW2. If not actual then via the vivid memory of their parents when citizens suffered horribly under allied targeting of and subsequent large scale mass killing of civilians. This was followed by the shock of occupation by an alien individualistic culture, vastly different from the Japanese polite inclusive society. That society probably still remains today in reaction to the trauma they experienced but is still cowed by their experiences. No wonder (as in the past before Commander Perry) they remain suspicious of foreign influence. The Japanese have learnt to be good actors when facing the other – and also probably now have an ingrained distrust of their own previously militaristic elites. Maybe that is why they abhor aggressive behavior that we recognise as populism but is not populism (just the democratic pragmatism of ordinary people – this can be expressed in different ways).
The Japanese might go wrong but theseem to be managing population control very well without descending into the chaotic type of recession that we fear.
In a world going exponential they might just do a fine job looking after their culture and their citizens – and manage the new robotic revolution to their advantage – better than most anyway.
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The Japanese are docile. They never fought for their rights or freedom. They are not even familiar with natural law. Rebelling against the powers that be is not part of their history or culture.
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