Why US economists are obsessed with 'Japanification' | FT 

Slowing economic growth is worrying economists in the US, who liken the situation to Japan's economic troubles. Read more about it: www.ft.com/content/3746c864-4362-11ea-abea-0c7a29cd66fe.

03:27 "And in one important way it's a better place to live than the United States..." Cut to Pikachu boat filled with Pikachu mascots

Why are there no clips of Japanese economist speaking at the forum. They lived through the lost decade and their English is pretty good.

I'm not a weeb, I'm the future of the world economy.

3:00: We can't tell you that we have no tools left or it'll cause a panic *literally tells everyone they have no tools left*

Japan has found itself in what is called a liquidity trap: negative interest rate and deflation so it was impossible to change the price level through the monetary supply

Japan has had flat economic growth and stagflation or deflation for the last 30 years but still have a great GDP per capita, long life expectancy, affordable standard of living, awesome quality of life, and some of the best public services in the world. The western world does not want to be like Japan because their economies depend on overconsumption and consumers going into debt to finance their purchases. American companies want American consumers to turnover their possessions every year and banks want to keep American consumers in debt to collect interest on those debts. The cost of living in the western world is unsustainable. When average consumers in the western world dedicate over 60% of their gross monthly income towards shelter, insurance, utilities, transportation, healthcare, and other life maintenance must haves there is nothing left to save or invest or even enjoy life at all. Wages in the western world have been in stagflation since the late 1970s where the cost of living has gone through inflation unchecked. Perhaps 30 to 40 years of deflation on the cost of living in the western world can make up for the stagflation of wages since the 1970s. My old family house in the 1990s costed $50,000 so why my new family house in the 2010s cost $500,000 is beyond my understanding. Real estate inflation at 1,000% over 20 years is quite alarming. And don’t get me started on the cost of vehicles, post-secondary education, utilities, insurance, groceries, and taxes. Japanification of the western world sounds pretty nice right now. At least the consumers in Japan don’t have to worry about their cost of living doubling every 10 to 20 years. We in North America do have to worry about that. Terrible.

“It’s easy to tell who is a San Diegan and who’s an economist” Lol I felt that while wearing shorts.

I find it strange how economists are obsessed with exponential growth, as if the world's resources are limitless.

slow economic growth and low inflation sounds like sustainability to me

Japan has the same demographic as Germany. Their economic focus is also pretty much the same. In my opinion the big differences between both countries are their neighborhood and their handling of monopolies.

wall street guys : uwu

Great point from Freidman (4:44) that slow growth in the US and disproportionate distribution of that growth means that most Americans are really not doing well.

I'd rather impress and impact people by creating value to their lives which is the only true and honest path to wealth and abundance.

I thought Japanification was that thing they did in '80s science fiction movies.

This reliant on interest rates as a way to manage the economy is really something we need to get rid of.

I think we should stop worrying about growth, and the economy, and focus on happiness measures, and quality of life.

“Oh god, we’re gonna have to get creative!”

So all these studies in Economics and the only tool Federal banks have is rising and lowering interest rates?

There is another issue effecting the Japanese economy that is often ignored when talking about post bubble Japan. Overwork. It is throughly unsurprising that there is low demand when most workers are chronically overworked and have no time to spend money. I work in Japan and have worked with people who have not taken a day off (this includes Weekends and all but the most significant national holidays) in several years. From what I have seen this issue is under represented in western economic discussions about Japan. It is difficult to quantify until you spend more than a couple of weeks here. Most companies either fudge or downright lie about this kind of thing. The pressure to not take leave of any sort is overwhelming. One person I know missed the birth of their first child to stay at work. My assessment is that this is warping the economy at large. But I am no economist. I would love to see some work done from an outsiders prospective. This kind of thing is rarely questioned here. It’s ‘shoganai’. It may allow the west to learn another useful lesson from Japan. We work to live, not live to work.

Hey, the 80's wants it's Japanification back!

it’s so interesting they were worried about the possible effects of the next recession, and this video was posted just months before the pandemic

The random gong transitions are killing me haha. Well done FT, and a good summary of Japanification.

TLDR - once the boom is over, you can only ease so much before the music stops.

I love watching economists try to figure out what happens to the US as inequality increases, as if some central bank policy can prevent the millions of people struggling to feed their families from eating the rich. There is no policy, it's just game over.

The lost decade in Japan has many important lessons, but I think these economists are overlooking a number of factors that will prevent the same situation from happening elsewhere.

Basically its not actually an issue in japan but because of how the US economy is structured theyre worried it’ll crash the US economy

Japan does have the problem of stagnating salaries. Heck, their gdp hasn’t grown for 20 years! Lots of Japanese are overworked for meager salaries while their entreprise leaders take the big slice. Japanification is bad; really bad.

I can't believe they cut Friedman out like that. Financial times is a Straight out savage

Maybe instead of being obsessed to the situation in Japan, look at other places like South Korea and Singapore as their demographic problem is far more severe and still manage to squeeze growth. Even Japan is fine as they actually are close to their peak. They peaked too much in the mid 90s till their big fall, but after that they have been recovering just fine. They still manage to expand social safety net. Even SK which inequality is a huge problem, lately is addressing their social net to solve problems like high suicide rate, low birthrate, and stuff. Places like USA and even UK seems to try to solve the problem backwards. USA specially when they try to prop up the economy, it is only about helping Wall Street, crooked churches, and big corporations. It is never about helping the working and middle class. The eternal growth isn't sustainable if we wanna face environmental problems that could cause a collapse. These economists are trying to balance irreconcilable concepts and just winging it.

Very weird three decades of economic slowdown japan still a super rich country i wish mexico can be like that

Good report,thank you !

Maybe if the US grew a pair and introduced sustainable taxation, free education and healthcare a gentle growth situation wouldn't look so terrifying to them.

If Japanification is a preview movie then we have nothing to worry about really, that would be a good thing. Because every preview movie that is not Japanification end up with us destroying ourselves. That's perfect specifically in preparation for AI ruling the world.

It’s not just aging. The young people of today saw their parents sacrifice their lives to work. Many are avoiding that path. I see similarities with our young people who are rejecting greed in larger numbers. A decrease in population may be economically painful but not necessarily a bad thing for the planet.

Spent the first 90% explaining what japanification is and last 2% rebutting it by saying, actually problem is US is more unequal. wtf.

The timing of this video is crazy looking at it over a year later. Sheesh

funny watching this at the end of 2021, inflation everywhere. Guess economists were 'wrong' as usual.

For all the hand-wringing about Japan I haven't seen a lot of suffering related to their condition. Perhaps it's time to reassess the importance of growth. I think the economist's admission that inequality makes it a problem is telling.

3:30 in many ways Japan is a better place to live... (Roll Pikachu boat)

So this where former head of federal banks of all the countries go to.

So they are saying Japan has less inequality?

This is a good thing. It’s time to turn the machine off. We can all relax

It is very very very embarrassing that mainstream economists seldom declare possibility of a recession although it is clear in sight, where as a doctor would warn you worsening of your health, a software engineer would recommend a system upgrade, a police officer would warn you of driving hazards, etc.

I would rather America became Japanificated than Japan became Americanized.

America is too obsessed with making a few people extremely rich. Wealth inequality is a more important signifier of a failing economy than GDP growth.

Japanification could been rephrased as Germanification. It did not work exact since Japan is an attempted power and security check to the fast developing continent with heavier a fastest growing population and cheap to invest for the last three decades. That has changed and we are witnessing it. The cheap to invest for profit has created limitless trouble for the west

Absolutely agree with Mr Friedman's words.

I always said if you want to know the financial future of the US you always look towards Japan.

Contradiction around 2min: "when you have more demand, you have inflation". But everybody in school is told the opposite: "the high demand generates inflation". Now I think that inflation had nothing to do with anything but GREED from the market. Of they are selling much, they raise the prices as people is buying. If they're selling low, they also raise the prices, as they want to recovery the loses by charging extra from the lower number of buyers. If margin of profit be not controlled, we will always get ripped off. I know, I know, the every country who tried to control prices were bad, but they were also communists, so... How about to give a try to it in a serious, non-dictatorial country?! Forget. The cattle is just fine with the market (and government) hands inside their assess.

So true, the federal reserve will have a very limited room to manoeuvre in case of anther recession hit if the interest rate stays low in today good economy.

I think the clear way to solve the problem talked about is the following policies (not monetary policy, will explain at the end): 1) Ban exclusive zoning laws that prevent the construction of safe and well-built housing anywhere (such as building housing on top of commercial property (the mixed use utopia that exists in Holland and basically every successful city not in North America, and was previously said to be “the way you build things”)). 2) Allow housing properties to be subdivided into units however the buyers feel is necessary with the proper right of way guarantees for buyers to go into and out of their units (this allows the prevention of rentiership by having individuals purchase an apartment within a building, instead of renting it). 3) Impose a national progressive property tax (with no exemptions except for the properties owned directly by state governments and local governments) of {value of all property owned by entity}*atan(ln(value of property)/1000)/pi. This tax effectively means that there is now an incentive for landlords to directly sell units to customers, since an individual with less total property will pay less as a percentage of the value of the property (presumably the former renter will be given a mortgage such that the monthly interest equals the normal rent). This then means that as an area becomes an even better place to live, the new gains in society will be shared equitably between more people. 4) Impose a 5% tax on all incomes and profits made by any person or corporation in the United States with no exemptions where 1% of that tax goes to the IRS to enforce it and the rest goes into building new hospitals and hiring only newly graduated doctors with competitive benefits (and purchasing medical supplies from whomever provides it the cheapest, including in allowing the new department to hire the CIA to covertly purchase medications from other countries) who will then treat everyone who comes in triaging to save as many people as possible. This policy means that we can, as time goes on, invest in building up our capacity to provide for people’s needs instead of the current system which simply invests in expanding the profits of the investors in hospitals, healthcare insurance and pharmaceutical companies, which has helped no one and made the U.S. pay more for healthcare than anyone else while getting worse results.

II live in Japan. The equality sounds good in the movie, but that is also one of the problems. Because our income does not reflect our skills or capability directly, due to the life-long employment system. This equality is caused by the low-salary easiness, which companies can keep their workforce even though they restrain the salary price. It really suffocates us……

So why is this a problem??

Sounds like "we're worried about losing financial policy tools" is really just code for "we're worried about not pleasing the people at the top".

'“Japanification” in the economic sense refers to the stagnation that Japan's economy has faced over the past three decades, and is typically applied in reference to the concern among economists that other developed countries will follow along the same path.' Feb 2021 Source: Seeking Alpha

2:33 Yellen using an iWatch?? 😳😳😳 It kinda vibe doe

"When the next recession hits" - Yeah, just wait a few days...

The main difference between Japan, and most of the west, is immigration. We seem to want growth at any cost, while they're content not to do that.

30 years ago, "Japanification" was everyone's goal. Now, it is something to be feared.

you didn't have time, I imagine, to explore how radically different immigration policies and realities affect demographics

The reserve bank of India guy has a very soothing voice

Useful video =)

A few points that needs to be noted.... Japan's GDP has been slowly increasing, but population and workforce decreasing... thus greater productivity per capita. Most challenges for those entering the workforce and those "stuck in the middle" are stagnant wages and lack of opportunities for promotion (lots of seniors still working). So shortage of labour will eventually mean higher wages and once the older population eventually make way for the younger population, more money for those workers as well. Higher wages will eventually lead back to a higher birth rate. Lastly... while Japan has a huge debt, it's all insular. 70% of the national debt is owned by the Bank of Japan and with the majority of the remaining amount owned by Japanese banks and Japanese investors. Any increase in rate just means the money still stays within Japan.

Lol. They should not worry of japanification or japan. They should be worried for themselves for their actions and policies what causes recession. Even though japan have less growth it didn't have a home grown problem since 1990 that leads to a great recession unlike the US from 2008.

Continuous growth is a symptom of cancer, which also kills it's host. My prediction for the economic worry about aging populations, (which has been a complaint for decades) it will be an excuse for "austerity" measures in aged care. Pensions & support services will be cut & vulnerable people will be sacrificed for economic gain.

When the Japonization beam hits the economy!

I love Japan.It is a place of dreams and I am very happy to know that there are so much old people there.

I like the way this Rajan guy talks.

so their concerns is that they will have to learn how mess with the economy in some other way than by using central banks

Now everyone is losing their minds about HYPERinflation, not deflation in the US... times change real fast.

To be honest, japan is nice to visit but not so great for working. It has way longer working hours and less pay compared to the US. I prefer living in California and visiting Japan for vacation.

Nobody wants to blame Keynes general economic theory or Friedman's monetarism😅😅

"HOW can we create LOTS more debt.. when it's mathematically impossible to pay back the current amount?"

these economists pride themselves they can improve a country by its policies but no. Truth is the best they can do is not screw up, it is the people who drives economic growth. Japan simply reached its peak performance rapidly and corrected as fast, Japan performance is impressive but to realize GDP growth they got to accept change or better immigration

Just came from "Wall Street journal" from future and found this "past" post 😅 from @Financial Times

Read Peter Zeihan's book.

Eventual labour shortage in Japan will mean rising wages. The eventual passing of the elderly also means huge transfer of wealth to the younger generations. Sounds like net positives.

Slow Econonic growth or sustainable economic growth? Low interest rates that don't stimulate demand is understandable but low inflation helps to keep the value of consumers' money. If this improves effective demand, how is there an issue? Why aren't they spending should be the question instead of just generalising the whole economy based off of what they see.

I’d like to keep growing. One mansion is not enough. One car is not enough. 1 million is not enough. 1 billion is not enough. 1 trillion is not enough.

Central banking is a con. Stop putting the country in debt and have a non fiat currency and problems disappear. Financialisation leads to a non productive economy not elderly people

wouldn't the solution to widening inequality in the US be strengthening unions, worker ownership, financial regulation, etc? why would more growth be a solution if the economy has grown for decades and wages have stagnated? i think many economists have mush for brains.

Does this still apply today, a year into the pandemic?

Why economics are japanifying? Me:Must have something to do with anime.

Oh hey, a cameo by Raghuram Rajan. The Indian weeb and finance student in me is so excited.

Imagine exploiting the poor so much that you only worry about having nothing left to steal from them ...

If the slow growth continues and the population falls, doesn't that mean that per capita GDP is increasing. Why are we looking at absolute figures of GDP when population is falling?

OH NOOOO!!!! PEOPLE AREN'T MINDLESSLY OVERCONSUMING BECAUSE THEY ACTUALLY PUT VALUE AND THOUGHT INTO THEIR LIVES. THIS IS A DISASTER!!!!😱😱😱

Declining population or stagnant population = deflation

Real Estate prices are are unreasonably high, anyone agree?

Why would it be if a lower percentage of your population is working that would translate to lower demand for goods and services? People have savings and income from government transfer payments.

rajan got it right

Captain obvious and Ms I spent years in University to report what we already know

Finally someone else than progressives doing social studies.

This video was posted on Feb-03-2020, when the ES was traded at 3,250...and two months after a 5 trillion FED balance sheet it is trading at 2,480....and lower. I guess this video didn’t age well...pretty fast.

Frankly go to Taiwan or Singapore people in their 60s and 70s continue to work. And really if you don't work, what are you doing?

3:06 Anytime you hear that "there are no more tools left" remember that there will always be one ultimate tool that works all the time: taxing the 1%, and redistributing the money to reignite demand.

The rich like wild and infinite growth because it makes them richer. The booms and busts hurt the rest of us the most. Don't give them growth. Put some reigns on the bulls; work like you're already retired! If they can't play games with interest rates, we can take the time we need to invest in the future of our great grand children.

Or you could just used fiscal policy, you know? Like the New Deal, increase aggregate demand through deficit spending to build public works etc...

If everybody consumed and wasted as much as people in 'advanced' consumer economies we would need about 3 planets + we have less than 10 years to make annual 8% reduction in greenhouse gas emissions if we have any chance of staying below 1.5C. Infinite growth on a finite world is a path to ruin. We need to find ways to embrace a slow down of growth in the economy, ways that also help us lead longer, healthier & happier lives. Sounds like equality is key to this. Japan isn't perfect but it might have some of the answers...