James Fallows (correctly) strikes back here.

I'm on a profession-oriented mailing list with a lot of Western expats who live in Japan full time, and they thought the Times article was off base, too.

I wouldn't write Japan off any time soon. They have shown an astounding ability to reinvent themselves, whether it was becoming the first Asian country to industrialize in the late nineteenth and early twentieth centuries or becoming a major economic player, hosting the Olympics, and launching the first Shinkansen a mere 19 years after having all their major cities bombed flat.

Just about every journalist who covers Japan for a non-Japanese media outlet is totally clueless. NYT's Martin Fackler, CNN's Kyung Lah and WIRED's Lisa Katayama are particularly bad, in the sense that they tend to take outlier stories and spin them into an overblown "look at how crazy and/or dead Japan is!" narrative.

The only one who I would call "really good," or even just "good," is NYT's Hiroko Tabuchi, who churns out interesting non-sensationalist articles regularly and captures all the amazing things that Japanese companies and individuals are doing on a daily basis.

Here are YouTube video clips that show a pretty amazing Japanese robotic snake project:

http://www.youtube.com/watch?v=k8j0jNxMeSQ

http://www.youtube.com/watch?v=piQmF31eghk

I don't really agree with the article but then the rebuttal isn't convincing to any extent (the part where they talk about GDP seems designed to mislead).

However, I don't think Japan is getting out of the current predicaments anytime soon. It would take leadership and a willingness to accept change and pain that accompanies it, and I don't really see all of them, especially political leadership.

I think this time is different too.

LDP is out. The bureaucrats are just steady as she goes with a musical chairs cabinet. People have no influence on national policy in the practical sense. Population is falling and no mean of increase such as immigration policy, or NO is the policy. There is really no real direction at the moment.

80 yen to a dollar will stick around a lot longer than last time.

As I get paid in yen I have no problems with that.

I went to Costco yesterday - things seemed ridiculously cheap.

Have a churro on those of us who get paid in dollars!

Hiroko Tabuchi is just as bad as Fackler but in a different way. Now, to the point of the NYT article, it was indeed rather inanely framed and supported, but I am of two minds when it comes to the conclusions.

Having stepped back a bit from the weeds, I do see that Japan is in trouble, maybe even big trouble. The unwillingness of most people in many areas of endeavor, including government, large corporations, and small, entrepreneurial firms, to actually step up and take a risk is very damaging in the long run. Expecting others to step up and move things forward because of risk aversion is leading Japan towards a sclerosis that is self-reinforcing. Maybe Japan needs to be bombed by North Korea, that should get their juices flowing.

I think locals underestimate the huge societal cost imposed on Japan by its banking system.

For decades now, every resident of Japan has been royally screwed by these banks, who charge not twice as much as in every other country, but at least ten times as much. And, in a culture where service is highly valued, in return for those ridiculous fees, the banks provide absolutely abysmal service. It's a huge drain on the entire economy, one that could easily be set right.

Yet Japanese put up with it even though it would be readily fixable. Why? Maybe because the banks are good at paying off the government. Simple reforms here would go a long way towards changing the country as a whole.

x 2

The self-reinforcing loop here has two substantive components. (1) The cost of failure in Japan is pretty high. If your start-up tanks, you are not likely to get funding to try another one, or for that matter to even get a decent salaried job anywhere. (2) If you have a salaried job in a government office or sizable company, it's nearly impossible to lose it unless you quit -- so people don't quit unless they are extremely confident that they can do better elsewhere. So it's not really a cultural aversion to risk taking. Rather, the whole system offers overwhelming incentives for all but the most senior people to shut up and stay in line.

But I would disagree with the idea that large corporations don't want to take risks -- they are pretty much the only serious risk takers in Japan, and they do it on a huge scale, often more readily than large corporations in other developed countries. Think electronics companies committing to huge assembly lines during the height of the financial crisis, Nomura buying half of Lehman, etc. The real problem is that there is not enough game to be had at more granular tiers of the economy, unless you're in the con artist business.

Fixed
 

And, everyday at 5 pm on the dot:

;)

I disagree. Japanese multinationals, with some notable exceptions (e.g. Toshiba) tend to be major-league chicken$h!t companies. In the field I know best, which is electronics, the competition isn't with "large corporations in other developed countries" but with their peers in Korea, Taiwan, and China, and in that regard, these other countries are eating Japan's lunch because they dither, hem and haw, and suck wind through their teeth while the competition keeps cooking along. There are now countless examples of consumer electronics, including TVs and mobile phones, where the Japanese managed to squander a spectacular lead into near irrelevance.

Sort of like the US did to Japan in the 50s and 60s? Maybe that's just what happens to all economies as they mature.

I am helping a Japanese friend who has started his own small company. He's a risk taker and if he fails at this one, he'll almost certainly try to start something else. It is true he'd never be hired by a keiretsu but I can't imagine that he wants to be.

All of this doesn't take away from the problems Japan is facing. It is truly amazing that they aren't trying something now to deal with the problem of their aging population, but apparently Japanese nationalism (kinder term) or racism (less kind term) stands in the way of that.