May 25, 2002


Japan starts to feel growing pains (David Pilling, May 23 2002, Financial Times)
If Japan cannot consolidate itself out of debt problems, it must grow its way out. But that too is difficult. Not only is the economy facing increasing pressure from China, which is sucking jobs and investment away daily; it is also burdened with a rigid labour market and a highly regulated economy.

Worse, its labour force is shrinking by 0.6 per cent a year as the population enters a period of rapid ageing, which will depress consumption and tighten the screw on government finances. "It's hard to escape the conclusion that this economy is heading for a brick wall," says a senior official with one ratings agency.

"There are two sets of structural problems," adds Mr Jerram. "There are those, such as demographics, that they can't solve through policy. And there are those that they can - but won't."

If that is right, Japan is doomed to repeat the cycle of the 1990s when its economy suffered a series of false dawns. The grim reality is that the economy today is smaller in nominal terms than it was in 1995.

In many ways, the current hysteria over our confrontation with Islam resembles the Japanophobia of the 1980s. Then, as now, the emotionally labile, those who live in the moment, took a current situation (things like the Japanese buying Radio City Music Hall) and projected it forward in a straight line, never pausing to consider the catastrophic internal weaknesses of the culture they perceived as a threat. Today, without our having done a thing, Japan is a nation on the verge of collapse. The problems that the rest of the West shares with Japan are a far greater threat than Islamic extremism. Posted by Orrin Judd at May 25, 2002 7:41 PM
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