Monday 11 April 2016

Should we aspire to a Japanese economy?

I apologise for the fortnight's silence, but I have been in Japan. Eating as much rice and sushi as I could.

I don't really have an excuse but it was a fabulous trip and I learned a great deal, and perhaps the most important lesson I learned is about Japanese growth. Put simply, there isn't any but it doesn't appear to be a social disaster.

I have been wondering, and I'm not the only one, whether Japan is not so much struggling economically - though it's economy has oscillated around the same size since their disastrous property bubble burst in the 1990s - but is actually some way ahead, pioneering a new kind of no-growth economy.

Japan is a paradoxical place, as I wrote in my book Authenticity - it is particularly paradoxical when it comes to embracing the real. So on the other side of the equation, you would have to set out the fact that the current lack of growth worries the Japanese.

It may or may not have something to do with the serious problems of rural depopulation - to find work, you kind of have to go to the cities. It is clear once you are there that their IT infrastructure is not really compatible with ours - it is hard to get money out or make phone calls - and this may be to do with under-investment. The economy carries huge debts.

They also work too hard. There was a fuss while I was there about a government department that keeps secret the companies where employees have died from overwork. This isn't a problem we have really faced here.

But unemployment is low, there is very little poverty to be seen - though there are homelessness problems, as you can see in some of the Tokyo parks. There isn't the appalling divisions of wealth that so scar London these days. They genuinely are all in it together.

"If the business of a state is to project economic vigour, then Japan is failing badly,” wrote David Pilling of the Financial Times. “But if it is to keep its citizens employed, safe, economically comfortable and living longer lives, it is not making such a terrible hash of things.”

Yet if Japan represents the future, then we will need some effective system - not to stimulate demand - but to provide the money in circulation that can keep the economy going at the steady rate. Japan has not succeeded in discovering this yet, though their 'helicopter money' version of QE clearly has useful elements about it.

Perhaps the key moment is not when Japan rejoins the nations who succeed in stimulating growth, but when they accept that they are the first post-growth economy and start seeking out ways of making it work for them. We will have to catch up.

And I suspect the biggest change between a growth and a post-growth economy is going to be something about scale. Big investments, big projects will not be able to attract the big investment they need. Progress is going to be in smaller steps, and perhaps therefore more human ones. And I for one am pretty pleased about that.

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