How Japan dug itself into such a hole is a story of reckless spending. Japan is bristling with bridges, roads and dams, the legacy of vast government spending to lift the economy from a severe downturn following the bursting of its stock and asset price bubble in 1990. But even while amassing the developed world’s largest debt over nearly two decades, Japan has failed to spark a convincing recovery.
The free market chattering class is so smug about the economic situation in Japan, but Japan, Inc. is stronger than ever and produces everything from the most advanced “wafer steppers” to industrial sewing machines. Long ago, the Japanese went from copycats to being the world’s greatest innovators. I know that this shatters a long-held American myth, but it is true.
The problems with Japan are that 1. the government will not allow the yen to appreciate to the level consistent with the wealth that the nation has created through brilliance and hard work and 2. the Japanese people prefer to work, save and invest rather than borrow and spend.