Japan, through all these years, has held the distinction of
being the most technologically advanced country in Asia. The
worlds second-largest economy, ironically, is now going
through the worst economic disaster it could ever dream about.
(Asian Economic Crisis) If it is said that the crisis-hit countries
in Asia such as Thailand, Malaysia and South Korea are experiencing
a potentially lethal but short-lived sickness, Japan on the other
hand is suffering from a slow wasting disease.
Numerous factors make or break an economy. For Japan, one of the
primary reasons for its economic downfall is consumer thriftiness,
an attitude normally seen as a virtue. What is the problem with it?
Japanese consumers simply dont buy enough that would
encourage businesses to invest, even at outstanding near-zero
interest rates. In economic terms this would be called a "liquidity
trap," in which the accumulation of cash is the private
sectors priority. Since this is not happening, the Japanese
economy falls further below its potential.
Japan is said to be stuck in a hermetically sealed society. Even
with the clamoring for reform, the political elites deny there is
anything wrong and run the country as a pension state focused on an
As stated, this internal problem has existed for a long time
now. Just now is Tokyo passing a new legislation to create a new
unit characteristic of a Resolution Trust Corporation. In the labor
force among men, the jobless rate hit 4.3 % last May (1999). For
men 15 to 24 years old, the jobless rate rose to 8.4 %.
With the causes of recession in Japan defined, we must assume
that foreign investment has started pouring in to revitalize
growth. In this strictly orthodox society however, little of these
foreign exchanges are allowed. Foreign help for ailing companies
must be given, but it is not allowed. Outsider CEOs must be
assigned to help companies from further downfall, but such action
also prohibited. Why is Japan allowing itself to remain
[ Page 1 ] [ Page 2 ]