How Japan escaped neoliberalism and lived happily ever after

10 comments

1. >Japan’s main interest rate was minus 0.1 per cent before COVID-19 came along, stayed there throughout the pandemic and is still minus 0.1 per cent. And no talk of a rate hike now.
   >
   >Inflation has increased from minus 1 per cent (deflation) in 2021 to 4 per cent and although the economy shrank in the September quarter this year, growth has averaged 0.5 per cent per quarter since the start of last year – not a boom, that’s true, but not a recession either.
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   >Unemployment is 2.5 per cent and has been under 3 per cent for five years, politics is stable and polite and there’s no shortage of infrastructure or housing – house prices have been fairly stable for 30 years.
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   >But Japanese government debt is 265 per cent of GDP, second highest in the world after Venezuela, which is definitely not the company you want to be in.
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   >In fact, the Japanese government has owed more than 200 per cent of GDP for more a decade but has been happily running massive budget deficits the whole time, no pressure to balance the books, either politically or economically.
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   >Why? Because the interest rate on that debt has fluctuated around zero, plus or minus 0.1 per cent – for the whole time, and has lately “soared” to 0.7 per cent, so repayments are negligible.
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   >And that’s because the Bank of Japan buys most of it, using freshly created money, to keep the interest rate low.

2. >But the truth is Japan’s doing fine, and is not crazy at all. Everyone’s happy,

   Oof. Not sure I care to read any of this guy’s opinions if this is his starting point.

3. What does this mean for normal people?

4. this is just false

5. Headline is stupid, but the article has a point, being:

   Fiscal conservertism is a tool that those in power use to keep the downtrodden in their place. The deficit is just a strawman, running a deficit to support social programmes is a much better than touting financial responsibility and stand by as the wealth gap grows. Looking at you, USA.

   Still, the phrasing is bad.

6. In case it is not clear to everyone, Japan is still very much under the influence of neoliberalism.

7. Didn’t think Alan Kohler is that dumb given he shows his face on our national broadcaster (ABC) but seems like he is. The Japanese government cannot throw fiscal discipline into the bin because that will crater the Yen even further. Look at what happened in the UK last year when the Tories tried to push for billions in unfunded tax cuts.

8. Wait, isn’t Japan ruled by the LDP, in which the L stands for liberal?

9. There is a lot of people spinning Japan as a sort of heaven on earth – not sure what they’re smoking.

10. Japan is living happily ever after?