Japan, the System That Soured : The Rise and Fall of the Japanese Economic Miracle
Author: Richard Katz
List Price: $29.95
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ISBN: 0765603101
Publisher: M.E.Sharpe (July, 1998)
Sales Rank: 57,644
Average Customer Rating: 4.2 out of 5
Customer Reviews
Rating: 4 out of 5
This book integrates colloquially a lot of solid research.
This book is essential for those who want to understand Japan's peculiar economy at one -- or perhaps a few -- sittings. It is not a "Japan bashing" book, but rather explains what Japan did right some decades ago, notes some failures, and -- most importantly -- spells out how Japan's 1970s-era switch to increasingly costly measures to shield its domestic economic losers set both Japan and the world up for big troubles down the line.The introductory chapter sketches the terrain and the next seven chapters, starting with Japan's "Deformed Dual Economy," are easy to read, albeit redundantly written (redundancy is actually a plus for non-economists who need a lot of restatement to take points on board). Chapter 13 "Beyond Revisionism and Traditionalism" is worth the price of admission (to the paperback), giving a neat summary of two decades of American writing on Japan's economic miracle, the Japan justifiers and the "Japan bashing" revisionists. Anyone who missed this vast literature won't feel so guilty after reading Katz' marvelous summary/analysis.
The last chapter ("Interregnum: Whither Japan") is a brave attempt, but .... Leaving aside the merits of Katz' argument that further electoral reform is absolutely essential to shake up Japan's system and open up its economy, the section on electoral reform (pp. 321-331) is extremely confusing for anyone not already steeped in recent Japanese domestic politics. The section skips back and forth in time, assumes too much knowledge, and rehashes Western (too idealistic?) faith in the eventual coming of a true and pure opposition party.
Some aspects of Japan this reviewer would have liked to see more of are: why the tremendous resistance to inward foreign direct investment, and both more exceptions that disprove the rule and more examples of how foreigners came and bent their spears; some sense of whether there are signficant schools of thought within Japan that mirror Katz' and the Western "neo-centrist" view; and some attention to the peculiar postal savings system and its distorting impact on the Japanese budget and economic choices. These are quibbles.
Anyone thinking of buying, or anyone who has read Katz' book, needs absolutely to read a "companion" piece, a fine article about the troubles caused by Japan's (until very recently totally unreformed) banking system. See Peter Hartcher's "Can Japan Come Back" in "National Interest" Winter 1998/99 No. 54. Hartcher hits some of the same themes as Katz but goes into fascinating depth on the history of Japan's banking law/financial institutions, tracing back to WWII and on into the period when the system helped usefully mobilize domestic savings. Like Katz, Hartcher points out when Japan should have realized that "enough was enough" and spells out the terrible consequences both for Japan and the world. Again, no "Japan bashing," just telling it like it is.
Now, it would be great to see a "colloquial" book like this one done on China, not the "system that soured," but "the enigma that seems to suceed."
Rating: 1 out of 5
Would be relatively worthless even if it was timely
It is suprisingly how people could review such a weak book
on Japan positively, considering its author is a run of the mill journalist attempting to morph into an economist and write about Japan-- and doesnt live in Japan or speak Japanese, beside the fact that he has no experience in finance. Though writing on the topic may not demand in-country experience, experience working in finance or language ability- it certainly would help. It is a regurgitation of old comments and arguments published years after the fact- literally no original thought. Old wine in new bottle. The follow up is then a book about how Japan will return. Surprise. Japan: The Coming Collapse by Brian Reading was timely and though journalistic more substantive. Works by Chalmers Johnson (though dated) and Tag Murphy (former investment banker in Tokyo) are a lot more useful. See Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance by Akio Mikuni, R. Taggert Murphy, R. Taggart Murphy, Michael H. Armacost (the Katz book is just hopping to a certain extent on this more reputable bandwagon). Another important book is Arthritic Japan: The Slow Pace of Economic Reform by Edward J. Lincoln. Ed Lincoln is a real economist that speaks Japanese and has been dedicated to following Japan for a while. His previous work, Japan's Unequal Trade, was an important work. Unfortunately, due to the decreased interest in Japan over the past decade, the number of quality books (especially on finance) has declined and, unfortunately, there are a good number of books written in Japanese that would be useful but are not translated into English.
Rating: 5 out of 5
Political economy of two Japans
Over more than a decade, Japan has baffled not only its citizens but also foreigners with its inability to sort the mess out. They call it the Heisei depression. What¡¯s the problem of Japan? It¡¯s been a daunting question. There have been numerous explanations. Those could be grouped into three camps in my view:
1.the problem is the financial macroeconomics not the fundamental disease of Japanese economy. Once the bad loans are cleared up, Japanese economy would be on the right track as before. (Posen at IIE: Cargill and his colleagues)
2.Japan is on the bad point at its long-term cycle. Each economy has its own long-term cycle of investment, determined by the level of sunk capital. In this view, ascendance of Japan and Germany over the States in ¡®70s and 80s could be attributed to this dynamic of cycle. In other words, the US was in a bad point at the time. Now Japan is on its own bad point. (Robert Brenner)
3.Depression or liquidity trap must be serious problems. But those are not the cause but the symptom of deep-seated malady. So-called Japanese miracle was propelled socioeconomic regime of ¡¯55 system, in Pempel¡¯s words. It was the key to Japan¡¯s epic story. But now it¡¯s the curse to Japanese economy. The vested interests of the regime¡¯s alliance, or iron triangle, has hamstrung the overall competitiveness of economy. (Pempel, Tilton, Porter, Bai Gao, Brookings Institute, OECD, and The Economist)
Richard Katz is on the side of the third camp. His argument is like this: Infamous industrial policy fostered various industries with policy pair of promotion/protection. But not all sectors succeeded in world market. Those sectors should be liquidated to free resources up to competitive sectors in the view of rational policy makers. But such massive exit or restructuring is not of political rationale. The first oil shock exacerbated things around exit options. Such an attempt would be political suicide. So Japanese government prop them up. But uncompetitive sectors have taxed out competitive sectors and consumers with artificially high prices far above international market prices. It has resulted in weakening competitiveness and aggregate demand in economy-wide. To make up for weak domestic demand, export-drive set in motion. Up to mid-1980s, competitive Japan like electronics, automobile industry could feed up uncompetitive Japan like petrochemicals, steel, service sector at the expense of overseas competitors¡¯ market share. But overdependence on overseas market invited super-strong yen in 1985. So export-drive hurts its very condition. There was 2 consequences: Competitive sectors responded with FDI, so-called the problem of ¡®hollowing out¡¯;s Now overseas market couldn¡¯t make up for the feeble domestic demand. So there should be alternative demand in domestic side. Government boosted the demand with pouring down money. Buddle swelled. At last bubble busted. The problem of Japan is not financial mess but the political economy of two Japans. It has weakened the competitiveness and aggregate domestic demand. Deregulation is the answer. But it¡¯s near impossible for political reasons. So the problem lies not in economic side but in political side.
Katz follows the mainstream line of Japanese studies. So His account of Japanese political economy is not that unheard-of. but he articulates the points with simple and clear economic modeling. The picture he draws up is amazingly lucid and plain. His work could be counted as the constellation of a decade¡¯s debates. Similar Products
Arthritic Japan: The Slow Pace of Economic Reform
Japanese Phoenix: The Long Road to Economic Revival
Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance
Financial Policy and Central Banking in Japan
Japan's Economic Dilemma : The Institutional Origins of Prosperity and Stagnation
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