Spend or Save?
December 27, 2009 4:17 PM Subscribe
With hundreds of years of accumulated data on how economies 'work' available for analysis, how is it possible that it is still unclear (it seems) whether or not - and to what extent - a government should boost an economy that is in a slowdown?
There is an op/ed piece in my newspaper this morning (The Japan Times) which argues that Japan is in a downward spiral (partially) due to government policy: to reduce deficits, government reduces spending, which depresses the economy, reducing taxes, thus increasing deficits, etc. and etc. The writer makes the argument (compelling to a non-economist like myself) that massive spending on the part of government would get things moving again, and that the resulting massive deficits would soon be covered by increased tax revenue.
There are of course plenty of experts who argue the reverse, that such a level of deficit would be harmful (inflationary spiral, etc. etc.).
But surely by now - after hundreds of years of experience at trying different methods of 'moving' an economy this way or that - isn't there enough data to show which way to go? My question isn't to ask you to argue one side or the other, but to ask: why isn't the answer clear by now?
There is an op/ed piece in my newspaper this morning (The Japan Times) which argues that Japan is in a downward spiral (partially) due to government policy: to reduce deficits, government reduces spending, which depresses the economy, reducing taxes, thus increasing deficits, etc. and etc. The writer makes the argument (compelling to a non-economist like myself) that massive spending on the part of government would get things moving again, and that the resulting massive deficits would soon be covered by increased tax revenue.
There are of course plenty of experts who argue the reverse, that such a level of deficit would be harmful (inflationary spiral, etc. etc.).
But surely by now - after hundreds of years of experience at trying different methods of 'moving' an economy this way or that - isn't there enough data to show which way to go? My question isn't to ask you to argue one side or the other, but to ask: why isn't the answer clear by now?
I'd say:
1. Lack of controlled experiments to create cause-effect analysis
2. Data going into models is more subjective then it appears. Measuring inflation for example is quite tricky (or at least the govt statistics departments make it so).
posted by H. Roark at 4:28 PM on December 27, 2009
1. Lack of controlled experiments to create cause-effect analysis
2. Data going into models is more subjective then it appears. Measuring inflation for example is quite tricky (or at least the govt statistics departments make it so).
posted by H. Roark at 4:28 PM on December 27, 2009
I agree with Roark - it's the lack of controlled experiments. Each time the economy was 'shifted', it was under different circumstances. It was during WWII or just before the industrial revolution or when chinese manufacturing was beginning to produce cheap goods or something completely different. There are too many variables and not enough data.
posted by jacalata at 4:35 PM on December 27, 2009
posted by jacalata at 4:35 PM on December 27, 2009
why isn't the answer clear by now?
You talk about "hundreds of years of experience" and imply that this experience occurred in many countries. So just look at the USA since WWII - a much smaller sample area and a much smaller sample time than what your question implies. How has America changed since WWII?
People live much longer. The work force has gone from one where farming and similar rural activities were increasingly replaced by industrial ones and then increasingly replaces by a service economy. Americans citizens went from carrying almost no debt to an incredible amount of per capita consumer debt. The average size of living space per person has nearly tripled. Automobile usage has dramatically increased. Public transportation usage has not kept up with population growth. Per capita use of nearly all utilities has grown dramatically. The government spends billions of dollars on things that it didn't use to spend much on - the interstate highway system, farm subsidies, air travel-related infrastructure, not to mention entire government agencies, like NASA. A lessening of regulation over many areas of enterprise - from Wall Street to radio stations to interstate commerce - means that the government may not have be able to determine the cause and effect of stimulus like before.
I'm no economist. And I haven't lived in America that long. But even that very short list of variables and changes should help explain why what worked in the past (or didn't work in the past) may not apply at all to the conditions of the economy today. People are still arguing about the New Deal - did it stimulate the economy in a worthwhile way or did it create a legacy of gigantic government spending that is harmful? And that happened nearly three-quarters of a century ago! It's hard to "isolate" actions and judge their effectiveness. For every action touted as responsible for turning things around, there are people who claim it would have turned even without it, and maybe even faster.
posted by Dee Xtrovert at 4:36 PM on December 27, 2009
You talk about "hundreds of years of experience" and imply that this experience occurred in many countries. So just look at the USA since WWII - a much smaller sample area and a much smaller sample time than what your question implies. How has America changed since WWII?
People live much longer. The work force has gone from one where farming and similar rural activities were increasingly replaced by industrial ones and then increasingly replaces by a service economy. Americans citizens went from carrying almost no debt to an incredible amount of per capita consumer debt. The average size of living space per person has nearly tripled. Automobile usage has dramatically increased. Public transportation usage has not kept up with population growth. Per capita use of nearly all utilities has grown dramatically. The government spends billions of dollars on things that it didn't use to spend much on - the interstate highway system, farm subsidies, air travel-related infrastructure, not to mention entire government agencies, like NASA. A lessening of regulation over many areas of enterprise - from Wall Street to radio stations to interstate commerce - means that the government may not have be able to determine the cause and effect of stimulus like before.
I'm no economist. And I haven't lived in America that long. But even that very short list of variables and changes should help explain why what worked in the past (or didn't work in the past) may not apply at all to the conditions of the economy today. People are still arguing about the New Deal - did it stimulate the economy in a worthwhile way or did it create a legacy of gigantic government spending that is harmful? And that happened nearly three-quarters of a century ago! It's hard to "isolate" actions and judge their effectiveness. For every action touted as responsible for turning things around, there are people who claim it would have turned even without it, and maybe even faster.
posted by Dee Xtrovert at 4:36 PM on December 27, 2009
Because the underlying conditions have changed over those hundreds of years. Most recently, in 1971, the Bretton Woods system (by which countries agreed to peg their exchange rate within a percentage range of the price of gold) collapsed, moving Western economies entirely onto fiat currencies (IIUC). Various conditions like recessions and depressions occur and react differently to different actions by interested parties. Our effective history is only about 40 years, and even then there's disagreement over what's generally true about our current conditions--the recent meltdown of Wall St. has created a surge of interest in Keynesianism, as opposed to the Chicago School that's been dominant (and some blame) for the latter half of the 20th century.
posted by fatbird at 4:55 PM on December 27, 2009
posted by fatbird at 4:55 PM on December 27, 2009
Response by poster: a much smaller sample area and a much smaller sample time
Sure it's confusing - in that 'small' sample area. That's kind of my point. When we stand back to see the sweep of the data over centuries, surely the effect of the multitude of variables starts to level out, or at least become visible.
This point - stimulate or not - is so basic, so black and white, that one would have thought effects could be attributed to causes, at least in the 'overall' sweep of things across decades.
posted by woodblock100 at 4:58 PM on December 27, 2009
Sure it's confusing - in that 'small' sample area. That's kind of my point. When we stand back to see the sweep of the data over centuries, surely the effect of the multitude of variables starts to level out, or at least become visible.
This point - stimulate or not - is so basic, so black and white, that one would have thought effects could be attributed to causes, at least in the 'overall' sweep of things across decades.
posted by woodblock100 at 4:58 PM on December 27, 2009
There is a great difference between positive and normative economics. What we know and how we understand economies to work may or may not fit with how we want them to work or what ends they should serve. For example, the title of your question "spend or save?" invites the question of who should spend or who should save. Should the government spend, or the public, or businesses? And whose money should they spend? Deciding who depends on your values, and underlying most economic judgement are values which inform policy more that positive fact alone. Keynesianism (which that article sounds like) and monetarism are both modern economic policies that appealed to people according to their ideology and beliefs, and not necessarily because of their efficacy. One policy may perfectly achieve a certain set of ends, but if they're irrelevant to an economist, or even contrary to what they want, it won't be the most desirable to implement.
There can never be a clear answer until we are all agreed on the values by which we judge economic "goodness", and a surfeit of data won't change that. Economics is as value-laden as politics.
posted by Sova at 4:59 PM on December 27, 2009
There can never be a clear answer until we are all agreed on the values by which we judge economic "goodness", and a surfeit of data won't change that. Economics is as value-laden as politics.
posted by Sova at 4:59 PM on December 27, 2009
Various conditions like recessions and depressions occur and react differently to different actions by interested parties...
I left out the end of that sentence: by interested parties depending upon the underlying conditions. Treating the 1930s depression is quite different from treating the one we just escaped.
posted by fatbird at 4:59 PM on December 27, 2009
I left out the end of that sentence: by interested parties depending upon the underlying conditions. Treating the 1930s depression is quite different from treating the one we just escaped.
posted by fatbird at 4:59 PM on December 27, 2009
With hundreds of years of accumulated data
I guess it depends on what you mean by "data". As the Wikipedia entry for GNP says:
posted by mhum at 5:07 PM on December 27, 2009
I guess it depends on what you mean by "data". As the Wikipedia entry for GNP says:
Although some attempts were made to estimate national incomes as long ago as the 17th century, the systemmatic keeping of national accounts, of which these figures are a part, only began in the 1930s, [...] The impetus for that major statistical effort was the Great Depression and the rise of Keynsian economics, which prescribed a greater role for the government in managing an economy, and made it necessary for governments to obtain accurate informationHow reliable (and wide-ranging) is economic data before the 1930s? Beats me.
posted by mhum at 5:07 PM on December 27, 2009
This point - stimulate or not - is so basic, so black and white,
I don't agree. stimulation comes in so many forms (targeted tax relief, lower taxes overall, government spending (on what?) and in a variety of scopes (trillions down to 0) that it is not a yes or no question. And economies are complex systems, with a number of feedback loops. A minor change in one or two seemingly unrelated variables might combine to greatly change the outcome of an attempted stimulation.
posted by mrgoldenbrown at 5:08 PM on December 27, 2009
I don't agree. stimulation comes in so many forms (targeted tax relief, lower taxes overall, government spending (on what?) and in a variety of scopes (trillions down to 0) that it is not a yes or no question. And economies are complex systems, with a number of feedback loops. A minor change in one or two seemingly unrelated variables might combine to greatly change the outcome of an attempted stimulation.
posted by mrgoldenbrown at 5:08 PM on December 27, 2009
why isn't the answer clear by now?
Because every situation is unique; even the metrics for what constitutes success change over time.
At this time, Japan's situation is completely unique: the demographic shift has resulted in an "old age" society, where fewer and fewer people are working age and are therefore able to pay the bills.
On top of all that, you have an export-dependent economy struggling to compete in an recession, and this problem is compounded by the emergence of strong competitors such as China, Korea, Brazil.
Once again, a totally unique situation.
As well, the global fluidity of capital is also something completely unprecedented.
Money moves faster and more easily across borders than ever before.
All these scenarios are historically unique, and make it difficult to predict how an economy will react to stimulus or the lack of it.
Plus, there are higher expectations now about how a country will provide for its citizens than in the past. The metrics have changed.
In the Depression of the 30s, there was no expectation (at first) that government would provide much help to the jobless - it was a new concept.
Anyway, it seems as though the United States and Japan (and Britain) are in a real bind right now: don't stimulate the economy and risk economic collapse; continue to pump money into the economy and overleverage the ability of future generations to provide effect programs to maintain competitiveness and quality of life.
Personally, what I think Japan needs is more focus on teaching individual entrepreneurship, and more focus on creating a strong software and IT (as opposed to hardware) sector.
posted by KokuRyu at 5:31 PM on December 27, 2009
Because every situation is unique; even the metrics for what constitutes success change over time.
At this time, Japan's situation is completely unique: the demographic shift has resulted in an "old age" society, where fewer and fewer people are working age and are therefore able to pay the bills.
On top of all that, you have an export-dependent economy struggling to compete in an recession, and this problem is compounded by the emergence of strong competitors such as China, Korea, Brazil.
Once again, a totally unique situation.
As well, the global fluidity of capital is also something completely unprecedented.
Money moves faster and more easily across borders than ever before.
All these scenarios are historically unique, and make it difficult to predict how an economy will react to stimulus or the lack of it.
Plus, there are higher expectations now about how a country will provide for its citizens than in the past. The metrics have changed.
In the Depression of the 30s, there was no expectation (at first) that government would provide much help to the jobless - it was a new concept.
Anyway, it seems as though the United States and Japan (and Britain) are in a real bind right now: don't stimulate the economy and risk economic collapse; continue to pump money into the economy and overleverage the ability of future generations to provide effect programs to maintain competitiveness and quality of life.
Personally, what I think Japan needs is more focus on teaching individual entrepreneurship, and more focus on creating a strong software and IT (as opposed to hardware) sector.
posted by KokuRyu at 5:31 PM on December 27, 2009
I think you put too much faith in economics. The discipline of economics is not as developed as other fields of study. (It is only in the past 50 years that mathematical models were introduced into economics — before that, economic theories were articulated with words.)
And what of those mathematical models? Look what a university economist said recently:
Economics has a way to go before it can provide clear answers to your questions.
posted by exphysicist345 at 5:42 PM on December 27, 2009 [1 favorite]
And what of those mathematical models? Look what a university economist said recently:
- There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.
Economics has a way to go before it can provide clear answers to your questions.
posted by exphysicist345 at 5:42 PM on December 27, 2009 [1 favorite]
Q: why isn't the answer clear by now?
A: The entire economics discipline is in a parlous state.
I was listening to a podcast and there was some degree of uncertainty about what caused the (US) recession, whether high oil prices had anything to do with it.
Grrr. It should be clear to anyone in the US that it was real estate sector economic activity and equity extraction that led the economy out of recession in 2002-2003 and continued to temporarily juice the service economy & consumer spending in general 2004 through to mid-2008). American borrowed TRILLIONS of dollars 2003-2008! The real estate and finance sector skimmed 5-10% of this, and consumers were allowed to "extract" -- ie borrow against -- temporarily inflated home values to essentially live two or three paygrades above their actual incomes.
I think drilling-down to what wealth really is -- that which provides services that satisfy human needs and wants -- can clarify analysis.
An economy consists of the production, trade, and consumption of goods and services. Some goods last longer than others, and some services are more economically worthwhile than others.
Modern Japan is immensely wealthy by some measures. Excellent investment in public infrastructure, and very little wasted investment in military crapola that provides no ancillary benefits to the public weal. Reasonable availability of education, health, and other social services.
The immense savings rate Japan claims is really neither here nor there, since much of the savings is held in government bonds, which have to be paid by Japanese taxpayers, so that transaction will net out.
But Japan does hold $750B of US debt now. That is good for an income stream of say 5% over the long term, or $375 per year of "free stuff" that each Japanese can claim from American production over the infinite horizon. America really can't inflate away that savings since that will just make the yen stronger. . . a USD = Y50 world may be scary for Japanese exporters to the US but would make Japan a consumer paradise.
To drill down more, I think economics is confused since Economists are bought and paid for by the rich, and he who pays the piper calls the tune. Economists are paid to ignore what wealth really is, and the central imbalance that ownership of the land has in all modern economies.
Japan has a dynamic service economy, but in the end a lot of investment has historically been cycled into land values. This over-investment into land in the 80s basically terminally crippled much of the major actors in the economy, since land value is ephemeral and is completely untethered to the actual physical reality of wealth production. Japan's high land values are being held up largely by the 2-3% long-term (35-year) mortgage rates -- should these ever rise to 4-5% land values (and the homes values that incorporate the raw land value) will see immense declines.
To the extent that an economy is dominated by the super-wealthy elite living off of rentierism, IMO it will become decrepit and rather ineffective in providing a quality standard of living, since there is something to Marx's Labor Theory of Value. Eg. the production of luxury cars is something of a "Broken Window Fallacy" -- the hundreds if not thousands of hours of labor to produce a single deluxe automobile with an actual cost-of-goods (labor component) of say $100,000, while in a more healthy economy that $100,000 of labor could have produced 20 normal middle-class cars, which would have enriched the society a whole lot more than the one Ferrari the lucky rich guy gets to drive until he wraps it around a pole.
This brings up another element of wealth. Capital goods and durability. Capital goods can be referred to as "produced means of production" -- they are forms of wealth that assist in the further creation of wealth. Human capital is the skills we learn that enable us to create wealth. Societal capital is the network of trust and social efficiencies -- lack of graft or mandated inefficiencies, the extension of credit -- that facilitate wealth production.
Capital goods essentially save labor, and with Japan's demographic decline Japan is of course pursuing new forms of capital rather aggressively.
There is a flip-side to the economy, too -- wastage and wealth-destruction. The burglar who shatters a $500 window to steal a $40 iPod is doing immense economic harm on the micro scale, and the cost to society in defending against the wealth-destroyers impoverishes everyone.
This isn't very focused alas but to sum up, wealthy societies have collected stuff that reduces labor and provides for life's needs and wants. Unfortunately, we can't have half the population laying around, so rents and land values will always serve to suck the "excess' earnings capacity out of the lower and middle classes, where it collects in the bank balances of the super-wealthy who invest in everything that collects this income. Government provides a mechanism to redirect this rentierism back to the people through subsidized and/or non-profit provision of many social goods & services.
posted by tad at 5:43 PM on December 27, 2009 [3 favorites]
A: The entire economics discipline is in a parlous state.
I was listening to a podcast and there was some degree of uncertainty about what caused the (US) recession, whether high oil prices had anything to do with it.
Grrr. It should be clear to anyone in the US that it was real estate sector economic activity and equity extraction that led the economy out of recession in 2002-2003 and continued to temporarily juice the service economy & consumer spending in general 2004 through to mid-2008). American borrowed TRILLIONS of dollars 2003-2008! The real estate and finance sector skimmed 5-10% of this, and consumers were allowed to "extract" -- ie borrow against -- temporarily inflated home values to essentially live two or three paygrades above their actual incomes.
I think drilling-down to what wealth really is -- that which provides services that satisfy human needs and wants -- can clarify analysis.
An economy consists of the production, trade, and consumption of goods and services. Some goods last longer than others, and some services are more economically worthwhile than others.
Modern Japan is immensely wealthy by some measures. Excellent investment in public infrastructure, and very little wasted investment in military crapola that provides no ancillary benefits to the public weal. Reasonable availability of education, health, and other social services.
The immense savings rate Japan claims is really neither here nor there, since much of the savings is held in government bonds, which have to be paid by Japanese taxpayers, so that transaction will net out.
But Japan does hold $750B of US debt now. That is good for an income stream of say 5% over the long term, or $375 per year of "free stuff" that each Japanese can claim from American production over the infinite horizon. America really can't inflate away that savings since that will just make the yen stronger. . . a USD = Y50 world may be scary for Japanese exporters to the US but would make Japan a consumer paradise.
To drill down more, I think economics is confused since Economists are bought and paid for by the rich, and he who pays the piper calls the tune. Economists are paid to ignore what wealth really is, and the central imbalance that ownership of the land has in all modern economies.
Japan has a dynamic service economy, but in the end a lot of investment has historically been cycled into land values. This over-investment into land in the 80s basically terminally crippled much of the major actors in the economy, since land value is ephemeral and is completely untethered to the actual physical reality of wealth production. Japan's high land values are being held up largely by the 2-3% long-term (35-year) mortgage rates -- should these ever rise to 4-5% land values (and the homes values that incorporate the raw land value) will see immense declines.
To the extent that an economy is dominated by the super-wealthy elite living off of rentierism, IMO it will become decrepit and rather ineffective in providing a quality standard of living, since there is something to Marx's Labor Theory of Value. Eg. the production of luxury cars is something of a "Broken Window Fallacy" -- the hundreds if not thousands of hours of labor to produce a single deluxe automobile with an actual cost-of-goods (labor component) of say $100,000, while in a more healthy economy that $100,000 of labor could have produced 20 normal middle-class cars, which would have enriched the society a whole lot more than the one Ferrari the lucky rich guy gets to drive until he wraps it around a pole.
This brings up another element of wealth. Capital goods and durability. Capital goods can be referred to as "produced means of production" -- they are forms of wealth that assist in the further creation of wealth. Human capital is the skills we learn that enable us to create wealth. Societal capital is the network of trust and social efficiencies -- lack of graft or mandated inefficiencies, the extension of credit -- that facilitate wealth production.
Capital goods essentially save labor, and with Japan's demographic decline Japan is of course pursuing new forms of capital rather aggressively.
There is a flip-side to the economy, too -- wastage and wealth-destruction. The burglar who shatters a $500 window to steal a $40 iPod is doing immense economic harm on the micro scale, and the cost to society in defending against the wealth-destroyers impoverishes everyone.
This isn't very focused alas but to sum up, wealthy societies have collected stuff that reduces labor and provides for life's needs and wants. Unfortunately, we can't have half the population laying around, so rents and land values will always serve to suck the "excess' earnings capacity out of the lower and middle classes, where it collects in the bank balances of the super-wealthy who invest in everything that collects this income. Government provides a mechanism to redirect this rentierism back to the people through subsidized and/or non-profit provision of many social goods & services.
posted by tad at 5:43 PM on December 27, 2009 [3 favorites]
what I think Japan needs is more focus on teaching individual entrepreneurship, and more focus on creating a strong software and IT
yup! One thing that occurred to me recently is that the demographic decline will open up more jobs to women. Right now it's my understanding that women coming out of college face a basically 無理 situation wrt the 就職 thing. This is immense underutilization of available economic talent and so I think eventual depopulation won't be as bad as presently anticipated.
And you're right that Japan has to focus more on non-physical means of wealth-creation. This article on Japan's "Gross National Cool" is a simply awesome precis of something I vaguely understood back in the late 80s when I first really got into things Japonais.
posted by tad at 5:56 PM on December 27, 2009 [1 favorite]
yup! One thing that occurred to me recently is that the demographic decline will open up more jobs to women. Right now it's my understanding that women coming out of college face a basically 無理 situation wrt the 就職 thing. This is immense underutilization of available economic talent and so I think eventual depopulation won't be as bad as presently anticipated.
And you're right that Japan has to focus more on non-physical means of wealth-creation. This article on Japan's "Gross National Cool" is a simply awesome precis of something I vaguely understood back in the late 80s when I first really got into things Japonais.
posted by tad at 5:56 PM on December 27, 2009 [1 favorite]
I recently read this blog post by an economist-cum-historian about whether the Smoot-Hawley tariffs in the 1930s caused the Great Depression. That post, and other posts on the same blog, might reveal a little about how an economist sees the world, and how limited the available data really is.
(I found it via Greg Mankiw's blog, which is excellent.)
posted by miyabo at 6:57 PM on December 27, 2009
(I found it via Greg Mankiw's blog, which is excellent.)
posted by miyabo at 6:57 PM on December 27, 2009
You are making the assumption that the government has this in its power. I think there are far more fundamental forces at play personally. Any system is governed by the supply of "energy" (lets say untapped natural resources, fossil fuels, young people) and the presence of infrastructure or rules (in societies case things like laws, water, good soil, weather, education systems). Then there are the wildcards that may disrupt or even fundamentally alter a system either to make it more efficient at what it does (for this example inventions and evolutions) or to destabilize it (plagues, hurricanes) etc.
I took economics in school (I'm an ecologist) and was always struck by the many assumptions made, things like constant growth, that seemed fundamentally unsustainable.
posted by fshgrl at 6:59 PM on December 27, 2009 [1 favorite]
I took economics in school (I'm an ecologist) and was always struck by the many assumptions made, things like constant growth, that seemed fundamentally unsustainable.
posted by fshgrl at 6:59 PM on December 27, 2009 [1 favorite]
^ Mankiw is a cock and his centrality in economics this past decade is a prime symptom of its difficulties in being anything other than a self-reflexive circle-jerk if not outright snowjob.
He's the source of hamburger manufacturing being semi ha-ha being considered actual wealth production.
posted by tad at 7:37 PM on December 27, 2009
He's the source of hamburger manufacturing being semi ha-ha being considered actual wealth production.
posted by tad at 7:37 PM on December 27, 2009
I know this is straying from David's original AskMe question here, but this Economist article is pretty good:
A host of medium-sized Japanese electronics firms have developed dominant positions in many areas of technology. Can they keep them?
Japan does produce added-value goods and services, and the country has managed to decentralize production (and thus provide relatively sustainable and high-paying jobs in many rural areas), but for how long?
BTW, I think the Japan Times is a great news property (I read it online, and can't really call it a newspaper), but only thing coherent about its editorial policy is that it is consistently "progressive" and left-wing, and I often wonder if the paper's sole function (besides positioning itself a language study resource) is to provide Japanese writers of English with some sort of experimental platform to practice writing Op-Ed.
Nippon Keidanren is a better place to look for English-language analysis of current economic trends in Japan.
posted by KokuRyu at 8:19 PM on December 27, 2009
A host of medium-sized Japanese electronics firms have developed dominant positions in many areas of technology. Can they keep them?
Japan does produce added-value goods and services, and the country has managed to decentralize production (and thus provide relatively sustainable and high-paying jobs in many rural areas), but for how long?
BTW, I think the Japan Times is a great news property (I read it online, and can't really call it a newspaper), but only thing coherent about its editorial policy is that it is consistently "progressive" and left-wing, and I often wonder if the paper's sole function (besides positioning itself a language study resource) is to provide Japanese writers of English with some sort of experimental platform to practice writing Op-Ed.
Nippon Keidanren is a better place to look for English-language analysis of current economic trends in Japan.
posted by KokuRyu at 8:19 PM on December 27, 2009
Response by poster: BTW, I think the Japan Times is a great news property (I read it online, and can't really call it a newspaper), but only thing coherent about its editorial policy is that it is consistently "progressive" and left-wing,
You would only get that impression from reading it on-line, where they don't include all the op-ed from outside writers that they run; (George Will, for just one example). The editorial policy, as much as there is one, seems to be - just dump everything on the table, and let the readers sort it out. (Which suits me just fine, actually.)
It also acts as an extremely valuable 'foil' to the mainstream Japanese press, with is (in)famous for skating around and ignoring issues it doesn't want uncovered. I subscribe to the Daily Yomiuri too, and it's great fun to read the Times first, and then guess which stories will be AWOL from the Yomiuri ...
As for the question/topic: thanks to the contributors so far for the thoughtful points. Obviously, the extremely fragmented nature of the data and the continuously changing frames of reference, do make a clean analysis difficult/impossible, but I still find myself amazed that there can be such extreme polarization of opinion, and (seemingly) no 'real' data available at all to try and guide the person who wants to vote/participate rationally, rather than emotionally.
posted by woodblock100 at 8:36 PM on December 27, 2009
You would only get that impression from reading it on-line, where they don't include all the op-ed from outside writers that they run; (George Will, for just one example). The editorial policy, as much as there is one, seems to be - just dump everything on the table, and let the readers sort it out. (Which suits me just fine, actually.)
It also acts as an extremely valuable 'foil' to the mainstream Japanese press, with is (in)famous for skating around and ignoring issues it doesn't want uncovered. I subscribe to the Daily Yomiuri too, and it's great fun to read the Times first, and then guess which stories will be AWOL from the Yomiuri ...
As for the question/topic: thanks to the contributors so far for the thoughtful points. Obviously, the extremely fragmented nature of the data and the continuously changing frames of reference, do make a clean analysis difficult/impossible, but I still find myself amazed that there can be such extreme polarization of opinion, and (seemingly) no 'real' data available at all to try and guide the person who wants to vote/participate rationally, rather than emotionally.
posted by woodblock100 at 8:36 PM on December 27, 2009
"With hundreds of years of accumulated data on how economies 'work' available for analysis"
That's one problem right there. Your question assumes that this data is available, and as mentioned above, it isn't. I took a class on development economics, and we learned that accurate historical economic data is very rare. Basically, you have the last seventy years or so in the US and a few other countries, and very incomplete or questionable data for a lot of developing countries.
An economy is also a vastly complex system. I'm not an economic expert by any stretch of the imagination, but the economics classes I've taken have made some points made by this article by Paul Krugman (whether you agree with his specific views or not) ring true to me. Even basic microeconomic concepts and models are based on assumptions about human behavior that just aren't how people always behave. It seems to me that using mathematics to model economic concepts requires freezing all but a few parts of a hugely complex system and seeing how modifying those few variables changes the entire system. In reality, you can't freeze an entire economy and carefully adjust a few variables, even the kind of toy Tomato and Cellphone economies used as examples in economic textbooks.
Your argument about looking for one simple, neat cause-and-effect relationship is also suspect. Looking at real economic data might allow you to find correlations between say, economic growth and government spending, but the first lesson in any statistics class is the difference between correlation and causation. And of course, how do you define "economic growth"? What kind of government spending, in what industry, in what context? How long does it take for the money to actually have an effect? When exactly did the economy start "growing"? How strong or significant is the relationship? Making broad, sweeping claims of the kind you're proposing is really pretty hard.
posted by MadamM at 8:45 PM on December 27, 2009
That's one problem right there. Your question assumes that this data is available, and as mentioned above, it isn't. I took a class on development economics, and we learned that accurate historical economic data is very rare. Basically, you have the last seventy years or so in the US and a few other countries, and very incomplete or questionable data for a lot of developing countries.
An economy is also a vastly complex system. I'm not an economic expert by any stretch of the imagination, but the economics classes I've taken have made some points made by this article by Paul Krugman (whether you agree with his specific views or not) ring true to me. Even basic microeconomic concepts and models are based on assumptions about human behavior that just aren't how people always behave. It seems to me that using mathematics to model economic concepts requires freezing all but a few parts of a hugely complex system and seeing how modifying those few variables changes the entire system. In reality, you can't freeze an entire economy and carefully adjust a few variables, even the kind of toy Tomato and Cellphone economies used as examples in economic textbooks.
Your argument about looking for one simple, neat cause-and-effect relationship is also suspect. Looking at real economic data might allow you to find correlations between say, economic growth and government spending, but the first lesson in any statistics class is the difference between correlation and causation. And of course, how do you define "economic growth"? What kind of government spending, in what industry, in what context? How long does it take for the money to actually have an effect? When exactly did the economy start "growing"? How strong or significant is the relationship? Making broad, sweeping claims of the kind you're proposing is really pretty hard.
posted by MadamM at 8:45 PM on December 27, 2009
Response by poster: I know this is straying from David's original AskMe question here, but this Economist article is pretty good: "A host of medium-sized Japanese electronics firms have developed dominant positions in many areas of technology. Can they keep them?"
Interesting, and very informative. But as I read through it, I wondered when he was going to get to the part about the demographics ... and it never came. There are plenty of small back-street manufacturers in my own neighbourhood, some of them no doubt making parts/casings/etc. for some of those world-leading companies mentioned in the story. But when you visit one of them, you see nothing but grey hair. I'm 58, and it's rare to see anybody younger than myself. No 'bright' kid would dream of working in such a place. So they are completely hollowed out, and in just another ten years or so, they will be gone. (They are already disappearing rapidly, with empty lots all over town, showing where they were.)
Whether or not those world-leaders mentioned in the story can survive without this wide base of general manufacturing support underneath them is an open question.
posted by woodblock100 at 8:51 PM on December 27, 2009
Interesting, and very informative. But as I read through it, I wondered when he was going to get to the part about the demographics ... and it never came. There are plenty of small back-street manufacturers in my own neighbourhood, some of them no doubt making parts/casings/etc. for some of those world-leading companies mentioned in the story. But when you visit one of them, you see nothing but grey hair. I'm 58, and it's rare to see anybody younger than myself. No 'bright' kid would dream of working in such a place. So they are completely hollowed out, and in just another ten years or so, they will be gone. (They are already disappearing rapidly, with empty lots all over town, showing where they were.)
Whether or not those world-leaders mentioned in the story can survive without this wide base of general manufacturing support underneath them is an open question.
posted by woodblock100 at 8:51 PM on December 27, 2009
With hundreds of thousands of years of accumulated data on how evolution 'works' available for analysis, how is it possible that it is still unclear whether or not—and to what extent—a genetic mutation or altered environment will change the morphology and behavior of a particular species?
Like an ecology, "the economy" is a messy, stochastic, constantly evolving and path-dependent thing. It's a convenient, but fictional, aggregation of billions of individual actors and their actions: In Japan, it's 127 million different people spending, saving, building, buying, and so on. Like biologists, economists have done a pretty good job coming up with models for the underlying mechanisms that make markets work, and figuring out some of the larger-scale "laws" of economics. But in a system as complex as an economy, it's not surprising that there's some disagreement on how to 'move' it one way or the other.
posted by ecmendenhall at 9:16 PM on December 27, 2009 [1 favorite]
Like an ecology, "the economy" is a messy, stochastic, constantly evolving and path-dependent thing. It's a convenient, but fictional, aggregation of billions of individual actors and their actions: In Japan, it's 127 million different people spending, saving, building, buying, and so on. Like biologists, economists have done a pretty good job coming up with models for the underlying mechanisms that make markets work, and figuring out some of the larger-scale "laws" of economics. But in a system as complex as an economy, it's not surprising that there's some disagreement on how to 'move' it one way or the other.
posted by ecmendenhall at 9:16 PM on December 27, 2009 [1 favorite]
Paul Krugman seems to come up with a similar conclusion to the JT.
posted by KokuRyu at 9:22 AM on January 6, 2010
posted by KokuRyu at 9:22 AM on January 6, 2010
This thread is closed to new comments.
But that's not a very popular thing to actually implement… why should the government be saving money (i.e. not funding some politician's favorite cause) when the economy is booming and the treasury has a surplus? The money belong's to the people! Etc.
posted by mpls2 at 4:25 PM on December 27, 2009