Japan: an economy in trouble(経済危機の日本)
The future could be dominated by the U.S. and Europe with the Japanese economy in decline.
Japan, the world's second largest economy, by the end of this year will have experienced a decline in its national output of 10 per cent from the peak in 2008.
Figures announced on Wednesday show that in the first three months of this year output fell by 4 per cent. This is the fastest rate of decline since the war; overall it is the biggest decline of any major economy since the U.S. economy contracted by a quarter during the Great Depression.
Japan's travails closely impact on us. It is a major locomotive of the world economy; its problems are everyone's.
Japan's output has now fallen so far that it has lost all the gains it made since 1992. Brutally, it has lost two decades. You have to shake your head at the horror of it - another sobering example of the dark times in which we are living.
Economists comfort themselves that the wost is behind. A lot of Japan's recent problems arose from a cataclysmic 26 per cent decline in its exports over the quarter as retailers and distributors around the credit-crunch suffering globe stopped ordering, and met what demand there was from stocks.
Japan, uniquely dependant on industrial export for its prosperity, was hit very hard. But now there are sings orders are picking up again as the "destocking" stops. Exports are steadying. On top there is a colossal $153bn stimulus package, focusing on stimulating demand for green products.
The big car firms report a surge of orders. Even the IMF believes the Japanese economy will decline less rapidly as the year wears on. The Japanese stock market, expecting the news, was hardly affected. Perhaps the crisis is yesterday's story. Wrong. The explainations for Japan's problems are unlikely to evaporate soon.
The first is that its economy was crippled during the 1990s and the first part of the 2000s by a dawn-out credit crunch. Banks had lent too much and were crippled by losses as the property market collapsed. With bank and corporate balance sheet badly hit, the economy got stuck in low investiment, low growth, low confidence doldrums. It is an awesome warning of what may happen to Britain, similarly sticken.
Matters improved over the last few years, thanks to Japan's powerful industrial exporters and the pick-up in demand from Asia and the U.S. But crisis-hit America is no longer a big buyer of Japanese and Asian exports.
Enormous Challenge
As treasury secretary Tim Geithner has said, over-indebted America is unlikely to become a big consumer again any time soon. Nor can Europe,beset by unemployment,fill the gap. Which presents Asia and Japan with an enormous challenge.
Japan has been the economy Asia has copied - high saving, high inbestment and high exports - along with a government which closely directs economic avtivity. This is the Asian model. But who is now going to buy all those TVs, cars, cameras and videocameras?
The only answer is the Asians themselves.
Which means they will have to save less and spend more - a diagnosis easier to make than to execute. Asians save because they don't have confidence in their governments, the tax base on which welfare is financed or on the stability of property rights. There are even fears about the region's political stability. So governments have to spend to compensate, which is what Japan's is doing on an epic scale. But this can only be a shortterm solution.
Over the next five years Japan and Asia face the economic fight of their lives,with protracted stagnation and social unrest very real prospects. The solution is an Asia Enlightenment, a more transparent, consumer-oriented capitalism. The biggest worry of all is that so few in Asia recognise the problem.
Unless it changes, the next 20 years will be even more dominated by the U.S. and Europe than last. (THE HINDU Friday, MAY, 22, 2009.)
今日の一言
日本の経済危機と政治危機はかなり致命的な段階にきています。それは、海外から見た方が明瞭に見えるのでしょう。最中の日本人、特に若者は見えているでしょうか？この経済危機・政治危機が。日本人が、アメリカ依存ではなく、アジアの中で新しい経済体系を作り出す為には、若者がもっと政治や経済に関心の目を高めて、新しい思考と力で日本を立て直していかないと・・・！
2009年5月26日火曜日
2009年5月6日水曜日
Falling wage syndrome(給料削減症候群)
Falling wage syndrome(給料削減症候群)
Wage are falling all across America.
Some of the wage cuts, like the givebacks by Chrysler workers, are the price of federal aid. Others, like the tentative agreement on a salary cut here at The Times, are the result of discussions between the employers and their union employees. Still others reflect the brute fact of a weak labour market: Workers don't dare protest when their wages are cut, because they don't think they can find other jobs.
Whatever the specifics, however, falling wage are a symptom of a sick economy. And they're a symptom that can make the economy even sicker.
First things first: anecdotes about falling wage are proliferating, but how broad is the phenomenon? The answer is, very.
It's true that many workers are still getting pay increases. But there are enough pay cuts out there that, according to the Bureau of Labour Statistics, the average cost of employing workers in the private sector rose only two-tenths of a per cent in the first quarter of this year -the lowest increase on record. Since the job market is still getting worse, it wouldn't be at all surprising if overall wages start falling later this year.
But why is that a bad thing? After all, many workers are accepting pay cuts in order to save jobs. What's wrong with that?
The answer lies in one of those paradoxes that plague our economy right now. We're suffering from the paradox of thrift: Saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We're suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.
And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the results is higher unemployment.
Here's how the paradox works. Suppose that at the XYZ Corp, accepts a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cut raise employment - which they do at the level of the individual employer.
But If everyone takes a pay cut, nobody gains a competitive advantage. So there's no benefit to the economy from the lower wages. Meanwhile, the fall in wages can worsen the economy's problems on other fronts.
In particular, falling wages, and hence falling incomes, worsen the problem of excessive debt: Your monthly mortgage payments don't go down with your paycheck. America came into this crisis with household debt as a percentage of income at its highest level since the 1930s.
Families are trying to work that debt down by saving more than they have in a decade - but as wages fall, they're changing a moving target. And the rising burden of debt will put downward pressure on consumer spending, keeping the economy depressed.
Things get even worse if businesses and consumers expect wages to fall further in the future. John Maynard Keynes put it clearly, more than 70 years ago; "The effect of an expectation that wages are going to sag by, say, 2 per cent in the coming year will be roughly equivalent to the effect of a rise of 2 per cent in the amount of interest payable for the same period." And a rise in the effective interest rate is the last thing this economy needs.
Concern about falling wages isn't just theory. Japan - where private-sector wages fell an average of more than 1 per cent a year from 1997 to 2003 - is an object lesson in how wage deflation can contribute to economic stagnation.
So what should we conclude from the growing evidence of sagging wages in America? Mainly that stabilizing the economy isn't enough: we need a real recovery.
There has been a lot of talk lately about green shoots and all that, and there are indeed indications that the economic plunge that began last fall may be levelling off. The National Bureau of Economic Research might even declare the recession over lately this year.
But the unemployment rate is almost certainly still rising. And all signs point to a terrible job market for many months if not years ton come - which is a recipe for continuing wage cuts, which will in turn keep the economy weak.
To break that vicious circle, we basically need more: more stimulus, more decisive action on the banks, more job creation.
Credit where credit is due; President Barack Obama and his economic advisers seem to have steered the economy away from the abyss. But the risk that America will turn into Japan - that we'll face years of deflation and stagnation - seems, if anything, to be rising. 2009 The New York Times News Service (THE HINDU Tuesday, May, 5 ,2009)
今日の一言
Wage are falling all across America.
Some of the wage cuts, like the givebacks by Chrysler workers, are the price of federal aid. Others, like the tentative agreement on a salary cut here at The Times, are the result of discussions between the employers and their union employees. Still others reflect the brute fact of a weak labour market: Workers don't dare protest when their wages are cut, because they don't think they can find other jobs.
Whatever the specifics, however, falling wage are a symptom of a sick economy. And they're a symptom that can make the economy even sicker.
First things first: anecdotes about falling wage are proliferating, but how broad is the phenomenon? The answer is, very.
It's true that many workers are still getting pay increases. But there are enough pay cuts out there that, according to the Bureau of Labour Statistics, the average cost of employing workers in the private sector rose only two-tenths of a per cent in the first quarter of this year -the lowest increase on record. Since the job market is still getting worse, it wouldn't be at all surprising if overall wages start falling later this year.
But why is that a bad thing? After all, many workers are accepting pay cuts in order to save jobs. What's wrong with that?
The answer lies in one of those paradoxes that plague our economy right now. We're suffering from the paradox of thrift: Saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We're suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.
And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the results is higher unemployment.
Here's how the paradox works. Suppose that at the XYZ Corp, accepts a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cut raise employment - which they do at the level of the individual employer.
But If everyone takes a pay cut, nobody gains a competitive advantage. So there's no benefit to the economy from the lower wages. Meanwhile, the fall in wages can worsen the economy's problems on other fronts.
In particular, falling wages, and hence falling incomes, worsen the problem of excessive debt: Your monthly mortgage payments don't go down with your paycheck. America came into this crisis with household debt as a percentage of income at its highest level since the 1930s.
Families are trying to work that debt down by saving more than they have in a decade - but as wages fall, they're changing a moving target. And the rising burden of debt will put downward pressure on consumer spending, keeping the economy depressed.
Things get even worse if businesses and consumers expect wages to fall further in the future. John Maynard Keynes put it clearly, more than 70 years ago; "The effect of an expectation that wages are going to sag by, say, 2 per cent in the coming year will be roughly equivalent to the effect of a rise of 2 per cent in the amount of interest payable for the same period." And a rise in the effective interest rate is the last thing this economy needs.
Concern about falling wages isn't just theory. Japan - where private-sector wages fell an average of more than 1 per cent a year from 1997 to 2003 - is an object lesson in how wage deflation can contribute to economic stagnation.
So what should we conclude from the growing evidence of sagging wages in America? Mainly that stabilizing the economy isn't enough: we need a real recovery.
There has been a lot of talk lately about green shoots and all that, and there are indeed indications that the economic plunge that began last fall may be levelling off. The National Bureau of Economic Research might even declare the recession over lately this year.
But the unemployment rate is almost certainly still rising. And all signs point to a terrible job market for many months if not years ton come - which is a recipe for continuing wage cuts, which will in turn keep the economy weak.
To break that vicious circle, we basically need more: more stimulus, more decisive action on the banks, more job creation.
Credit where credit is due; President Barack Obama and his economic advisers seem to have steered the economy away from the abyss. But the risk that America will turn into Japan - that we'll face years of deflation and stagnation - seems, if anything, to be rising. 2009 The New York Times News Service (THE HINDU Tuesday, May, 5 ,2009)
今日の一言
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