I've mentioned sporadically over the past 2-3 years here that I think the U.S. is about 10 years behind Japan economically. Japan's economic boom of the 1980s is what inspired then-President Reagan's admiration and desired emulation of their economy. After all, the joke in "Blade Runner" (1982) is that Los Angeles in 2019 is overrun by Japanese culture.
For better or for worse, we did create an economy that emulated Japan, with the 1990s being our decade of prosperity--a decade after Japan's prosperity. Most troubling, however, was Japan's fate during the 1990s up to the present: a stock market that plunged from 20,000 to around 7,000 (?) and persistent deflation with interest rates around zero. The lack of economic growth is for so long is being blamed on the large debt amassed during the prosperity. Remind you a bit of the U.S.?
This was my primary objection to the mass deregulation of the 1980s and 1990s. Without regulation, business has had no incentive to operate with any stability. The end of the punitive "windfall profits tax" took away any incentive for a business to reinvest in itself and pay its labor--and, as such, in the pursuit of quick profits, relied on stock investment. All good and well, but the stock market is fickle, as we can see by companies literally being ruined by unsubstantive, panic-driven selling in the last three years.
Our "yes-man" Treasury Secretary, John Snow, had this to say, "I don't think the United States has any risk of being in a serious deflationary period. Any comparison to Japan would be inappropriate." He may, indeed, be correct, but he certainly lacks the credibility of his predecessor, Paul O'Neill, who was fired for being "too honest."
Regardless, it may be too late to stop. Re-regulation is not going to stop the large debt amassment that needs to get paid, and it can't erase the mistakes of the last two decades. Deflation may, indeed, be our future, and we might emulate Japan down to the last detail. I'll be curious to see what the next ten years hold for the U.S. If we are, indeed, emulating Japan, we're just at the beginning of what could be a long and bumpy ride into economic ruin.
Melon
For better or for worse, we did create an economy that emulated Japan, with the 1990s being our decade of prosperity--a decade after Japan's prosperity. Most troubling, however, was Japan's fate during the 1990s up to the present: a stock market that plunged from 20,000 to around 7,000 (?) and persistent deflation with interest rates around zero. The lack of economic growth is for so long is being blamed on the large debt amassed during the prosperity. Remind you a bit of the U.S.?
This was my primary objection to the mass deregulation of the 1980s and 1990s. Without regulation, business has had no incentive to operate with any stability. The end of the punitive "windfall profits tax" took away any incentive for a business to reinvest in itself and pay its labor--and, as such, in the pursuit of quick profits, relied on stock investment. All good and well, but the stock market is fickle, as we can see by companies literally being ruined by unsubstantive, panic-driven selling in the last three years.
Our "yes-man" Treasury Secretary, John Snow, had this to say, "I don't think the United States has any risk of being in a serious deflationary period. Any comparison to Japan would be inappropriate." He may, indeed, be correct, but he certainly lacks the credibility of his predecessor, Paul O'Neill, who was fired for being "too honest."
Regardless, it may be too late to stop. Re-regulation is not going to stop the large debt amassment that needs to get paid, and it can't erase the mistakes of the last two decades. Deflation may, indeed, be our future, and we might emulate Japan down to the last detail. I'll be curious to see what the next ten years hold for the U.S. If we are, indeed, emulating Japan, we're just at the beginning of what could be a long and bumpy ride into economic ruin.
Melon
