Stimulus package helps Japan out of recession.

Discussion in 'Asia' started by tigerbob, Aug 17, 2009.

  1. tigerbob
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    tigerbob Increasingly jaded.

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    Let's hope the economic upturns in places like Japan are a good indicator for the US as well. After all, spending to stimulate the US economy has not been insignificant.

    It will be interesting to see whether this is sustained.
     
  2. The_Halfmoon
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    The_Halfmoon Member

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    Japan's been fighting for a decade and a half to win back its economic prosperity... and stimulus has consistently failed in its history. I hope it is genuinely recovering, as it is waaaay too soon to tell at the moment.

    I don't propose to be any sort of an expert on Japan, but it is a very troubled economy... I read somewhere that their national debt is 170% of GDP... if that's correct, that is simply insane and Japan has a very tough road ahead.
     
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  3. PoliticalChic
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    PoliticalChic Diamond Member

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    Wrong.

    Japan is exactly the example of the inadequacy of government stimulus programs.

    The only stimulus in a capitalist economy is profit.

    "Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

    Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience. While Japan is not exactly comparable to the United States — especially as a late developer with a history of heavy state investment in infrastructure — economists say it can still offer important lessons about the pitfalls, and chances for success, of a stimulus package in an advanced economy. "
    http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=1&partner=permalink&exprod=permalink


    "Beginning in 1991-1992, Japan adopted the spending approach now advocated by many in the U.S. Congress when it embarked on a massive nationwide program of infrastructure investment. Between 1992 and 2000, Japan implemented 10 separate spending stimulus packages in which public infrastructure investment was a major component.
    …
    Combined with increases in other government spending programs, Japan’s efforts to spend its way to prosperity led to substantial increases in government spending as a share of GDP. … Japan’s failed policies had severe negative consequences for its economy and citizens. …[M]easured in inflation-adjusted GDP growth, Japan went from being a high-growth country in the 1980s to a slow-growth country during the 1990s. … For the average Japanese citizen, the chief consequence of this economic underperformance has been both a relative and an absolute decline in the nation’s standard of living, defined by per capita GDP as measured by the World Bank and adjusted for differences in purchasing power parity (PPP)."
    Learning from Japan’s Big Debt Spending Failure » The Foundry


    Beware of a double bottom to this recession!
     
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  4. Polk
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    Polk Classic

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    Japan's stimulus programs have been ineffective due to their small size. While they've added up to quite a bit over the years, the theme has been to pass stimulus and the instant the economy starts to recover, pull back on it. The results are not good.
     
  5. PoliticalChic
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    PoliticalChic Diamond Member

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    I don't know you well enough to recognize your political slant, but your explanation of Japan's economy is in accordance with the two most frequent explanations by our leftist friends, when their theories or programs fail:

    "It's different this time,"

    or

    " It wasn't tried enough," as in why the Soviet Union failed.

    Your response is pretty much the latter.

    Note:
    "Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery."

    and

    "Between 1992 and 2000, Japan implemented 10 separate spending stimulus packages in which public infrastructure investment was a major component."

    and

    " Japan’s failed policies had severe negative consequences for its economy and citizens."

    Compare the effects with those of Harding's in fighing the recession of 1920:

    "America's greatest depression fighter was Warren Gamaliel Harding. An Ohio senator when he was elected president in 1920, he followed the much praised Woodrow Wilson— who had brought America into World War I, built up huge federal bureaucracies, imprisoned dissenters, and incurred $25 billion of debt.

    One of Harding's campaign slogans was "less government in business," and it served him well. Harding embraced the advice of Treasury Secretary Andrew Mellon and called for tax cuts in his first message to Congress on April 12, 1921. The highest taxes, on corporate revenues and "excess" profits, were to be cut. Personal income taxes were to be left as is, with a top rate of 8 percent of incomes above $4,000. Harding recognized the crucial importance of encouraging the investment that is essential for growth and jobs, something that FDR never did.. On July 12, 1921, Harding went to the Senate and urged tax and spending cuts."
    N-Philes :: Forums - View Single Post - The not-so-great depression of 1920-21

    BTW, the 11th President was one of my favorites.
     
    Last edited: Aug 26, 2009
  6. Gudrid
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    Gudrid Bilderbergs' Catcher

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    That doesn't make sense to me. Profit doesn't stimulate anything; profit is the result of a successful economy. Capital investment is a stimulus, no matter if the investment capital is coming from the private sector or the public sector. The question is whether it's a successful investment or not. In that regard, I don't think we'll know til Spring at the earliest. And I think all the people who are trying to say "the stimulus package is working fantabulously" or sayin g"the stimulus package is our doom!" are all premature. We don't know yet. The best economist in the world will tell you it's partially a guessing game, and highly qualified economists disagree on this issue.
     
  7. PoliticalChic
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    PoliticalChic Diamond Member

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    Shows a kind of gap in your understanding of human nature.

    Profit is the reason one risks one's time and treasure.

    It is the life's blood of risk.

    There is an old saying, "there is no education in the second kick of a mule," yet some of us keep saying that Japan's stimulus plan would work if only we gave it more time, or more government largess. The same experiences over and over, yet some wish to try them again.

    FDR's stimulus, actually retarded recovery, as other nations recovered sooner.

    Study the Harding approach.
     
  8. KittenKoder
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    KittenKoder Senior Member

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    Apples and oranges.
     
  9. Gudrid
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    Gudrid Bilderbergs' Catcher

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    There is no single "the reason." Power is another reason for such risks. And the satisfaction of providing employment for others. And building a legacy. There's all sorts of things that you're failing to understand about human nature. Beyond that, the profit motive continues as a motivator whether the economy is bad or not.

    Either way, economically profit is an end and investment is the means. Profit can be reinvested, but investment can come from other sources as well. I think your analysis is being tainted by your desire to trash the stimulus plan based on the source. Personally, I don't know whether the stimulus is going to work or not. And neither do you.
     
  10. PoliticalChic
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    PoliticalChic Diamond Member

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    I like the idea that there can be a number of motivations, but in a capitalist society, the easiest way to judge the success of one's endeavor is the bottom line.

    Now, most businesses in the US are small businesses. It is your opinion that the greatest number of these are motivated by building a legacy, what ever that means, or employing others,... or would most thinking folks say that the majority of businesses are based on the profit motive?

    Count, if you will, the number of 'Mother Theresa's" in your ken, and show how employers open their doors merely to employ folks. If true, why would they lay folks off during a recession?

    Are the numbers even close? Even in the same universe???

    No, don't infer where I didn't imply. I trash the stimulus plan because it never worked; it is trash. Your guess about my motivation makes no sense, unless you would like to argue that I have something against the Japanese, as well.

    Your argument is a variation on the latest Obamunist defense, i.e. anyone who disagrees with the administration must be a racist. Nor am I intimidated.


    For purposes of comparison, go back and review the Stakhanovite Movement within communism.
     

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