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Arthritic Japan

Arthritic Japan: The Slow Pace of Economic Reform

Copyright Date: 2001
Pages: 247
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  • Book Info
    Arthritic Japan
    Book Description:

    In the late 1980s, Japan's strong economic performance put it on a the verge of becoming a major player in regional and global affairs. But nearly a decade of economic stagnation, a mounting of bad debts, and a continuing stream of scandals have tarnished the country's distinctive economic model. At the turn of the millennium, the Japanese economy remained mired in a pattern of stagnation. As this disappointing condition dragged on, the government pursued policies to restore economic health. Yet Japan has been slow to embrace the systemic reform on which a robust economic recovery depends. In Arthritic Japan, Edward J. Lincoln examines the causes and implications of this weak response. Concluding that Japan is unlikely to pursue the vigorous reform necessary for economic growth, Lincoln warns of serious consequences: a stumbling economy bedeviled by recession and financial crisis, eroding leadership in economic and security issues, a continued defensive trade posture, and a disgruntled population that could turn a more nationalistic stance in foreign policy.

    eISBN: 978-0-8157-9871-2
    Subjects: Political Science, Business, Economics

Table of Contents

  1. Front Matter
    (pp. i-x)
  2. Table of Contents
    (pp. xi-xii)
  3. 1 Introduction
    (pp. 1-15)

    At the turn of the millennium, the Japanese economy remained mired in a pattern of stagnation that had continued since the early 1990s. As this disappointing condition dragged on, some in Japan called for systemic reform as a central part of policies to restore economic health. Beginning in 1994, the government formally pursued an agenda of broad economic deregulation, a specific package of deregulation measures for financial markets, and administrative reform. The private sector, prompted by substantial excess capacity in some industries, has also carried out some restructuring. The casual outside observer might easily infer that substantial—and beneficial—systemic...

  4. 2 The Postwar Economic System
    (pp. 16-55)

    Japan is a capitalist nation in the most basic sense of the word. That is, the means of production for goods and services are largely in the hands of the private sector rather than the government, and economic transactions take place mainly through private markets and contracts rather than through the government. In many important ways, however, the organization and operation of the economy differs from that of the United States. This observation should not be controversial since European and other capitalist countries all have distinctive features that affect economic structure and behavior. Japan never moved as far as European...

  5. 3 The Argument for Change
    (pp. 56-93)

    Reform to reduce the economic role of government, motivated by public dissatisfaction with economic performance, has been a dominant story in many countries over the past quarter century. Heavy-handed government involvement in the economy eventually failed to enhance economic growth and led to increasingly obvious distortions and inefficiencies in a number of countries. In the United States, for example, deregulation grew out of economic analysis of the distortions, inefficiencies, and misallocation of resources caused by the regulatory system. In other countries, like Britain, state-owned enterprises were increasingly inefficient, soaking up ever-larger taxpayer-funded subsidies. Some countries experienced escalating inflation stoked by...

  6. 4 Vested Interests
    (pp. 94-120)

    Vested interests can be a problem for change in any society. Some individuals, groups, and organizations profit from the current configuration of rules, regulations, taxes, and other aspects of the framework for the economic system. If changing that framework would hurt their economic interests, they have no reason to support change and may actively oppose it. In democratic societies, they have the power of the vote to support their positions, and, if they are well organized politically, they may exercise a political voice stronger than might be suggested by their numbers alone.

    Over time, groups may also use their political...

  7. 5 Consistency with Society
    (pp. 121-152)

    The Japanese and American economies have many of the same economic institutions—corporations, industries, banks, securities firms, households, and government agencies. Those institutions have often behaved quite differently in the two countries, however. Differences in economic factors, unique historical developments and path dependency, or variations in the distribution of political power explain much of the difference in behavior and form the core of most analysis of Japan’s political economy. Nevertheless, in explaining why societies make certain choices about how to organize and operate their economic systems, sociology matters as well.

    Put simply, institutional systems for organizing economic activity vary among...

  8. 6 Weak Outcomes
    (pp. 153-200)

    Previous chapters have laid out the argument for systemic reform and the variety of factors that work against its accomplishment. This chapter considers the outcome of such reform. Since the mid-1990s some economic reform has proceeded in both the government and the private sector. Government has been engaging ostensibly in a process of both general economic deregulation and administrative reform to reduce and reorganize government. The private sector has engaged in corporate restructuring and consolidation, prompted by the poor performance of many firms. By the end of the decade, stories of reform and change abounded, providing an image of a...

  9. 7 Implications for American Policy
    (pp. 201-222)

    A quarter century ago a number of nations began unwinding government involvement in the economy. Government-owned corporations have been privatized. Management of market outcomes through regulation or manipulation has eased or been abandoned. In the United States the process of deregulation is a continuing story.

    The Japanese government has been the quintessential activist, interventionist government. Relatively few sectors have been subject to direct government ownership, but the government has interfered indirectly in markets, hoping to achieve its design of what was best for economic development. For over a century, industrialization aimed at catching up with the advanced industrial nations was...

  10. Notes
    (pp. 223-238)
  11. Index
    (pp. 239-247)