One of the most surprising things about Japan – and there are many surprising things – is
how safe it is.
See, Japan is one of the few countries in the world where you can leave an iPhone X
[Ten] in a coffee shop and not have to worry about anything but dropping by the next day.
Because, my friends, it is almost certain that your recently released, brand new iPhone
X will be there waiting for you.
And no, I'm not exaggerating.
Also, Japan, is just a beautiful country with amazing sites, where everything seems to be
where it should be.
But...
As you know this isn’t a travel channel... and this video isn’t sponsored by Japan’s
Ministry of Tourism, so... let’s get to the point.
Recently we found out that Emperor Akihito has decided to abdicate.
(“The emperor of Japan will step down on April 30, 2019, the first abdication by a
Japanese monarch in two centuries”.
New York Times.)
Well, see: this emperor came to the throne almost 30 years ago, in 1989...
Just when the great Japanese crisis began.
No, in Japan the emperor has no power, so Akihito wasn’t responsible, but don’t
say that can’t be just coincidence and bad luck.
We can practically say that it was after Akihito’s arrival that 30 years of stagnation began.
In this video we will see what happened, what caused this great crisis and why the German
economic model has managed to defeat the Japanese model.
But first, my friends, a small history lesson.
(MIRACLES EXIST)
Japan and Germany are two very interesting countries, with a lot in common and, also,
many differences.
After the Second World War both countries were literally in ruins.
They had lost not only their infrastructure, but also an entire generation.
However, despite this, between the 1950s and the 1970s, both countries experienced such
a powerful takeoff that in those two decades they not only managed to recover, but to become
two of the largest economies in the world, as well as two of the richest countries.
In fact, even though it might seem incredible today, for years it was speculated that Japan
could surpass even the United States as the world's largest economy.
How things have changed!
The fact is that between 1955 and 1973 Japan grew at an annual average rate of 9%, and
between 1973 and 1990, above 4%.
These truly are some incredible rates.
And Germany, didn’t stay behind, it had average annual growth of 7% for almost 30
years.
Both countries were at full throttle.
Their factories worked tirelessly, there was no unemployment, and both Germans and the
Japanese saved and invested their money all over the world.
Suddenly, Japanese and German companies became famous worldwide.
This was very important, especially for Japan, a country that lives constantly under nature’s
threat...
Besides being a very mountainous country, Japan suffers from all kinds of natural disasters:
earthquakes, cyclones, tsunamis, etc, etc.
By the way, in future VISUALPOLITIK videos, we will tell you all about how these two "economic
miracles" took place.
Well, the fact is that in 1989 this entire economic takeoff stopped, it came to an end
and gave way to what is now known as the great Japanese stagnation.
(“Forget Greece, Japan is the world's real economic time bomb” Christopher Matthews,
an Axios reporter.)
I’m convinced, this isn’t news to you, as it isn’t strange to hear people talk
about Japan along with the word crisis.
Yes, ever since I can recall, Japan has been the country of eternal crisis, the country
that has one good year for every three bad ones.
In fact, nowadays we can easily declare Germany the winner in the growth race that both countries
maintained for decades.
See, today Germany – which has also gone through some bad times in recent decades – is
richer, has healthier public accounts, is more competitive internationally and has higher
wages.
To get an idea of Japan’s situation, I think we can use two very revealing facts.
First, in Japan real wages, taking inflation into account, are lower today than salaries
back in 1990, 30 years ago!
And second, the Japanese government’s public debt is the highest in the world: 250% of
the GDP, yes 250%, you heard that right.
So my friends, you might be wondering, what the hell happened?
What made the German model so much better than the Japanese model?
Well... obviously, there are lots of reasons, but we believe that 3 of them are, by far,
the most important.
Let's take a look at them.
(A PROBLEMATIC MODEL)
First, we can say that there was a big difference between Japan and Germany’s development.
The country of the rising sun, opted to protect large industrial conglomerates, the 'Keiretsu'.
The keiretsu are, so to speak, holdings that do practically everything, that is, they have
companies for all kinds of things: cars, planes, tires, toothpaste...
Everything is manufactured by the same holding company, whose companies support each other,
buy and sell products between them and even have their own banks to finance themselves.
So what’s the problem with this?
Well... these large conglomerates tended to be very bureaucratic and not very flexible.
So decision-making was a difficult and very slow process.
But...
The Japanese government decided to compensate for all these disadvantages, and didn’t
hesitate to give the keiretsu all kinds of advantages and privileges.
For example, Japan’s Central Bank financed them generously at abnormally low rates through
specific programs.
However, my friends, the results weren’t at all good.
See, these large groups became very influential in the country’s politics;
they hid many problems, because of course, when one of these conglomerates’ companies
did badly, it was extremely easy for them to infect the rest;
they were in a lot of debt; and they even limited competition.
Of course, how can one compete with such groups, if they are also protected by the government
and have all kinds of privileges?
Sounds hard, right?
On the other hand, in Germany, the political commitment was completely different and focused
on creating a very competitive market with small and medium sized companies.
But, are there large industrial groups in Germany?
Of course, and that's a good thing, as long as they don’t depend on the government or
receive privileges that impede competition.
So while Germany’s companies thrived, Japan’s large conglomerates have had many problems,
and most have disappeared or broken down at some point.
But that’s not all...
(THE DISCOUNT POLICY)
For years, Japanese politicians thought that in order to export more, devaluing the currency
from time to time... wasn’t a bad thing.
However, in 1985, the real problems began.
See, as a result of all these currency wars, the United States gained a fairly large external
deficit.
And because Washington politicians of the time, as they do now, didn’t like it, they
forced the so-called "Plaza Accord", an agreement between the United States, Japan, Germany,
France and the United Kingdom to depreciate the dollar to decrease this trade defi
As you can imagine, this was a huge blow to the Japanese industry, who was used to competing
with some help.
And, what do you think the government did?
It told them “Don’t worry, I’m here to save you!"
And then the Japanese government sank its interest rates and began boosting credit like
there was no tomorrow.
The result?
A huge debt spiral, banks distributing money like crazy and a massive bubble in the real
estate and financial markets.
And, do you know what happened?
Well, in 1990, this entire house of cards began to collapse...
In Germany, however, as we also saw here at VISUALPOLITIK, the government opted to maintain
a strong Mark (their currency at that time), which on one hand forced companies to compete
in productivity and innovation, but on the other allowed them to buy foreign technology
and machines under better terms.
But, my friends, there’s still a third… and determinant difference.
Listen up.
(LOCKED WITHIN THEMSELVES)
Japan is the most elderly country in the world.
Just over 25% of its population, that is, 1 in 4 Japanese are over 65; and for every
hour that passes, the country’s population drops by 50 people.
You heard that right.
In fact, the Japanese government expects the country's population to fall below 100 million
people by the year 2050.
And of course, the more elderly citizens there are, the less young people, and the lower
population.
This has clear consequences:
For one, more public spending on pensions and health care, and for another, less labor.
True, many other countries have this problem but Japan’s case is by far the most serious.
And this isn’t at all by chance.
Japanese companies have compensated for all the problems caused by the bad policies that
we went over in this video, forcing their employees to work for longer hours than in
other developed countries... which obviously, leaves very little time to think about starting
a family.
What’s more, while some countries, such as Germany, have favored the arrival of immigrants,
who tend to have higher population growth rates, Japan has closed its doors.
In fact, when international organizations tell Japan that they have to open their borders
to immigration to face the aging problem…
the Japanese government has even said this:
(AUDIO: “Japan's finance minister tells elderly they should 'hurry up and die' to
help reduce country's rising welfare bill”.
Daily Mail.)
So my friends, these are the fundamental causes that have led Japan to live in continuous
crisis; and the causes that have made the German model clearly better than the Japanese
model.
But now, it’s your turn.
Do you think Japan will manage to overcome this stagnation and permanent crisis period?
Leave your answer in the comments as well as in the survey.
I really hope you enjoyed this video, please hit like if you did and don’t forget to
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Also, don’t forget to check out our friends at the Reconsider Media Podcast - they provided
the vocals in this episode that were not mine!
And as always, thanks for watching!