1945.
(The battleship Missouri, 53 thousand ton flagship of Admiral Hasley’s third fleet
becomes the scene of an unforgettable ceremony, marking the complete and formal surrender
of Japan)
Folks, on August 15th 1945, having suffered the only nuclear bomb attack in history only
a few days before, the Japanese government finally surrendered.
(As Supreme Commander for the Allied Powers, I announce it my firm purpose, in the tradition
of the countries I represent, to proceed in the discharge of my responsibilities with
justice and tolerance, while taking all necessary dispositions to insure that the terms of surrender
are fully, promptly and faithfully complied with)
At that moment, Japan was a defeated country, its economy was shattered and the Japanese
had suffered unimaginable damage.
Not only were they immersed in extreme poverty, they’d also lost more than 3 million compatriots:
brothers, sons, mothers…
Wars take a terrible toll.
With this grim picture as their situation in 1945, the question that we might all ask
ourselves is, how on earth did Japan manage to become one of the greatest economic powers
on the planet in such a short time?
How did the Japanese recover so quickly and with such might?
Dear friends, here on VisualPolitik we’ve already talked about the differences between
the German model and the Japanese model; we’ve also told you about how Japan transformed
from a medieval country to a thriving modern nation.
However, we still need to answer the question of how Japan managed to become a great world
power in just a few years.
Let me tell you right now that the Japanese model is so peculiar, we’ll need more than
one video to explore it.
In this one we’ll see a few brushstrokes in the whole picture, but don’t worry, more
chapters will come.
(THE POST-WAR)
In 1945, it seemed like everything that had been built after the Meiji Restoration of
1868 had evaporated.
Moreover, as if that weren’t enough, for the first time in its history, Japan was occupied
by the United States.
But wait just a second… because it wasn’t all bad news.
As we’ll see, the Japanese also had three aces up their sleeves, three characteristics
that would launch their country into the stratosphere, turning it into one of the richest countries
on the planet.
- And that’s in spite of the many political mistakes that both the occupation forces and
the local authorities would make over the years.
ant to know what these 3 elements were?
The main ingredients of the Japanese recipe?
Well, first of all, a huge ability and predilection for saving.
See, in Asian countries in general, and Japan is no exception, families try to save every
penny, much more than in almost any other place on earth.
Why?
Well, there are many explanations for this phenomenon: a cultural preference, a trend
towards less consumption in the present in order to spend more in the future, or just
because of a lack of public services... which tend to be very limited in this part of the
world.
All of these explanations may have a bit of truth to them...
But regardless, these high amounts of savings are then invested, which creates productive
capital that obviously leads to higher production and wealth levels.
It’s savings that allow us to direct our efforts for a long time, not to satisfy our
immediate needs, but to worry about satisfying our future needs: we produce capital goods
so that they, in turn, manufacture the future consumer goods we may need.
Juan Ramón Rallo)
So, you see, the first ace that Japan had up its sleeve after the war was was an enormous
propensity to save.
Savings, savings, and more savings.
The second had a lot to do with the Meiji Restoration of 1868.
See, as we saw in a previous video, one of the first things the Japanese government did
after the regime change was bet on creating a very powerful educational system: They established
universal primary education and promoted universities, academies, research centers, etc., etc.
Thus, after the Second World War, despite their situation, the Japanese were the most
well trained workers on the entire Asian continent.
And of course this entails a huge competitive advantage.
But also, one of the first measures taken after the war was pushing the educational
system even further.
The third card?
Well, I think you all know it.
The Japanese’s huge capacity for and willingness to work longer hours-- one they’ve always
had... at least the previous generations.
And, in some cases, they’ve even taken things to the extreme.
Do you know any other country in the world that has a word for death from working too
much?
Listen up.
“Karoshi”, death from working too much, which is a public health problem in Japan.
BBC)
The fact is that all three of these factors... gave Japan a huge capacity to recover, grow,
and create a lot of wealth.
But... just a second… having seen all this, what stages exactly did Japan go through in
order for this economic miracle to happen?
Listen up.
(THE STAGES)
The process we’re about to explore starts with the US’s occupation of Japan after
the end of the war.
See, the occupation forces had two major priorities: to demilitarize and democratize Japan.
It’s around this time, for example, that the new Constitution establishing a democratic
system was created.
It equalized men’s and women’s rights and stripped Japan of its right to wage war,
dismantling its Armed Forces.
In addition, the occupation forces copied US institutions and launched reforms that
had some benefits and many drawbacks.
- I think one day we’ll need to talk about how badly the military has always managed
the economy of the countries they’ve controlled.
The fact is that the priority of these reforms was to eliminate, or at least reduce, the
power of the oligarchs who’d supported Japanese expansionism and militarism.
To do so, the sale of land from big landowners to small farmers was approved.
Measures were taken to dissolve the Zaibatsu, large business groups that engaged in many
activities but were controlled by a single family.
An antitrust law that outlawed monopolies was also passed in 1947, and the unionization
of workers was promoted.
Everything, I insist, was done with the intention of achieving an economic power change.
Of course, some of these measures, in addition to limiting the power of the great oligarchs,
also had some rather positive consequences:
For example, the land distribution managed to turn many farmers into owners; the demise
of many of the Zaibatsu led to the emergence of many small and medium enterprises.
In spite of everything, their recovery was much slower than expected…
However, in the 1950s the country had, as it were, a stroke of luck... the Korean War
turned Japan into one of the alliance forces’ suppliers... thereby boosting their exports
and production.
Suddenly, Japanese companies – and politicians – discovered the great global market.
In 1953, production levels had already surpassed the levels they’d been at right before the
war, and the political class had a new main priority: boosting economic growth through
business.
(THE ECONOMIC TAKEOFF)
Folks, the decades of the 50s, 60s, and even 70s, were miraculous years, Japan’s golden
age.
A time led by the “Liberal Democratic Party” a political party that ruled the country for
almost 40 uninterrupted years
- A few years ago, by the way, it was discovered that the CIA gave a lot of money to support
the party’s political campaigns.
This is also the party of the current Abe Minister, Shinzo Abe.
The fact is that this party launched a very peculiar system:
See, on the one hand, it promoted policies that favored saving, kept inflation under
control, slowed down the growth of the public sector, maintained low taxes and avoided the
accumulation of debt.
- This is the opposite of what they do in countries like Argentina or Italy, for example.
However, just a second, because that’s not all.
On the other hand, unlike what happened in other countries that achieved a great economic
takeoff, the truth is that these governments were quite interventionist:
For example, they decided to promote certain industries, which they themselves chose and
which they helped grow from within the government itself;
They also promoted a new cartelization of national companies...
supposedly to... avoid what they considered to be excessive competition...
- (Gesture:?)
Although I don’t know… it sounds like it was mainly a way to help out their friends.
Regardless, it had amazing results.
In the early 1960s, Prime Minister Hayato Ikeda announced a plan to double the size
of Japan's economy in just 10 years.
To reach this goal the country needed to maintain an annual average growth of 7.2% for that
entire time.
International analysts considered it impossible.
10 years later, Japan had far exceeded its goal.
The country had multiplied the size of its economy by 2.8 because it had an average annual
growth of more than 9.3%.
Thus, in 1973, the Japanese economy had multiplied by more than 5 since 1953, that is, in just
20 years.
On the other hand, GDP per capita multiplied by 4 and within a few years Japan became the
largest asset holder in the world and the largest humanitarian aid provider.
Even the Tokyo Stock Exchange managed to outperform the New York Stock Exchange for a short period
of time.
But... you know what, folks?
This is when a great controversy arose…
On one side, some defend the country’s spectacular growth despite all these government policies.
That is to say, the 3 factors that we covered at the beginning of the video-- Savings, work
and training-- were so strong that they managed to take off in spite of the government’s
interference.
But some argue that since the government kept the macroeconomic parameters under control,
these public policies actually accelerated the country's growth.
By the way, which group do you belong to?
Leave your answer in the comments section and also in this survey.
What there’s little doubt about, is that it was exactly during that time that some
of the great imbalances that led the country into a huge crisis, from which it hasn’t
yet recovered, emerged.
But we already talked about that in this other video.
So I really hope you enjoyed this video, please hit like if you did, and don’t forget to
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Don’t forget to check out our friends at the Reconsider Media Podcast - they provided
the vocals in this episode that were not mine.
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And as always, I’ll see you in the next video.