> Do you mean to say that the Japanese government can spend its way out of
> worldwide deflationary pressures & the dead end of product-cycle
> industrialization at which Japan has found itself? When _all_ other
> governments are pursuing neo-liberal policy? Even with no Red alert
> motivating the ruling class to pony up some welfare programs to buy
> workers' allegiance?
>
> I thought it's only Dennis R. who had a case of incurable Eurasian
> euphoria.... (Yes, a medical metaphor! So sue me!)
I'm not euphoric about the possibility of Asian recovery on these terms--I just disagree that, at the end of the day, fiscal policy is dead as a policy choice. (I also disagree categorically with Dennis' saying that Europe and Japan are the pre-eminent global economic powers--that they "rule the roost" as he recently put it.) Japan doesn't have to spend its way out of worldwide deflationary pressures (worldwide?)--it only has to spend its way out of Japanese deflationary pressures, for the time being, and bring its GDP growth up to something modest like 2.5% per year. In that sense, there could be a kind of perverse rightness to Krugman's suggestion to start the printing presses--although the owners of all that debt in the Japanese bourgeoisie wouldn't like it, since it would make all those bad loans even cheaper for American banks. I don't know about the end of product-cycle industrialization business: in a liquidity trap, aren't all kinds of investment are disappearing? So it wouldn't matter if there were some kind of capital upgrade or revolution. Also, the recession hasn't been brought on by the "structural conditions" of Japanese markets--it has been brought on by a speculative bubble. Trying to emphasize "restructuring" seems to be a displacement to me.
There's no red menace necessary for Japan to pursue this kind of spending. As critics of Japanese fiscal policy never tire of mentioning, public works spending--such as it is--is not so much targeted at workers as people who live in rural areas, a mainstay of LDP support. Also, fiscal spending is not universally popular--Tokushima recently held a referendum to vote against construction of a proposed government dam. So, if the government is trying to win workers' allegiance, it's only partly working.
All best, Christian