From: Richard Katz (rbkatz at ix.netcom.com) Date: 2002.11.4
My new book, "Japanese Phoenix: The Long Road to Economic Revival" is due back from the printers in about three weeks.
Any professors who wish a review copy to see if they want to use it in their course can e-mail Dudley Jahnke at djahnke at mesharpe.com. Normally, surface mail is used, which would mean a long wait for those outside the continental U.S. Let Dudley know if you're in Japan and want to arrange something special.
For more information on the book contents, see the M.E. Sharpe website at http://www.mesharpe.com/results.asp?Title=Japanese+Phoenix%3A+The+Long+Road+to+Economic+Revival.
Toyo Kezai is publishing a Japanese language edition at the end of this month, entitled, Fushicho No Nihon Keizai.
The main message of the book is contained in its opening paragraphs:
A half century ago Japan picked itself up from the ashes of war and, within a few short years, stunned the world with its economic achievements. It will do so again. Japan will reform and revive. When it does, its economic achievements will once again earn the world's admiration. Once again its per capita GDP will grow faster than that of the United States. Its information technology revolution will prove even greater than America's, precisely because all the waste and inefficiencies eliminated by IT are greater in Japan. As Japan brings its inefficient industries up to world benchmarks, sustained growth of 3 percent, perhaps more, is within reach.
That痴 the good news.
The bad news is that it will take ten more years to reach this promised land. And the road will be very bumpy. The renewed recession and banking troubles that began in 2001 are some of those bumps. So was the grassroots revolt that led to ascension of reformist prime minister Junichiro Koizumi in 2001.
Some people say that Japan is reforming in steady, incremental fashion. Others believe that most of what passes for reform has been a sham. In my view, both of these perspectives are one-sided. I see a long period of trench warfare between the forces of reform and resistance, complete with institutional upheaval. The LDP may not survive the process. The book is a progress report on that battle, as well as a guide to what kind of reforms I see as necessary.
Let add a comment on the recent battle over NPLs. The outcome is clearly a big disappointment. The package released on October 30 contains nothing that could not have been released under Yanagisawa. Koizumi opened a big window of opportunity with the appointment of Takenaka. However, he stood aside from the fray as the banks and LDP roughed up Takenaka. Kamei even accused Takenaka of being nothing more than an agent of foreign vulture funds. Moreover, Koizumi did not relent on the kind of spending required by a serious macroeconomic (tax cut) safety net and a social safety net (unemployment insurance, etc.). Takenaka had to work within the constraints set by his boss. If the only options offered appear to be bailout or uncushioned hard landing, Japan will choose bailout every time. It's a shame. A lot more could have been done to advance the process forward. Under the current policy, new bad debt will continue to rise faster than old bad debt is written off.The only good out
come is the widespread negative reaction. People have learned from the 1999 experience. This is certainly not the end of the story. Until the problem is solved, it will keep coming to the fore again and again and again. Whether this is a matter or weeks or months remains to be seen.
Richard Katz The Oriental Economist Report
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