1) They take a long time, and I’m a busy guy running a company
2) I can’t bother responding to critics (see #1)
3) Internal CScout disagreements about economics
4) Bright and cheery is good for business!
5) I don’t want to have a heart attack
It’s been well-documented that the Old Grey Lady is…well…old, grey, and behind the times, and shows no sign of being willing to retire to the nursing home anytime soon. The NYT is constantly on the case, discovering things in Japan that everyone has known about for years: QR Codes, internet cafes, and even complete bullshit like Japanese people dressing like vending machines.
I’ve never met Martin Fackler (though I have had the pleasure of drunkenly arguing economics with NYT reporter (and LSE grad) Hiroko Tabuchi) and I’m sure he’s very intelligent and amiable. However, his latest piece on Japan entitled Japan Goes from Dynamic to Disheartened is a perfect representation of everything that’s wrong with reporting on Japan, economics, and general consumer trends all wrapped into one. More annoying is getting the story emailed to me by twenty different people just to show how fucked Japan is and, thus, how screwed I am.
It is undeniable that Japanese consumer culture has changed quite a bit since the good old days of bubble and boom, but I would argue that it’s a GOOD thing this is finally happening. Japan might just be on the way to the correction it’s needed for twenty years.
Being more interested in the philosophies underpinning political and economic thought (rather than “politics” and “economics”), my most difficult goal is in defining terms. After all, without defining our terms it’s useless to even begin such discussions without them devolving into nonsensical Ham Sandwich Fallacy (of four terms) squabbles:
Major premise: Nothing is better than eternal happiness.
Minor premise: A ham sandwich is better than nothing.
Conclusion: A ham sandwich is better than eternal happiness.
This may be a simplified example, but without defining the meaning of “nothing”, we can argue all day using the same vocabulary, but never truly understanding one another.
In the case of discussing Japan’s economic situation, we first need to define the meanings of “inflation” and “deflation”. Contrary to what you may have heard, neither term means rising or falling prices, but rather an expansion or contraction of the monetary supply which may or may not lead to price fluctuations. After all, computers and mobile phones have continually gotten cheaper over the last decade, but one would hardly attribute that to deflation. Lower prices, such as those Japan is experiencing, can be a consequence of deflation, but not always!
Back in the days when people carried gold coins for money, inflation was achieved through literal debasement of the currency. People would shake the coins in a bag, or shave off bits and pieces around the edges, in order to get tiny pieces of gold to turn into new coins. Thus, the ridged edges of coins were created to combat this (these days it’s just ornamental). This meant that the value of each coin became less, and prices would go up as a result. These days, in the same manner, central banks around the world create new money, but instead of shaving the coins they just add a couple of decimal points to a spreadsheet somewhere.
With all of the complaining about deflation and prices that are “too low”, I have to wonder, “Who are they too low for?”. God forbid that the rest of us living with budgets and expenses get to spend a little less on our beef bowls.
Yes, Japanese consumers are saving more, but they’ve always been good savers. In fact, it’s a testament to the will of the Japanese people that they still save at all since they haven’t earned anything in interest for years! Rather than bemoaning the newfound frugality of Japanese youth, we should be celebrating it. Savings are a GOOD thing, just as having a currency that’s worth something is ultimately beneficial to an economy. An economy, I might add, that has to import nearly 50% of its food. Why on earth would we want a devalued yen? Sure, Sony can sell more televisions and cars to Americans who can’t afford them anyway, but the rest of us have to eat. Falling prices allow for falling wages as well, thus keeping companies profitable and the rest of the economy employed.
