The downsizing of Japan’s ambitions can be seen on the streets of Tokyo, where concrete “microhouses” have become popular among younger Japanese who cannot afford even the famously cramped housing of their parents, or lack the job security to take out a traditional multidecade loan.
These matchbox-size homes stand on plots of land barely large enough to park a sport utility vehicle, yet have three stories of closet-size bedrooms, suitcase-size closets and a tiny kitchen that properly belongs on a submarine….
But in Japan, nearly a generation of deflation has had a much deeper effect, subconsciously coloring how the Japanese view the world. It has bred a deep pessimism about the future and a fear of taking risks that make people instinctively reluctant to spend or invest, driving down demand “” and prices “” even further.”
A new common sense appears, in which consumers see it as irrational or even foolish to buy or borrow,” said Kazuhisa Takemura, a professor at Waseda University in Tokyo who has studied the psychology of deflation.
The NY Times has a fascinating front-page story, “Japan Goes From Dynamic to Disheartened.” It explains how, for many Japanese, “living standards slowly crumbled along with Japan’s overall economy,” thanks in large part to two decades of failed economic policies.
Voters in this country who seem poised to put the people who got us in our current economic mess back in charge, at least of the US House of Representatives, may think grid-lock is good, yet I’m sure they also believe such a future is impossible for this country.
The NYT‘s explanation for why it can’t happen here isn’t reassuring:
Many economists remain confident that the United States will avoid the stagnation of Japan, largely because of the greater responsiveness of the American political system and Americans’ greater tolerance for capitalism’s creative destruction. Japanese leaders at first denied the severity of their nation’s problems and then spent heavily on job-creating public works projects that only postponed painful but necessary structural changes, economists say.
“We’re not Japan,” said Robert E. Hall, a professor of economics at Stanford. “In America, the bet is still that we will somehow find ways to get people spending and investing again.”
Huh? The “greater responsiveness of the American political system”? Are the reporters and editors at the one-time paper of record even paying attention to what’s going on in this country? The American political system — which already can barely pass an extension of jobless benefits and can’t even bring up a centrist, business friendly, Republican-designed strategy to limit carbon pollution and promote clean energy — is about to become all but ungovernable because:
- Progressives refuse to clearly articulate how we got in this mess, what the heck they’ve been doing to get us out, and what the opposition has stopped them from doing (see Krugman sets the narrative straight: “We never had the kind of fiscal expansion that might have created the millions of jobs we need” and David Stockman bombshell: How my Republican Party destroyed the American economy).
- The Tea-Party driven conservative movement has realized its nihilistic policies and messaging, while ultimately self destructive in the medium and longer term, is a short-term winner (see Why the victory of the Tea Party extremists (backed by Big Oil) over the slightly less extreme GOP establishment (also backed by Big Oil) is good for progressives, but bad for climate and clean energy).
- The media is primarily interested in reporting on the horse race, who’s up and who’s down, rather than the implications for America and the world (see Joe Klein on the GOP: “How can you sustain a democracy if one of the two major political parties has been overrun by nihilists? “¦ How can you maintain the illusion of journalistic impartiality when one of the political parties has jumped the shark?” and How the status quo media failed on climate change).
There is no genuine possibility that Congress is going to act to address our economic or energy or climate problems anytime soon — see Sen. Bennett: “The concern I have is that ideology and a demand for absolute party purity endangers our ability to govern once we get into office.” Indeed, the message that will be delivered in the November election to every Republican is that even the tiniest hint of bipartisanship is fatal to your political prospects. It’s not like Lisa Murkowski (R-AK) or Bob Bennett (R-UT) are actually moderates. They just weren’t sufficiently extreme or anti-bipartisan enough for the Tea Party crowd.
And where is the evidence Americans have “greater tolerance for capitalism’s creative destruction”? The auto bailout appears to be a tremendous success, but it is vilified along with the rest of the bailouts, which, while they may have been imperfect, appear to prevented the Bush-Cheney depression. Americans are so unhappy with the current round of capitalism’s creative destruction that they are going to hand the keys of the car back to the people who ran it into the ditch.
Of course, quite separate from the short-term question of whether we can pull the economy out of its torpor this decade is what happens in the medium term now that the Tea Party crowd has made serious action on climate and peak oil — or even a big push on clean energy — all but inconceivable. As Tom Friedman wrote over a year ago (see Is the global economy a Ponzi scheme?):
“We created a way of raising standards of living that we can’t possibly pass on to our children,” said Joe Romm, a physicist and climate expert who writes the indispensable blog climateprogress.org. We have been getting rich by depleting all our natural stocks “” water, hydrocarbons, forests, rivers, fish and arable land “” and not by generating renewable flows.
“You can get this burst of wealth that we have created from this rapacious behavior,” added Romm. “But it has to collapse, unless adults stand up and say, ‘This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate “¦’ Real wealth is something you can pass on in a way that others can enjoy.”
And so every generation that comes after the Baby Boomers are poised to experience the dramatic changes in lifestyle that inevitably follow the collapse of any Ponzi scheme (see”Labor Day, 2029: When the global Ponzi scheme collapses, the only jobs left will be green”). Unless the Tea Party can be stopped, that is.