Japan - The Fading Economy

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  • Published: 22 August 2019
  • Japan became the first of the modern Asian countries to experience massive sustained economic growth. Japan had a lot going for it after the end of the war, it was able to rebuild with the help of the allies and go through its own modern industrial revolution. In the 1960’s japan was growing at a rate of 10% a year which for a national economy was unheard of at the time, this economic growth continued and japan was able to ride the wave of globalisation as the worlds low cost manufacturer. Japan developed a huge car industry, it was at the forefront of consumer electronics and was working meticulously to make sure that this new found wealth was being invested wisely into infrastructure like high speed rail, airports and metro systems that would make their economy even more efficient.

    At its peak there was so much wealth in japan that the real estate market of Tokyo had some pretty crazy anomalies. In the late 80’s it was estimated that the imperial palace covering an area of 3.4 square kilometres in central Tokyo had a real estate land value greater than all of the real estate in California. Of course, the imperial palace was never for sale and this was based of the cost per square feet in the area but it still should give a good idea of just how much money was washing around in Japan.

    In this video we will look at how this all went so wrong and what it can tell us about countries that are today where japan was 40 years ago.

    References -

    Hutchison, M.M., Westermann, F. and Fuest, C. eds., 2006. Japan's great stagnation: financial and monetary policy lessons for advanced economies. Mit Press.

    Lockwood, W.W., 2015. Economic development of Japan (Vol. 2161). Princeton University Press.

    Music - superiorjanitorial.pro/user/watch?v=KBeTtawWClE

Comments • 2 122

  • Yadin
    Yadin  9 hours back

    “Deflation will make an economy come to a grinding halt” ... um no, production will fall until prices rise back to break even

    • Mtbdrum
      Mtbdrum  14 hours back

      Anyone wanting a more in-depth look should watch The princes of the Yen here on Youtube. Very insightful.

      • tanjoy0205
        tanjoy0205  17 hours back

        Can do one on Singapore

        • Charles Jannuzi
          Charles Jannuzi  20 hours back

          Some of the reasoning is flawed here. People don't think like that about purchases like cars. And since their money earns no interest, it holds back consumption. Savers are penalized in almost every aspect of the country now. Near-zero or even negative interest rates combined with artificial Abenomics (cack) inflation.

          • Stefche Macrae
            Stefche Macrae  20 hours back

            Are you a fellow (ex) VCE economics student? Target inflation between 2-3%p/a sounds like something straight from the RBA charter

            • Charles Jannuzi
              Charles Jannuzi  20 hours back

              A timeline would help. Japan faltered after the war, and was going to turn socialist. That is why the US intervened with aid, like the Dodge Plan. It must be pointed out it was mostly aid in the form of loans, and so Japan became a high-debt country right from the start of the boom.

              • Anselle Joe Singco
                Anselle Joe Singco  21 hours back

                i love your voice...

                • Apple Islander
                  Apple Islander  23 hours back

                  there is only one true way for Japan to get out of this shithole
                  that nigga needs an oil boom

                  • Sumeet tanwar
                    Sumeet tanwar  23 hours back

                    watch Prince of yen, really good documentary what central bank did to Japan.

                    • Laurence Cserépy
                      Laurence Cserépy  1 days back

                      Japanese inflation is not 2-3% its between 0 and 1%

                      • NaitomeIya
                        NaitomeIya  1 days back

                        Economy is just all about MAKIN’ MONEY CIRCULATE!
                        Building a new infrastructure by contracting a private company seems to be a brainy excuse to make the money go round, but what if the money gets spent for the government officials’ private possessions overseas instead?

                        • BUX BE
                          BUX BE  1 days back

                          What is this pointing to is a new currency. I'm not talking about crypto in a dead space until him out something quite different. As I live in Sydney and you are obviously Australian, give me a call.

                          • Léa Strasser
                            Léa Strasser  1 days back

                            Declining Birth Rate, Declining Economy, this country is done.

                            • allgoo 19
                              allgoo 19  1 days back

                              I hear Nikon is brink of bankruptcy.

                              • Hawk M
                                Hawk M  1 days back

                                Just me or did the elephant get missed? Economic growth = PPP - Population, Productivity and/or Participation. Japan has had no population growth (insert immigration) and so no economic growth.

                                • Ryaken
                                  Ryaken  1 days back

                                  Japanese do have one major competitive advantage: Their anime. Of course now even the Chinese are trying to challenge it with their own animated series.

                                  • Ryaken
                                    Ryaken  1 days back

                                    Nah it makes sense. It's like maxing out all the buildings and population in Civilization.

                                    • Pro Gram Mer Ng
                                      Pro Gram Mer Ng  2 days back

                                      Japan products are the Best. THE BEST

                                      • Alex Mercer
                                        Alex Mercer  2 days back

                                        You just had to turn your video into a propaganda crap at the very end by equating China with Japan and saying that making technology is a sign of a bad economy.

                                        • Jacques Mertens
                                          Jacques Mertens  2 days back

                                          You really don't understand anything about economics. If the interest rates go down the housing market goes up. Houses will sell for whatever people can afford to borrow.
                                          You don't have any extra money at the end of the month because you're still spending most of it on your house. A lower interest rate on your mortgage, but on a much higher capital.
                                          The end result is that you are just as poor as you were before the interest rate dropped and have approx. the same amount of money to spend on household or luxury items.
                                          For that reason a lower interest rate will not cause inflation of consumer goods.

                                          • Mr Sausage
                                            Mr Sausage  2 days back

                                            why people still complaining abt jpanese peole do a crime at war .
                                            meanwhile america kill hundered thousand kids in japan

                                            • Ultimate Gaming
                                              Ultimate Gaming  2 days back

                                              Message to Japanese people
                                              START FRICKIN

                                              • DEEPANJAN SAHA ROY
                                                DEEPANJAN SAHA ROY  2 days back

                                                What i think is japan should invest and diversify its investment outside Japan and let others work for them

                                                • glitch gamer
                                                  glitch gamer  2 days back

                                                  How japan seems soo well doing

                                                  • Sanuku
                                                    Sanuku  2 days back

                                                    Never borrow money
                                                    IT doesnt matter why would you
                                                    Dont dont do IT
                                                    Never
                                                    Unless internet rate is 2/3% or less
                                                    Or even than no

                                                    • Sanuku
                                                      Sanuku  2 days back

                                                      They sre jot the only ones.

                                                      • Jiawei Ke
                                                        Jiawei Ke  2 days back

                                                        "Economics" worth studying? Want to learn "Jiawei No Mix". Its idea is rather simple. You must be racist and reject everything that you consider a threat and hazardous to your own well being. This also means that even if you provide obscene opinions or views online you don't really actually have to be paranoid about using VPNs. When you are under the impression you have no choice... you still have a choice. You always have a choice. If you have a nuke or possess the technology to send me to the bottom of the ocean. Go ahead and do so. No-one cares and would feel sorry for your actions.

                                                        • aa bb
                                                          aa bb  2 days back

                                                          Korea has become the 3rd superpower while Japan is now a pathetic has-been with zero competitiveness and no known export product. Japan's decrepit and moribund rail traffic system is a good example. No transfers, cape gauge, expensive fees. Even some developing countries like Thailand have better systems. I think that some third world countries will have a transfer system encompassing planes buses metro tuktuk jeepney etc.

                                                          • Christian Libertarian
                                                            Christian Libertarian  2 days back

                                                            There was clearly some kind of change in Japan in the early 1990's, but I don't know what. In the early 1990's, I bought Sony everything--TV, amplifier, speakers, WalkMan, DVD players. They were the best. Then they stopped. Sony started to try defending their old systems, not allowing new tech. I haven't bought anything Sony this millenium.

                                                            • 欧阳嘉骢
                                                              欧阳嘉骢  2 days back

                                                              Japan is still strong ok
                                                              even I'm a Chinese I can't deny the fact that Japanese is making their country better and stronger

                                                              • 欧阳嘉骢
                                                                欧阳嘉骢  5 hours back

                                                                KillMeWithPotato I'm not gonna have a debate with you about Japan. Japan is increasingly open for immigrants and it's bringing changes in Japanese society. let's see what's gonna happen

                                                              • KillMeWithPotato
                                                                KillMeWithPotato  11 hours back

                                                                @欧阳嘉骢 Uhh I literally stated what is wrong with Japan, of course I'm mad because their society has conditioned themselves to have no political will to improve or change anything.


                                                                You thought that was a "gotcha" moment?

                                                              • 欧阳嘉骢
                                                                欧阳嘉骢  15 hours back

                                                                KillMeWithPotato you're a joke man. I'm even not Japanese. Actually I'm Chinese and I'm just telling the truth. so what's wrong with Japan and why you're mad at it?

                                                              • KillMeWithPotato
                                                                KillMeWithPotato  16 hours back

                                                                @欧阳嘉骢 Oh and the Japanese dude appears now. Sorry mate, your population will stagnate to 85 million by 2060, healthcare expenses will increase, debt will get higher, and Japan will get less competitive over time.


                                                                Come on man, even your own country admits this. Unlike Germany, Japan is 100% flatlined.

                                                              • 欧阳嘉骢
                                                                欧阳嘉骢  19 hours back

                                                                KillMeWithPotato Have you ever been to Japan? You don't show the whole picture and Japan will remain the third largest economy in the world in the following ten years. and Japan is still the second largest developed country. It seems impossible for Germany to surpass Japan

                                                            • Antoine Harvey
                                                              Antoine Harvey  2 days back

                                                              Honeslly common economics are too simple... You should look into marxian economics

                                                              • Naofumi Iwatani
                                                                Naofumi Iwatani  2 days back

                                                                why do westerners love taking credit for other people's efforts? barf.

                                                              • Theodore Castro
                                                                Theodore Castro  3 days back

                                                                I visited Tokyo last year and fell in love! I hope to live there someday!

                                                                • David Orvik
                                                                  David Orvik  3 days back

                                                                  The House of the Rising Sun

                                                                  • Louis Huang
                                                                    Louis Huang  3 days back

                                                                    Taiwan is part of China so I don't think there was any need of repeating the same country twice.

                                                                    • Lauw
                                                                      Lauw  3 days back

                                                                      @Economics Explained This video is just wrong. A quick google can tell you that Japan's economy did not stagnate at 4.9 trillion for 30 years where there have been no growth at all. Their economy suffered through recessions and growth in the past 30 years, with 2012 being the year they recorded their highest GDP ever with over 6 trillion. However it has since declined again and fell into 4 trillion, and grown again into 4.9 trillion now.

                                                                      • SiGHT SMaSH
                                                                        SiGHT SMaSH  3 days back

                                                                        4:26 @scottykilmer trigerred

                                                                        • Hexo_Typhoon Oethou
                                                                          Hexo_Typhoon Oethou  3 days back

                                                                          rise VAT will help

                                                                          • drop zer0
                                                                            drop zer0  3 days back

                                                                            This video is very exaggerated. Japan’s debt are mostly internal debts lol. And japan has the biggest assets in the world.

                                                                            • Alex Mercer
                                                                              Alex Mercer  2 days back

                                                                              Try seeing how your government and companies function when that spiderweb of internal debts they're anticipating to continue are realized to be illiquid. Maybe they're still alive because foreign entities are the ones secretly owning them as assets.

                                                                          • Joshua Militar
                                                                            Joshua Militar  3 days back

                                                                            Please....you all are just overestimating the population problem of Japan....at least that problem is manageable than Europe's mass immigration.

                                                                            • newborn6
                                                                              newborn6  3 days back

                                                                              Japan would been no.1 Economy in the world if it weren't due to USA forced Plaza accord down to Japan's throat.

                                                                              • Terril Lion
                                                                                Terril Lion  3 days back

                                                                                What a socialist message. I love it.

                                                                                • Justin Chen
                                                                                  Justin Chen  3 days back

                                                                                  6:03 It's the commercial banks who are paying to the central bank, you have it opposite.

                                                                                  • ohheydjon
                                                                                    ohheydjon  3 days back

                                                                                    The Reserve Bank of New Zealand attempts to "formulate and implement monetary policy to maintain price stability and support maximum sustainable employment"

                                                                                    • Peizxcv
                                                                                      Peizxcv  3 days back

                                                                                      Just an Anglo-American economist trying to explain economic systems he don't understand. This "unlimited growth" model is based on evangelical Christianity where population and believers have to keep increasing. East Asian take a much more Taoist approach to economic growth where increase in living standards take precedent over ever-higher numbers. East Asia have a bigger economy than the US and Europe yet of the world's 20 richest people, only #19 and #20 are East Asian

                                                                                      • CJusticeHappen21
                                                                                        CJusticeHappen21  4 days back

                                                                                        GDP is only one measure of economic growth. GDP per capita (PPP) for Japan is increasing.

                                                                                        • Jarynn
                                                                                          Jarynn  6 hours back

                                                                                          Negative. In 1994 the GDP per capita of Japan was $39,000. Today it is $38,500. Not accounting for inflation. It peaked at near $50,000 in 2011 and then plummeted and has been struggling to recover since.

                                                                                      • jzd4rma1
                                                                                        jzd4rma1  4 days back

                                                                                        A fundamental problem of Japan is a lack of innovation. Japan has always been a country renowned for refining a product. 

                                                                                        Inventing and refining a product is two different things and as a result an economy built on refining a product can easily be copied and if the rival nation can do it at a lower cost it allows the rival country to take significant market share.

                                                                                        On the other hand inventing a product involves a different mindset and a free economy and a society not confined by rigid protocols. This is why companies like Microsoft, Netflix, Apple, Google and Amazon were conceived in USA and not Japan. Certain parts of USA has the right environment to help nourish new ideas and risk appetite to fund such businesses. Unfortunately Japan is a conservative country which lacks such environment.

                                                                                        Why is this a problem for Japan?

                                                                                        For a country to get rich it needs to export goods with foreign countries but unfortunately the goods Japan used to have a monopoly on is being hacked away by other eastern Asian countries. Therefore if it relies on exporting refined goods the price it commands for them will continue to shrink and so will the economy flounder.

                                                                                        The only way forward for Japan is to try and replicate its own version of Silicon Valley.

                                                                                        • macaron3141592653
                                                                                          macaron3141592653  4 days back

                                                                                          Another factor is low immigration. Most countries make up for their low birthrates by immigration, thus increasing their populations, and improving their workforce.