Japan: Whose Lost Decade?

Jan 10th, 2012 | By | Category: Economics and GDP

Japan’s economy stronger than USA’s This is usually obfuscated by using total GDP to measure growth, but per-capita GDP growth in Japan for the past decade has been stronger in Japan than in the U.S. or the Euro Zone.

Japan's per-capita GDP, courtesy of The Economist

We find it encouraging that even The Economist is noticing one of the pitfalls of relying on GDP as a measure of prosperity and well-being.Japan is almost always refered to as an economic basket case in the Western press because GDP has not risen in the past decade. However, unlike the Euro zone nations or the United States, population is falling in Japan. and so the average “Domestic Product”, or economic activity, per person has actually risen more in Japan than in the US or the Euro zone. (see the chart below)

The second measure by which Japan surpasses the US and the Euro zone is unemployment. Currently only 4% of Japanese are unemployed as opposed to 9% in the US and 10% in the Euro zone. What are they doing right?

However, notice that the growth addicts can not accept this as untarnished good news. The qualification on the headline “at least for the elderly” seems an ominous flag, until you realize that “elderly” here means 45 years old, and that the cultural norm is for older Japanese save money to pass along to their children and grandchildren. And how is it harder for younger people in Japan, where unemployment is only 4% than in the US where it is 9%, and much, much higher for young people?


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