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Japan Must Let Zombie Companies Die

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Re: Japan Must Let Zombie Companies Die

#81

Post by TheOtherHobbes »

lmm wrote: post #60
orangecat wrote: post #13

Earlier quoted context omitted.

If the goal of Japanese policy makers is to boost demand, and that does seem like a wise goal, then keeping 50,000 workers employed at Sharp seems like a smart bet, compared to keeping 100 people employed at some nimble, fast-moving startup. If you want to make sure people have money so that demand is increased then just give them money, don't keep useless jobs around. the USA was able to sell its stake in GM at a pr…

> If you want to make sure people have money so that demand is increased then just give them money, don't keep useless jobs around. Ideally yes, but that's politically difficult.

In spite of fifty+ years of MBA thinking, jobs aren't really fungible.

When you fire a lot of people you're not just reducing costs - you're also hoping that you will never again need the skills and the knowledge of your internal processes that those people have.

Sometimes it's a good bet. Sometimes it isn't.

Re: Japan Must Let Zombie Companies Die

#82

Post by saint_fiasco »

nandemo wrote: post #77
lmm wrote: post #61

Earlier quoted context omitted.

Maybe. But you'd be funding people to live in the most expensive country in the world and where there's hardly any startup infrastructure. Even if you have funding, can you rent an office? Can you furnish it without paying for 100 people's worth of office furnishing? If there's a hardware element, are there businesses that will produce a prototype quickly? Can you recruit people? What are you going to do about series…

Exaggerate much? Tokyo might not have the SV's startup "scene" but apart from funding, it has pretty much all infrastructure a software startup needs, just like any large city in a developed country does: fast, reliable internet connection, a functioning legal system, and enough qualified labor. Generally speaking, Tokyo is considerably cheaper than San Francisco or NYC at the current exchange rate (rather, at the ex…

It might be hard to find enough qualified labor because unemployment is so low and people are very reluctant to switch employers.

Re: Japan Must Let Zombie Companies Die

#83

Post by woliveirajr »

orangecat wrote: post #13
lkrubner wrote: post #10

The above article is best understood as a political piece, rather than a business story. Every single sentence in this article can be picked apart, but doing a line-by-line critique would miss the larger problems with the article. The author assumes that more productivity is always good, even though Japan has been suffering a lack of economic demand for most of the last 26 years. Big gains in productivity would only…

If the goal of Japanese policy makers is to boost demand, and that does seem like a wise goal, then keeping 50,000 workers employed at Sharp seems like a smart bet, compared to keeping 100 people employed at some nimble, fast-moving startup. If you want to make sure people have money so that demand is increased then just give them money, don't keep useless jobs around. the USA was able to sell its stake in GM at a pr…

Well, take a look on how Brazil is doing, since they had this idea in (more or less) 2007 to save the economy from the global crisis, and tell me more about it. give a special attention to the years 2014-2015.

Re: Japan Must Let Zombie Companies Die

#84

Post by notahacker »

klibertp wrote: post #79
cturner wrote: post #42

Earlier quoted context omitted.

So the issue is - is it possible to produce a valid measurement? In scientific method, part of an experiment involves a control. There's no way to produce one in economics - the systems are too complicated. You can't know whether measurements you take are the result of your change directly, or caused by network effects of the change as part of other things going on, or just weather from unrelated things happening in…

> Austrian instincts are partly about [...] Am I the only one who finds the word "instincts" used in this context deeply disturbing? We've got many well-intentioned people in history who acted according to their instincts and beliefs. Some of these invented and practiced eugenics, others tried to create an "agrarian communist society" while killing off some 2 million people in 4 years (I read about Khmer Rouge regime…

What makes you think that "modern economists" are more likely than the average person to (i) want to make us all into farmers and kill off intellectuals and (ii) have any chance of succeeding? All the available evidence would suggest that economists are disproportionately unlikely to favour agrarian dictatorship and no better placed than the average person to succeed.

In fact "unlikely to favour large scale social engineering backed by force" is about the only thing Austrian economics has in common with mainstream modern economics...

Re: Japan Must Let Zombie Companies Die

#85

Post by tonyedgecombe »

lkrubner wrote: post #10

The above article is best understood as a political piece, rather than a business story. Every single sentence in this article can be picked apart, but doing a line-by-line critique would miss the larger problems with the article. The author assumes that more productivity is always good, even though Japan has been suffering a lack of economic demand for most of the last 26 years. Big gains in productivity would only…

General Motors and Chryslers competitors didn't win from the bailout.

Re: Japan Must Let Zombie Companies Die

#86

Post by DominikR »

jljljl wrote: post #33
duncan_bayne wrote: post #17

Earlier quoted context omitted.

I think the author was criticising malinvestment, rather than arguing for higher productivity. https://en.wikipedia.org/wiki/Malinvestment According to the Austrian school, market interventions like those in Japan are bad _regardless_ of the effect on productivity, because they represent malinvestment.

How exactly do you judge a malinvestment if you don't measure its effects?

If you bail out a company that generates only losses for years it is pretty safe to assume that this is a bad investment. (Edit: would you invest in these companies? I doubt it)

I'm not saying that turnarounds are impossible (Apple) but what the government is in effect doing is to take resources (taxes) from viable entities and giving it to those that are simply not viable. (at least at the moment)

Or the government itself takes more debt to pay for it. Japans debt to GDP ratio is currently it 175% which is insanely high, this can't go on forever.

In my view the better solution would be to let these companies go bankrupt. The investors lose money, employees are let go but the resources will not vanish into thin air.

Someone else will buy it and hopefully build something more viable. Government can then reduce its expenditure and maybe even reduce taxes, which would also help in the long run.

Re: Japan Must Let Zombie Companies Die

#87

Post by crdoconnor »

simonh wrote: post #76
crdoconnor wrote: post #67

Earlier quoted context omitted.

>Are you seriously suggesting that sucking subsidy money out of the productive economy to pay for those jobs is not depressing demand? Which part of giving people money do you think would reduce their tendency to spend it?

Productive companies and organisations generate demand for the things they need in order to be productive. Unproductive ones generate less demand per worker. Yes those workers still need to pay for things, but if they are sitting around at work not doing much their work activity is a waste. Building a bridge to nowhere only creates demand for concrete and steel and goods for the workers. A useful heavily used bridge…

Actually, "efficient" factories that don't face competitive pressures (i.e. that don't drop their prices) will have a lower multiplier.

Money spent on wages gets spent and circulated within the economy at a higher rate than money that is diverted towards profits (which tends to bid up the value of fixed assets in a demand constrained environment).

>the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities.

Well, if you assume that opportunities for "demand producing activities" (i.e. products which will convince the Japanese to stop saving at such a high rate) are plentiful then yes. In the 80s perhaps.

But they're not. The Japanese really can't be convinced to spend.

Re: Japan Must Let Zombie Companies Die

#89

Post by sageikosa »

jzelinskie wrote: post #5

>you decide to leave your job and start a business with your college buddies I know the point they were trying to make in the article, but the primary reason this doesn't happen in Japan is the cultural fear of failure rather than the system being broken. Once you're in, the nanny corporation will take care of you for the rest of your life. Once those corporations are in, the government will take care of them for the…

My take on 19th century Japanese modernization was that Japan industrialized but never really shook its feudal cultural inertia.

Re: Japan Must Let Zombie Companies Die

#90

Post by lmm »

nandemo wrote: post #77
lmm wrote: post #61

Earlier quoted context omitted.

Maybe. But you'd be funding people to live in the most expensive country in the world and where there's hardly any startup infrastructure. Even if you have funding, can you rent an office? Can you furnish it without paying for 100 people's worth of office furnishing? If there's a hardware element, are there businesses that will produce a prototype quickly? Can you recruit people? What are you going to do about series…

Exaggerate much? Tokyo might not have the SV's startup "scene" but apart from funding, it has pretty much all infrastructure a software startup needs, just like any large city in a developed country does: fast, reliable internet connection, a functioning legal system, and enough qualified labor. Generally speaking, Tokyo is considerably cheaper than San Francisco or NYC at the current exchange rate (rather, at the ex…

> Tokyo might not have the SV's startup "scene" but apart from funding, it has pretty much all infrastructure a software startup needs, just like any large city in a developed country does: fast, reliable internet connection, a functioning legal system, and enough qualified labor.

I was trying to pre-empt "San Francisco is just as expensive as Tokyo". Yes it is, but it has a lot of startup-specific infrastructure that may (or may not) be worth the excess cost. (Likewise NYC/London/Berlin). If you just want the things you list, you can go somewhere much cheaper than Tokyo (e.g. central US, northern/western Europe - as you say, any large city in a developed country will do).

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