Japan Falls into Recession • Hacker News Board

Re: Japan Falls into Recession

#11

Post by dmritard96 » Mon, Nov 17, 2014, 1:32 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

I really hope that we do not rely on population growth to stimulate or sustain an economy for too much longer. At some point humans will need to think about carrying capacity and understand how to structurally reconfigure such that we can maintain a high quality of life for us and other earth inhabitants.

Re: Japan Falls into Recession

#12

Post by chvid » Mon, Nov 17, 2014, 1:32 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

Had it not been for immigration from the 3rd world most 1st world countries would have a population in decline.

Re: Japan Falls into Recession

#13

Post by TazeTSchnitzel » Mon, Nov 17, 2014, 1:33 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

With the way Japanese society feels about immigrants, I doubt it'd be politically palatable.

Re: Japan Falls into Recession

#14

Post by sliverstorm » Mon, Nov 17, 2014, 1:34 AM UTC

gst wrote: post #7

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

> What they need to do is figure out a way to grow the population locally or through large-scale immigration. That doesn't sound like a long-term solution. There'll be a limit to population growth at some point.

Well, their population looks about ready to take a nosedive, so it's not like they "just aren't growing fast enough".

Re: Japan Falls into Recession

#15

Post by tormeh » Mon, Nov 17, 2014, 1:39 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase the amount of money in circulation. A simple way to do that is for the central bank to make money up and give, say, 20000 yen to each citizen every year until deflation went away. This is called a helicopter drop in finance-speak, and seen as very radical. Deflation should be cause for celebration: It means the central bank can print money without hurting the economy. The money thus printed could be used for all kinds of good purposes, but it's not done.

I guess the reason helicopter drops are not done is that it kinda breaks some illusions people have with money. People generally don't know that central banks buy second hand government bonds, basically giving money to those who hold that kind of asset. In short, there's no law of physics that say you have to work for money. I guess they don't think the plebes would respond well to knowing this.

Re: Japan Falls into Recession

#16

Post by mc32 » Mon, Nov 17, 2014, 1:41 AM UTC

sliverstorm wrote: post #14

gst wrote: post #7

Earlier quoted context omitted.

> What they need to do is figure out a way to grow the population locally or through large-scale immigration. That doesn't sound like a long-term solution. There'll be a limit to population growth at some point.

Well, their population looks about ready to take a nosedive, so it's not like they "just aren't growing fast enough".

Be that as it may, the other option, to export their way out of this is not going to happen. They are not a cheap-labor based economy --and they don't have known viable reserves of natural resources. So, what are they to do?

Re: Japan Falls into Recession

#17

Post by georgeecollins » Mon, Nov 17, 2014, 1:41 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

I agree that Japan (and the US) would benefit from more immigration for a lot of reasons. But if you can only grow your economy by adding people, you aren't really increasing per-capita income, at least for the working class.

Re: Japan Falls into Recession

#18

Post by techdragon » Mon, Nov 17, 2014, 1:41 AM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

Immigration is painfully unlikely due to cultural issues. It's oft suggested by non Japanese people looking at the problem but at least from what I can see, the majority of the Japanese voting public don't want immigration. There's reasons if you want a fun read. Particularly interesting is the history of people of Korean decent who are native Japanese residents for a generation or two.

Re: Japan Falls into Recession

#19

Post by rrggrr » Mon, Nov 17, 2014, 1:43 AM UTC

Demographics. Fukishima. China. Japan faces enormous challenges. Aging population means increased healthcare costs supported by a (temporarily) declining workforce and decreased tax revenues. Fukishima's costs are incalculable but impact broadly healthcare, manufacturing, farming and fishing. Much Japanese manufacturing has moved to China and adding to that expense is Japan's need to increase its defense spending to provide a small measure of balance in its territorial disputes with its neighbor. A wave of investment and entrepreneurship is required in Japan that I'm not sure the country is capable of fostering at this time. Bearish.

Re: Japan Falls into Recession

#20

Post by csa » Mon, Nov 17, 2014, 1:44 AM UTC

lkrubner wrote: post #5

efjhewjfnkew wrote: post #3

Here's the thing: you actually need a strong middle class to buy your products. No amount of artificially inflating the value of the stock market through quantitative easing will give you a healthy economy. QE is like putting a fresh coat of paint on a house with a rotten interior: it makes things look pretty, but the structural integrity of the building is almost non-existent. Employees working themselves to death f…

But quantitative easing lowers interests, so that people can more easily take out a housing loan, so they can fix the "rotten interior" -- they can replace the rotting wood, they can replace the moldy roof, and by doing so, they stimulate the economy. "Putting a fresh coat of paint on a house" also stimulates the economy. You have chosen some strange metaphors for criticizing an economic program. If your point is tha…

> But quantitative easing lowers interests

Interest rates have been low -- very close to zero -- for a long time now (two decades?). Real interest rates have been negative over the same time period. Interest rates can't really be lowered in any way that is meaningful to the middle class.

If you talk to "regular" people, overall economic confidence is extremely low. People with super-secure jobs (e.g., with the government) are rat-holing their money away while it earns little interest and negative real interest. Many folks don't consume even within their means due to the desire not to appear to be a conspicuous consumer to their peers and/or irrational economic fears (e.g., losing their unlosable job).

Said another way, the velocity of money in Japan is extremely low, and it doesn't show any signs of recovering.

> If your point is that Japan needs more production and less consumption

I don't want to speak for the OP, but the reality is exactly the opposite -- they need to consume more, and there is tons of excess capacity right now.

> lower interest rates also allow businesses to borrow and invest at lower rates.

So few businesses are borrowing money compared to those in a healthy economy. Investment is often put off until (or past) the time it is needed due to the perception of economic uncertainty. Any investment in a business that can be delayed or done cheaply (i.e., penny-wise pound-foolish) is delayed or done cheaply... no amount of low-interest money can incentivize them more. They need to see real signs of a long-term strengthening of the economy before they are willing to take the long-term approach that Japan is so famous for.

The one potential "good" outcome for QE is that the yen will weaken (e.g., I fully expect ~180 yen per dollar or more to happen) and this will make Japanese manufacturing extremely competitive internationally. The problem is that this weakening of the yen creates other forms of turmoil and uncertainty in the rest of the economy.