Studying some more (look at me go!)

Alright, I’ve got to get through two more countries for my Comp Econ review: Japan and China. The ignorant American in me wants to say that they’re basically the same. The ignorant American in me is mostly wrong, and I’ll tell you exactly why.

Japan is like that really smart, but mean kid in elementary kid that would get a perfect on all his spelling tests and would shove it in your face every time. But it’s okay, because that kid always ends up getting picked last in freeze tag.

Japan took a lot of China’s culture and made it their own in the beginning. Then they got all offended, and basically shut itself off from the world for 250 years starting in the 1600’s because apparently a bunch of other areas tried to control it, or whatever. Really, Japan? Grow up, that’s what bratty 5 year olds do. Anyway, once it decided to play nice with all the other surrounding countries, it paid off its samurai (most of them became business men), gave farmers land, and opened the country to outside influence.

Through the early 1900’s, Japan really wanted to take over other places, and mostly succeeded.Their economy grew rapidly through the 1930’s, mostly because of the army buildup. Then they tried to screw with the United States. Haha, they lost.

America then took over Japan in 1945, demilitarized it, and made Japan more capitalist. Japan used to have these things, zaibatsus, which were basically huge conglomerate groups that worked together. Well, America stopped that, and made corporations fend for themselves.

1955 marked the creation of the Liberal Democratic Party, a conservative group. Fun fact, this group still rules Japan! That’s a super long time.

Japan’s economy has been pretty successful for a while. But why? Some attribute it to it’s familistic groupism, where basically everyone acts like one great big family, and everyone has each other’s backs. In firms, this is acted out by way of the three sacred treasures. These treasures are unfortunately metaphorical (bummer I know), but they are: lifetime employment, seniority-based wages, and enterprise unions.

Having a job guaranteed for life may seem awesome, but in reality it’s only guaranteed for about 30% of the labor force. And if it’s guaranteed, the company basically owns you. This theoretically creates loyalty, and makes people more productive.

Seniority-based wages also is supposed to build loyalty, and is built of the Confucian belief of respecting elders. However, when wages aren’t built off of productivity, productivity tends to decrease. Many firms are moving away from seniority-based wages and towards efficiency-based wages.

Enterprise unions are labor unions within a specific corporation, as most workers just move within one single firm for the majority of their lives. These unions account for the small wage differentials between the higher-skilled workers, and the low-skilled workers within a firm.

The Japanese use a different kind of industry organization as well, called the keiretsu. Horizontal keiretsus are pretty much like zaibatsus; they’re firms in different industries linked through one bank and a trading company. Horizontal usually follow the three sacred treasures. Vertical keiretsus are usually a set of suppliers linked to one major producer through a long-term contract. These keiretsues don’t usually follow the three sacred treasures.

It’s also said that the Japanese follow a J-mode type of organization. This J-mode is characterized by the attitude of sharing results horizontally. For example, companies getting together and telling each other what worked and what didn’t from their own experiences. This depends on long-term relationships between workers and firms, and banks and firms.This is also carried out through consensual decision making – basically making sure everyone involved in a decision on board. that’s why the Japanese take forever to make business decisions. Something else that is encouraged? Ringi-sho, which is basically the little people of the company sending memos up to the big guys, letting them know what they’re doing wrong. I think that’s pretty cool, you know? Everyone gets a voice! Yay!

The rapid growth of Japan may also be attributed to the Ministry of International Trade and Industry’s industrial policy, which involves them investing in promising parts of the economy and getting the pay off from it.

Japan also saves a lot, creating a lot of opportunity for investing, but with the population aging like it is, this may decrease saving significantly.

Japan was been characterized as a market capitalism with elements of a traditional economy, and indicative planning and guidance. They’ve got a huge debt problem right now, as they keep spending more money, since the people aren’t.

The income in Japan is equally distributed better than most other countries, probably from the set up of labor-firm relations. However, the Japanese also work a helluva lot more, and take less vacations. Not to mention their pollution problem, and their lack of fossil fuels. The fossil fuel problem is opening up a new efficient energy market in Japan, which may offer more growth for their economy.

On top of all of this, Japan is mean. Women don’t get paid a lot, and they really don’t like foreigners, which really doesn’t help their trade relations, at all.

Japan’s slowing growth is worrying the Japanese government – and so Abenomics is born. Abenomics is the combined expansionary fiscal policy, increased monetary policy, and reform heavy plan that Abe, the current prime minister of Japan, is trying to use to turn Japan around.

This could fail miserable. Who knows how successful “reforms” actually are in the political realm, and Japan is already in tremendous debt.

Uh oh Japan, better start playing nicely with all your trading buddies, and stop spending all your money in one place!