Neojaponisme is an English-language magazine about Japanese pop culture. In the latest issue, editor W. David Marx interviews me about the various myths and misconceptions that many Westerners (and some Japanese people) have about Japan's economy. Here is the part where I lay out most of the myths:
Can you help debunk us the main myths of the Japanese economy?
Myth #1: “Japan is an export-dependent country.”
Actually, exports are a smaller part of Japan’s economy (16%) than that of most rich nations’ (though bigger than the U.S.). Also, Japan hasn’t had a big trade surplus for a while.
Myth #2: “Japanese households save a lot.”
This used to be true, but isn’t true anymore. The household savings rate nearly hit 0% in 2008 and is only around 2% now (America’s is around 5%).
Myth #3: “Japan is a top-down economy guided by industrial policy.”
This used to be true, but isn’t anymore. The influence of METI (formerly MITI) has been curbed substantially. The Ministry of Finance still has a lot of power over banks, but this is true in other rich countries too and is generally what happens after a big banking crisis.
Myth #4: “Japan is a manufacturing-based economy.”
Manufacturing makes up slightly more than one-fifth of Japan’s economy, which is more than most rich countries (only Germany and Korea beat it), but is a lot less than most developing nations. India, for example, is now more manufacturing-intensive than Japan.
Myth #5: “Japan has lifetime employment.”
Sure, for the top half of the workforce. For everyone on the bottom, it’s a constant struggle with little hope of big raises or promotions. And among those with so-called “lifetime employment,” maybe half are in danger of losing their jobs to layoffs.
Myth #6: “Japanese companies aren’t innovative.”
This is just wrong in so many ways, I could write a book about it (and maybe I will).
Myth #7: “The Japanese buy government bonds out of patriotism.”
Unlikely. They probably buy Japanese government bonds out of fear, pessimism, and a lack of knowledge of good alternative investment opportunities.
Read the whole interview here! I also talk about regulation, innovation, labor markets, monetary policy, and a bunch of other stuff.