Japan Economy Watch

Japan Economy Watch Substack provides analysis on Japan's economic landscape, highlighting issues like wage stagnation, currency valuation, and economic policy. It explores international trade, comparisons with other economies, and the impact of technology on growth. Discussions also extend to global economic trends, environmental debates, and the dynamics of innovation in Japan.

Japan's Economic Policy Currency Valuation and Trade Wage Stagnation International Trade and Competitiveness Innovation and Entrepreneurship Environmental Policy and Climate Change Technological Advancements Global Economic Trends Corporate Practices and Taxation Monetary Policy and Interest Rates

The hottest Substack posts of Japan Economy Watch

And their main takeaways

What Kishida Should Have Done On Wages, Taxes

299 implied HN points β€’ 15 Jun 22
πŸ’° Finance Economy Taxes Income Distribution Corporations
  1. Stagnant incomes in Japan are primarily due to the gap between corporate and household incomes, with corporations hoarding profits instead of reinvesting in the economy through wage hikes, investment, or taxes.
  2. The failure of corporations to fulfill promises of raising wages after receiving tax cuts highlights the need for better enforcement of existing laws mandating equal pay and potential increases in the minimum wage to improve living standards and consumer demand.
  3. Rolling back corporate tax cuts and using resulting revenue gains to reduce consumption tax could lead to a fairer income distribution between companies and households, addressing the imbalance in income growth and stimulating economic growth.

Japan Unlikely To Meet 2030 Goal For Emissions Reduction

219 implied HN points β€’ 04 Oct 22
🌞 Climate & Environment Emissions Reduction Renewable Energy Carbon Emissions Greenhouse Gases Environmental policies
  1. Achieving net zero greenhouse gas emissions by 2050 requires strong government measures, as economic growth and renewable energy price reduction alone are insufficient.
  2. Decarbonizing energy is crucial but challenging, especially for richer countries as their per capita energy consumption increases.
  3. Japan faces hurdles in meeting emission reduction goals by 2030, like relying on coal and natural gas due to nuclear power challenges, and not fully maximizing opportunities in renewable energy and decarbonization sectors.

GDP Disappoints in Fourth Quarter

139 implied HN points β€’ 14 Feb 23
πŸ’° Finance Economics GDP Population Income Investment
  1. Japan's GDP growth in the fourth quarter of 2022 was below expectations, growing at only 0.6% annually.
  2. Over the past 15 years, Japan has experienced very slow economic growth, with private demand remaining weak and government spending being the main contributor to GDP growth.
  3. While Japan's population decline has had some impact, the country's GDP per capita has still increased at a slow rate, indicating deeper economic issues.

Is Japan’s Inflation As High As It Seems?

279 implied HN points β€’ 24 Jun 22
πŸ’° Finance Inflation Banking Policy Economy Market
  1. Japan's inflation rate may not be as high as it seems, with different measures showing varying results.
  2. Central banks like the Bank of Japan use 'core' inflation rates that exclude volatile items to gauge long-term trends.
  3. The challenge for Japan's economy is to achieve healthy inflation driven by domestic demand rather than by high import prices.
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Yen At Β₯128.6

279 implied HN points β€’ 19 Apr 22
πŸ’° Finance Currency Markets Interest Rates Economic Impact
  1. The yen has weakened to Β₯128.6 from earlier lows, fluctuating as markets don't move in straight lines.
  2. MOF interventions in currency markets may not have a lasting effect if the yen's decline reflects fundamentals.
  3. The interest rate gap between the US and Japan is a major factor driving the yen's decline, with investors shifting money to the US due to higher rates.

The Contest for Japan’s Economic Future

39 implied HN points β€’ 11 Jan 24
πŸ’Ό Business Entrepreneurship Economy Finance Startups Regulations
  1. Japan's stagnant economy could see a revival through a new generation of entrepreneurs and major social changes opening new opportunities.
  2. Challenges to progress in Japan include difficulty in bank financing, resistance to change by powerful entities, and the inflexibility of the traditional system with aspects like lifetime employment.
  3. Notable experts have endorsed the book 'The Contest for Japan's Economic Future', praising its analysis and recommendations for tapping into entrepreneurial potential in Japan.

Kishida May Raise Corporate Taxes, Part II

139 implied HN points β€’ 30 Nov 22
🌍 World Politics Tax policy Government spending Defense Public Opinion Economic Analysis
  1. The Kishida administration is considering raising corporate taxes to double defense spending, which could impact pro-entrepreneur tax breaks.
  2. There is uncertainty around how different government entities, like METI and the Prime Minister's Office, will negotiate on tax policies amidst concerns and objectives.
  3. Japanese corporations have a significant surplus in cash and securities, leading to questions about the necessity and use of low taxes and potential changes in government deficits.

Can Japan Afford To Cut Consumption Tax If It Rolls Back Corporate Tax Cuts?

219 implied HN points β€’ 17 Jun 22
πŸ’° Finance Taxes Corporate Revenue
  1. Japan has lost a significant amount of tax revenue due to cuts in corporate taxes, impacting the budget deficit.
  2. Rolling back corporate tax cuts to mid-1990s rates could offset losses and allow for a reduction in consumption tax without affecting overall revenue.
  3. The rise in corporate profits in Japan was primarily due to wage austerity and reduced interest payments, negatively impacting consumer demand.

Β₯/$ May Be Heading to Β₯125

239 implied HN points β€’ 24 Mar 22
πŸ’° Finance Currency Economy Trade Interest Rates Inflation
  1. The yen may be heading towards Β₯125, which would be its weakest level in 20 years, mainly due to factors like interest rate gaps between US and Japan.
  2. The ongoing Russia-Ukraine conflict and supply chain disruptions are contributing to yen weakening, despite historical perceptions of yen as a safe-haven currency during crises.
  3. Japan's shift from trade surpluses to deficits impacts its currency, and a weak yen may no longer be seen as entirely beneficial, especially if oil prices keep rising.

My Chapter On 'Lost Decades' In New Book on Heisei Era

239 implied HN points β€’ 15 Mar 22
πŸ’Ύ History Economy Society Politics Culture Technology
  1. The chapter focuses on why Japan experienced 'lost decades' and the potential for future improvement.
  2. Initially, there was denial about the situation, but eventually, leaders recognized the need for fundamental reform.
  3. Despite past challenges, there are signs of positive societal changes offering Japan an opportunity for revitalization with the right policies.

Why Putin Went to War to Keep Ukraine Out of the European Union

239 implied HN points β€’ 10 Mar 22
🌍 World Politics Geopolitics International relations European Union Russia Ukraine
  1. Ukraine's desire to join the European Union led to Putin's aggression and military actions.
  2. EU membership offers economic benefits like trade and foreign direct investment, leading to growth and modernization.
  3. The shift towards the EU in trade and foreign investment is helping Ukraine move away from Russian influence and progress towards a more prosperous and independent future.

Japan’s Vulnerability If There’s A New Recession

179 implied HN points β€’ 07 Jul 22
πŸ’Ό Business Economy Geopolitics Finance History
  1. Japan's vulnerability to economic shocks like a new recession is high, historically showing outsized reactions that affect living standards and geopolitics.
  2. The Japanese economy takes bigger hits from global shocks compared to other rich countries, recovering more slowly and experiencing slower growth.
  3. Japan's economic vulnerability stems from imbalanced growth where GDP growth hasn't translated effectively into wider population benefits like wage growth, creating long-term instabilities.

Can Korea Teach Japan How to Grow Again?

199 implied HN points β€’ 09 Mar 22
πŸ’Ό Business Economy GDP Reform Technology
  1. Korea has managed to outstrip Japan in per capita GDP despite facing similar structural challenges.
  2. Korea's success compared to Japan can be attributed to getting the basics right, raising wages, and addressing productivity gaps.
  3. Investing in human capital, upgrading technology, supporting SMEs, and focusing on entrepreneurship are key factors for Korea's growth success that Japan can learn from.

Does A Weak Yen Really Help Japan?

199 implied HN points β€’ 12 Feb 22
πŸ’° Finance Economics Currency Trade Income Inflation
  1. A weak yen has atrophied Japan's economic muscles as it relies on it like a crutch, impacting household income and overall economic growth negatively.
  2. Japan's export-driven growth fueled by a weak yen contrasts with Korea's growth driven by innovative products and efficiency improvements, leading to a significant difference in economic performance.
  3. The weak yen raises import prices and benefits big companies over consumers, showing how it indirectly transfers income and highlights the impact on inflation and household spending.

Thumbs Down On Yen Intervention

159 implied HN points β€’ 22 Apr 22
πŸ’° Finance Currency Markets Economic Impact Intervention
  1. Foreign cooperation to stop yen decline seems unlikely, making intervention less effective without U.S. approval
  2. A weak yen may not boost exports as much due to increased overseas production and decreased competitiveness
  3. Currency depreciation in Japan leads to higher prices for imports and reduced benefits for the country

Conversation On Japan's Economic Vulnerability

119 implied HN points β€’ 08 Jul 22
πŸ’° Finance Economy Consumption Income Savings Government spending
  1. In Japan, household income growth has shifted significantly towards relying on government transfers rather than private sector income, impacting consumer spending.
  2. The consumption share of real GDP in Japan has declined over the years, impacting economic growth and potentially leading to weaker consumption patterns.
  3. Japanese consumers have drastically reduced their saving rates, shifting towards a trend of living hand-to-mouth, which has implications on personal finances and economic stability.

Why Wages Slowed More In Japan Than Elsewhere

159 implied HN points β€’ 13 Dec 21
πŸ’° Finance Wages Economic Theory Labor Market Income Wealth
  1. Wages in Japan have not just slowed down but actually fallen, unlike in other rich countries where wages have been suppressed.
  2. The widespread slump in wage growth goes against economic theory, signaling a shift in how consumer demand and wages have traditionally grown alongside output.
  3. One main reason for Japan's wage decline is the rise of poorly paid non-regular workers, showcasing the impact of political factors on wage disparities.

Me On YouTube on Reviving Entrepreneurship in Japan

99 implied HN points β€’ 28 Jun 22
🌍 World Politics Entrepreneurship Startups Japan Government Economy
  1. The discussion on reviving entrepreneurship in Japan highlighted the need to broaden the definition of high-growth entrepreneurs beyond just high-tech ventures.
  2. Innovation should not be limited to high-tech areas like AI or quantum computing, but should encompass various aspects of business.
  3. Barriers to entrepreneurship in Japan are not solely cultural but also relate to issues such as funding, staffing, and access to customers.

Myth: Japanese Are Only Good At Incremental Innovation

3 HN points β€’ 15 Jun 24
πŸ’Ό Business Innovation Corporate strategy Technology
  1. Japanese companies have a history of pioneering new technologies and products, disproving the myth that they are only good at incremental innovation.
  2. Disparaging improvements as 'merely' incremental overlooks how incremental advancements can lead to transformative breakthroughs over time, like the evolution of the lithium-ion battery.
  3. Technological innovation must be coupled with effective corporate strategy and execution to maximize economic impact, as seen in the case of Nissan and Tesla's different outcomes in the EV market.

Japan GDP Ends 2021 Near Pre-Covid Level

79 implied HN points β€’ 16 Feb 22
🌍 World Politics Economy International relations Global Finance Government Policy Economic Impact
  1. Japan's GDP in 2021 was just 2% above its level from 14 years ago in 2007, showing a stagnant long-term economic performance.
  2. The growth Japan has seen has largely been dependent on government deficit spending, with private domestic demand remaining below pre-2007 levels.
  3. Economists predict Japan's GDP growth to continue in a saw-toothed pattern, with the economy expected to grow by 3.3% in 2022 and 1.8% in 2023, but still lagging behind other major economies like the US and Eurozone.

Tax and Regulatory Breaks for Startups

19 implied HN points β€’ 06 Dec 22
πŸ’Ό Business Entrepreneurship Taxation Regulation Innovation
  1. LLCs in the US and many OECD countries allow profits to pass through to owners without double taxation, promoting new firm creation and growth.
  2. Open Innovation Tax Incentive aims to encourage large corporations to invest in startups, but its effectiveness and expansion remain uncertain.
  3. Five-Year Plan proposes measures to simplify stock options for employees in Japanese startups, but their success is yet to be determined.

Fragmentation Among Floating Voters

39 implied HN points β€’ 04 Nov 21
🌍 World Politics Elections Political parties Voting behavior Power Dynamics Global impact
  1. Floating voters in Japan are crucial as they often decide election outcomes by their turnout and preferences. Their choices impact the viability of various political parties.
  2. Disenchantment with major political parties is evident among floating voters, leading to increased fragmentation in voting patterns.
  3. The rise of minor parties and shifts in voter loyalty suggest a potential realignment in Japan's political landscape, impacting the ruling party's future and the center-left's stability.

The β€œFloating Voters” Who Stayed Home

39 implied HN points β€’ 02 Nov 21
🌍 World Politics Election Dynamics Voter Behavior Political parties
  1. Japan's Liberal Democratic Party (LDP) has been successful in maintaining power with smaller shares of the vote in elections, thanks to the phenomenon of 'floating voters.'
  2. Floating voters, who do not consistently support any specific party, have been on the rise in Japan since 1998, making up about 40% of the electorate.
  3. Active independents among floating voters are engaged in policy issues and desire change, turning out to vote in elections with potential for real change in the political landscape.

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19 implied HN points β€’ 16 Mar 22
🌍 World Politics Ukraine Russia European Union
  1. Ukraine is seeking to distance itself from Russia for economic reasons, particularly to align with the European Union for prosperity.
  2. The difference between countries that join the EU and those that don't is a key factor influencing Ukraine's desire to break away from Russia.
  3. To understand Ukraine's situation and its desire to join the EU, one can explore content such as the Toyo Keizai publication conveying the reasons behind the country's decisions.

Podcast: Korea vs. Japan On Per Capita GDP

19 implied HN points β€’ 01 Feb 22
🌍 World Politics Economics GDP Japan
  1. The podcast explores the economic and political factors behind Korea surpassing Japan in real per capita GDP.
  2. The Korea vs. Japan comparison in per capita GDP is a significant topic of discussion.
  3. Real per capita GDP data from the World Bank indicates Korea surpassed Japan in 2018.

Biden’s Trumpian Talks With Japan on Steel Tariffs

19 implied HN points β€’ 16 Nov 21
πŸ‡ΊπŸ‡Έ U.S. Politics Trade policy Climate change National Security Foreign Relations
  1. Biden continued Trump's trade policies, including tariffs, using them as bargaining chips in trade talks with Japan and Europe.
  2. The US is reportedly using climate change as a reason to negotiate tariffs on steel and other products based on their carbon emissions intensity, potentially impacting allies like Japan.
  3. Biden's administration is aiming to reconcile protectionist/nationalist and climate change agendas in trade policies, facing challenges from different voter bases.

Podcast: Six Megatrends in Society

0 implied HN points β€’ 10 Nov 21
πŸŽ™ Podcasts Society Economy Technology Society Policy
  1. Six major trends in Japanese society offer potential economic revitalization if nurtured by policymakers.
  2. The trends include shifts in technology, generational attitudes, gender relations, demographics, growth, and globalization. These trends need to be amplified.
  3. Some trends like demography have both positive and negative impacts on economic revival prospects.

The Scandinavian Model and Japan

0 implied HN points β€’ 08 Mar 08
🌍 World Politics Economic Policy Japan Growth Strategies
  1. Japan can aim for both growth and security by adopting a model like the Scandinavian flexicurity, which combines market elements with policies promoting equality and security.
  2. Market-conforming policies that focus on security and equality can increase political tolerance for necessary 'creative destruction' to foster growth - a lesson learned by Nordic countries in the 1990s financial crisis.
  3. Countries like Sweden have seen high productivity growth while ensuring that the benefits are shared with the labor force, unlike scenarios where wage growth lags behind productivity growth.

2008-09 Financial Crisis: US Is Not Japan

0 implied HN points β€’ 28 May 09
πŸ’° Finance Policy response Economic Impact
  1. The 2008-09 financial crisis in the United States is not comparable to Japan's 'lost decade' due to different primary problems and causes.
  2. The consequences of the 2008 financial crisis in the US will be different from Japan's slump in the 1990s because the cause, scope, and response of policymakers differ significantly.
  3. The financial dysfunction in the US was caused by policy mistakes, unlike the structural flaws that led to Japan's crisis.

Why Abenomics Will Fail

0 implied HN points β€’ 29 Mar 13
πŸ’° Finance Economy
  1. Abenomics failed to reach its goal of restoring 2% per year annual growth by relying on 'inflation targeting' instead of structural reform.
  2. Prominent American economists initially supported Abe's strategy, but the outcome was predicted to be unsuccessful from the beginning.
  3. The 2013 analysis correctly foresaw that Abenomics would not work due to its reliance on a magic bullet approach rather than addressing deeper structural issues.

Voodoo Abenomics

0 implied HN points β€’ 28 Jul 14
πŸ’Ό Business Economy Government Policy Revival Failure
  1. The plan called Abenomics aimed to revive Japan's economy, focusing on monetary stimulus, fiscal stimulus, and structural reforms.
  2. Abenomics failed because the three arrows of the plan did not work together as intended, with Abe mainly focusing on monetary stimulus.
  3. Politically, Abenomics was a success as it made Abe the longest-serving Prime Minister in Japanese history, despite its economic shortcomings.

Summing up 20 years of The Oriental Economist Report

0 implied HN points β€’ 04 Apr 17
πŸ’Ό Business Economy Newsletter Research
  1. The Oriental Economist Report was published for 20 years, originally by Japan's Toyo Keizai, and later became an independent newsletter in 2003.
  2. The lead of the very last issue of the report from April 2017 summarized what the publication got right and wrong over the 20 years.
  3. The attachment also included the lead of the very first issue back in March 1997, providing insights into the expectations and views on Japan at that time.

Alan Greenspan, the Blind Oracle

0 implied HN points β€’ 28 Jan 14
πŸ’° Finance Economic Crisis Financial Markets Regulation
  1. Many experts actually did foresee the 2008 U.S. financial crisis even if they couldn't predict its timing or severity.
  2. Alan Greenspan's lack of regulation in financial markets contributed to imbalances, malfeasance, and corruption.
  3. The root cause of the financial crisis was not irrational 'animal spirits', as argued by Greenspan.

US Losing Its Capability To Be Benign Hegemon

0 implied HN points β€’ 28 Sep 16
🌍 World Politics International relations Trade policy Global Leadership
  1. For decades, the US has been seen as a benevolent global leader, especially in terms of trade liberalization, which helped maintain stability and prosperity among allies.
  2. Both Democrats and Republicans in the US are now turning away from open trade policies, continuing a shift that began with Trump's administration.
  3. The US's negotiation of the Trans Pacific Partnership signaled a significant change in its postwar approach to international relations and trade.