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In 1989 Japan seemed ready to take over the world. In little more than three decades Japan had become a gigantic industrial and financial power. It was by far one of the richest countries on the planet.
However, in 1990 the balloon burst and the Japanese plunged into a long crisis in which today, 30 years later, it is still immersed. In this video we tell you the four key reasons why Japan has not been able to escape from its never-ending crisis.
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This video has been made possible thanks To curiositystream if you live for Learning things or enjoy a good Documentary curiositystream’s YouTube Channel is definitely worth your click Check out their new custom Series where They will take you through pivotal Moments in the past present and Potential future of a handful of key Themes tackling everything from surgery To food to hallucinogens past present Future will help us understand the Threads connecting yesterday today and Tomorrow but not only that Curiosity Stream is also launching other great Content like the science of sound where Music educator Marty Schwartz connects With neuroscientists music therapists And more to better to understand the Science behind the music and all Absolutely free just a click here on YouTube go check out the full episode of Past present future and subscribe to Curiositystream for more of their brain Expanding content you’ll find all the Information in the video description [Music] For almost two decades between 1955 and 1973 Japan grew at an annual rate of Nine percent for the next 17 years it Grew at over four percent so by 1989 the Country seemed ready to take over the World in barely three decades Japan had Become a gigantic industrial and
Financial power it was by far one of the Richest countries on the planet in Addition Japanese multinationals had Become the major technological players Of the moment televisions VHS players Cameras video game consoles Japanese Industry was setting the world’s Technological agenda and not only that Between 1984 and 1989 alone the nikai Index multiplied by more than three Times at the same time that house prices Kept setting new records the Japanese Had become rich really really rich in 1990 however the balloon suddenly burst The Japanese economy entered a deep Economic real estate and financial Crisis from which it has never fully Escaped Today Japan is still a developed country And a wealthy one but things are totally Different take a look Japanese Yen hits 24-year low against dollar Japan Intervenes to prop up Yen for the first Time since 1998. to give you an idea of What this very drawn-out crisis has Really meant we can take a look at what Has happened to wages when the 21st Century began the average wage in the United States and Japan was Approximately the same however today the Average U.S wage is 2.5 times higher Than the Japanese equivalent and in fact In real terms that is after adjusting For inflation Japanese wages are lower
Today than they were in 1997. in other Words they are lower than they were 25 Years ago it is a decline that we can Also see if we look at GDP for example If in 1990 Japan and Germany taking into Account the price difference had roughly The same GDP per capita today the German Nations is 35 percent higher another Example well take the case of South Korea in 1990 in per capita terms and Even after taking into account the price Difference the South Korean economy was Just over 40 percent of the Japanese Economy today it has already surpassed It but what could explain such an Economic decline why has Japan’s economy Failed to recover in more than 30 years What can we expect in the coming years Hey there viewers welcome to Visualpolitik let’s get started A lot of Rising Sun [Music] Japan remains a relatively wealthy Country and also continues to be the World’s largest creditor to give you an Idea in net terms that is taking into Account the difference between what it Owes and what it is owed Japan has about 3.5 trillion of net Investments spread Across the globe the Japanese control Factories buildings stocks bonds and all Kinds of financial products however Despite this things are not going well There in practice wages have been frozen
For years government debt is growing Steadily and the yen is becoming more And more fragile in fact according to The bank for international settlements The yen is currently the weakest Currency of any developed country in Recent years its purchasing power has Fallen alarmingly this has made Imports More and more expensive in addition when Japanese people travel abroad nowadays They are shaking their heads at the high Prices they find for example using the Popular Big Mac index compiled by The Economist magazine each Big Mac burger Costs 70 more in New York than in Tokyo So then what is wrong with the Japanese Economy what kind of disease is it Suffering from well we can highlight Four major factors four major problems That explain the decline of the Land of The Rising Sun First from a labor standpoint Japan is Still essentially the same country it Was 30 to 40 years ago there’s a routine Of long working hours strict schedules Long commutes by public transport and Meager vacations in fact this is perhaps What explains why it is the only country That has a word kuroshi that means death By overwork for example promotions and Salary improvements depend essentially On seniority and not on achievements Among other things this means that the Younger population is largely excluded
From management and decision-making Positions in other words people who are Somewhat disconnected from the new Technologies or new market trends are Usually at the head of companies and Various departments and this way of Proceeding also makes company changes Very infrequent obviously if the salary And the position depend on seniority You’re not going to hop off the ladder And start from scratch Well the question is whether it is quite Possible that this stagnant culture is Behind one of the great problems that This country is dragging along low Productivity yes the Japanese work long Hours we all know that but far from what We might think they are terribly Unproductive for example output per hour Of work barely reaches 60 of output per Hour in the United States and is by far The lowest of all G7 countries Even since 1990 its Evolution has been Substantially worse than that of a Country like Spain [Music] What’s more over the past three decades Japanese companies themselves have moved Many of their most productive factories Overseas and you know what the problem With low productivity is not only that It limits income but also that it forces People to work much longer hours which Is why Japan still has one of the
Highest rates of working hours in the World and of course in a country with so Many demographic problems where there Are fewer and fewer workers available This is a kind of economic Millstone in Fact this is the second major problem That we can highlight demographics Foreign Is by far the most elderly country in The world since 2011 its population has Been shrinking year by year and by 2036 Those over 65 are expected to account For almost 35 percent of the population And take note because forecasts indicate That in a little more than 40 years this Country will lose more than 30 percent Of its inhabitants the Japanese Population will fall from 126 million in 2020 to just over 87 Million by 2065. This represents a demographic Contraction unprecedented in all of Human history and of course it is Something that also affects the economy Less population and an older population Means fewer available workers less Consumption less savings and much more Social spending then in third place we Have the connections with the outside World Foreign Is usually thought of as an economy that Is very open to the world but in reality It is completely different Japan is a Relatively closed country in all fields
And it shows for example when your Population is shrinking exports may be The best alternative for maintaining the Level of production of course if fewer People buy from you at home the logical Thing to do is to look for customers From overseas don’t you think Surprisingly Japan is one of the Developed countries in which exports Have the least economic presence yes Enough with that cliche that the Japanese make a living by selling things To the rest of the world because it’s Just not strictly true in fact despite Having a clearly stagnant local market Japanese companies are having a hard Time looking abroad you don’t believe me Take a look for yourself The presence of exports in the economy Is one of the smallest and it’s not just About trade as we’ve seen here on Visualpolitik in a past video Japan is Also one of the countries with the Lowest foreign direct investment in the World it is just over four percent of Its GDP and do you know what the average Of developed countries is no less than 44 11 times more of course this is Something that limits productivity Competition Innovation Etc etc etc then by the same token Japan Is also the most immigration restricted Developed country on the planet only 2.3 Percent of its population is foreign
Born so you see whether in terms of Trade investment or immigration this is Probably the most isolated country of All the developed economies in a way Japan is not only an island Geographically but also economically and That’s a gigantic problem Foreign [Music] Ly the fourth major problem is that the Country has been pursuing the same Policies for 30 years policies that Basically boil down to two ideas more Monetary stimulus and more fiscal Stimulus for example the Central Bank of Japan is currently the only Central Bank In the world to keep interest rates in Negative territory at negative 0.10 this Is largely what explains the Yen’s Plunge that we saw at the beginning of This video on the other hand in an Attempt to escape the crisis the Government has accumulated the highest Gross debt in the world we’re talking About a public debt equivalent to more Than 230 percent of GDP although as we Told you on visual economic there is a Catch but what is undeniable is that the State has been accumulating public Deficits year after year as if there Were no tomorrow now wait a minute does This mean that this country is doomed to Go from bad to worse well the truth is That more and more analysts are betting
On the opposite at least in financial Terms why well let’s take a look [Music] A discounted country Over the last 30 years the Japanese Stock market has been one of the worst Performers in the world and if we add to This the fall in the value of the Yen What we find is one of the cheapest Countries in the entire developed World On the Tokyo Stock Exchange many Companies are already trading at little More than the cash accumulated on their Balance sheets and that is precisely why Many analysts say that the discount is Gradually becoming so large that the Country could suddenly become a real Opportunity especially since the country Is trying to solve many of its problems For example it is pushing for free trade Agreements and in fact has become the Leader of the CPT PPP one of the most Important free trade agreements Worldwide and certainly the trending Organization everyone wants to join it From the UK to the People’s Republic of China well it is Japan that is piloting It In addition as we’ve already told you The kashida government has recently Promoted a plan to boost nuclear energy Again in order to obtain large amounts Of energy and cheap hydrogen take note Of this because during recent years the
Energy bill has been one of the Country’s major problems the government Is also favoring the Improvement of Corporate governance in companies the Integration of women in the professional World and is facilitating the arrival of Both foreign investment and immigrants And if we add to all this the fact that The country has gained a lot of Competitiveness with falling wages and Prices and that that is one of the World’s fastest growing areas then I Think that we can all see the Opportunity it represents of course the Same could have been said 10 years ago Now besides as we already told you Kashida’s plans also take into account The reformulation of Japanese capitalism By doping it with even more public Spending and more interventionism those Things can’t end well but it is true That basically Japan is very cheap so For the moment the question is over to You do you think Japan will manage to Escape its never-ending crisis and could It become an opportunity for him Investment leave us your thoughts in the Comments and let’s start a debate and Now if you found this video interesting Don’t forget to like it and subscribe to Visualpolitik if you haven’t already Done so all the best see you next time [Music]