Keep in mind that this article was written right before the earthquake/tsunami. I read this article when it came out and it seemed plausible to me at the time. One big reason is that Japanese people are not the 'toot my own horn' type and if they were doing quite well, they would probably just tell you that they're only getting by. Not in an attempt to fool you, but because it isn't respected to speak about yourself that way.
Of course, there are also a lot of problems in Japan as well. The demographics are not great (in my town they will pay you a subsidy if you have kids), the younger generation is doing a lot more temp work and doesn't have the security that their parents had, and people are showing frustration toward politicians in ways they haven't before. The rural parts of Japan have seen decline as younger people wish to move to the city. I have a friend out in the country who says that half of the buildings in his town are empty and will never be filled again. I think many places in the world are facing these kinds of pressures though.
I live in a nice part of tokyo so I can't speak for all of Japan but I find the living conditions to be quite nice. It is young, energetic, and lively. Everyone talks about how much debt Japan has but at least they use it to build nice things. The train system is absolutely amazing. Everything is earthquake-proof and bolted down. They have been working on the road by my house for almost six years and when you realize what they are doing it's quite amazing. They're putting several lanes of traffic underground (boston big-dig style) and while the total work is slow, everyday there is activity, traffic is rerouted, people are moving things around, and the quality of work is absolutely stunning.
I am always shocked by stores that sell services that I can't imagine being profitable. A small shop selling house slippers. A store selling tatami mats. A little gift shop. I don't really understand how they stay in business but here they are. It's one of the biggest metropolis areas in the world and it still has a small-town feel. I still can't say I understand it all.
Overall, I think viewing Japan through a western lens can be hard. I would be pretty suspicious of any foreign reporting on the state of the country just because the measuring stick will be different. You could say that there were 'lost decades' in that it is obvious that Japan will not be leading the world economies the way they were in the past. However, as an island nation, I don't think there is much sense of disappointment that they haven't expanded their economic reach. I think the people here seem pretty satisfied with the slow growth they have seen. I think when Japanese people dream of success, they want to be well known and respected in Japan. I think playing on the world stage is less of a concern.
But then again, I don't know. My view on all of this changes all the time. Macroeconomics are complex so the lessons learned from one country don't always apply to another.
Offtopic, but this is something that was very striking when I watched, what is one of my favorite TV shows, http://wiki.d-addicts.com/Haikei,_Chichiue-sama. The show is set in Tokyo, and centers around the lives of people who run a ryotei restauarant. It has beautiful shots of the streets, and it feels very much like a small town. The whole atmosphere feels so classical that at some point in the show when some of the characters are inside a car with a modern GPS system, it feels bit surprising and one realizes that this is actually happening sometime around 2005.
At some point, all societies will have to face a stable/decreasing population pattern. The later, the more severely they will have to face this situation. Japan has done it without falling to pieces.
From my point of view the demographics of Japan ARE great.
In 1, 2 or 3 generations time we will see (whoever lives to see it) what happens to ever-rapidly-growing demographic areas. I suspect it isn't going to be pretty if they wait until they hit a hard limit to stop.
Much of Europe used to have developing country demographics in the 19th century. They didn't hit a hard population limit.
http://www.makeleaps.jp/blog/en
Hope to see you there.
Two things come to mind with this:
1) The huge divide between big business and small business. There are so many small businesses in Japan that don't scale. They run from small run-down shops run by old people to super-trendy, artisan shops run by young people. Most of these younger people just want to run a small artisan-type business, they're not interested in being a part of the next big thing, or going public, looking for investor backing, etc.. These businesses are essentially confined to a community and neighborhood. The largest I've seen is one that spreads across the prefecture.
On the other end, you have the zaibatsu/keiretsu, which are run by oligarchies (Mitsubishi, etc.). A lot of young businesses talent is driven to these companies because they run essentially everything. I feel like this is what's driving the economy, and it's also not a part of the consciousness of the everyday Japanese person.
2) Japan's global stance. Japan is very traditional and modern in very awkward and confusing ways. People may have high definition TVs, but they live in hundred-year old houses with antiquated heating systems.
A friend once told me that Japan may be inefficient or wrong in some ways, but Japanese people like it and want it that way, and they are willing to work hard for it.
I feel like maybe the whole Japanese economic boom was some type of fluke. It was an odd advantage that a naturally introverted society had, and the economy is just going back to the way it was always supposed to be. I don't know if they're supposed to have a large economy, or really want one if it comes with a certain price.
Do you guys get what I'm saying?
As mentioned by others, trade surplus or worse currency "power" are about as meaningless as you can be. Those are related to typical misconceptions and bias (mercantilism, etc...). About one year ago, there was a much more convincing article about the Japan myth: http://www.project-syndicate.org/commentary/gros18/English. The gdp growth figures show a much better story than they do if you only take into account the workforce (it basically outdid both Europe and the US). Also, there is still a largely unused part of the population for economical growth: women.
- An entire generation of baby-boomers working as middle-manager types got highly-inflated mortgages during the bubble, only to be downsized or have their pay/benefits cut in the aftermath. These people have been hit very hard.
- I'm not sure of the latest numbers, but Japan has a deficit problem that rivals the US. As a % of GDP it might be worse.
So for me the article presents a non-falsifiable claim: Japan is doing better than ever. However, his claims could be checked by someone in a Japanese manufacturing company.
In the meantime, I don't see why it is surprising that Japan is doing well. As a nation they have positioned themselves well. The major challenge they face -- lack of natural resources -- has not materially affected their growth in the last 20 years. Instead, they are continuing to focus on the entire manufacturing vertical. Not just steel mills and consumer brands (ok, I'm making the U.S. seem dumber than they are).
This was in the late 1990's, then they began a program of liberalized immigration which now in 2011, sees over 30% of Singapore's resident population as foreigners. The influx of so many immigrants over two decades has caused severe strains upon the fabric of our country, a tiny island city-state.
Yet the story remains the same. The new immigrants are unlikely to suddenly produce more children [say three or more] and ironically, if they stay on, they will simply add on the the oncoming demographic crunch since they are mostly working class, and we all know how that particular segment of society is assaulted by growing inequality around the world.
[Most amusing, the incumbent political party which has governed Singapore since our independence has largely expended all its political capital. But that's not really relevant to our discussion on aging + demographics]
I suspect Britons in the U.K can tell a similar story, since Blair & co went on a similar tilt after they got in a decade ago.
Thus, I would caution against the popular view that immigration is needed to avoid the oncoming demographic crunch in societies. It probably can't fix the old issue, and instead generate many huge socio-political issues.
http://www.fingleton.net/an-open-letter-to-professor-edward-...
with more details of his basis for saying that Japan's economy has been growing steadily for the last two decades.
AFTER EDIT:
In one of the funniest comment-and-reply exchanges I have ever seen on HN, three years ago biohacker42 asked, "Anyone here lived through the Japan depression care to share their experiences with us?"
http://news.ycombinator.com/item?id=328819
and then hugh replied, "It was terrible. People were forced to eat raw fish for sustenance. They couldn't get full-sized electronics, so they were forced to make tiny ones. Unable to afford proper entertainment, folks would make do by taking turns to get up and sing songs."
Since then, I've been much less worried about Japan, which continues to be a very prosperous country. But today I'd glad to be updated on the situation in Japan, and what the "lost decades" really mean for people who live there, if anything.