I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase the amount of money in circulation. A simple way to do that is for the central bank to make money up and give, say, 20000 yen to each citizen every year until deflation went away. This is called a helicopter drop in finance-speak, and seen as very radical. Deflation should be cause for celebration: It means the central bank can print money without hurting the economy. The money thus printed could be used for all kinds of good purposes, but it's not done.

I guess the reason helicopter drops are not done is that it kinda breaks some illusions people have with money. People generally don't know that central banks buy second hand government bonds, basically giving money to those who hold that kind of asset. In short, there's no law of physics that say you have to work for money. I guess they don't think the plebes would respond well to knowing this.

Australia did one and it worked wonderfully. We rode out most of the brunt of the impact of the 2008 'GFC' with little disaster. The worst of it for most of us was that getting a home loan got a bit tougher, but really this was more a case of returning to earlier norms than really getting "harder"

To what extent does Australia's tie to the Chinese economy deserve primary credit for Australia weathering the GFC?

Australia has just delayed it, we are still letting people borrow more money than they can ever hope to repay (interest only loans on owner occupied places) now with our relationship with China growing tenuous (they're making deals with the USA and Russia instead of Australia), it spells bad news.

Australia did it by increasing immigration which is only a temporary solution. GDP per capita fell in the GFC.

Immigration is painfully unlikely due to cultural issues. It's oft suggested by non Japanese people looking at the problem but at least from what I can see, the majority of the Japanese voting public don't want immigration. There's reasons if you want a fun read. Particularly interesting is the history of people of Korean decent who are native Japanese residents for a generation or two.

It's true Japanese aren't very accepting of immigration, historically --and having to be blood to be a true national is a bit of an odd theory for citizenship; however, unless they (or anyone else) devise an alternative to neo-liberal capitalism which provides a decent living for its population while that population is in decline, the Japanese may have to reconsider their position on immigration.

Well if they change their mind on immigration, they better be quick. Japan's neighboring countries are quickly catching up, if not surpassing, in a lot of respects, such as PPI and HDI.

Even in China, on the east coast, in certain sector, especially high-tech and finance, local companies can offer competitive salary and a better potential for career progress.

It is not like in 80s, when Japan is the envy of all kids in the class, the interests is quickly fading, with a aging population and stale economy.

If neighbouring Asians are too rich to immigrate, there will still be plenty of poor Africans for decades.

Well, lets face it.If Japan is so reluctant to accept Chinese/Korean/Other Asians, whose appearance and culture are perhaps much closer to its own than other countries, it will only be harder for it to embrace the rest of the world.

It is pretty much like Asians in US sometimes being called as perpetual foreigners, even if some of them might been in this continent for generations.

Assume Japan is ever going to change its immigration policy, it will surely starts from developed countries and its neighboring states. But as I said in the above comment, the charm around Japan is vanishing, so even with a more friendly immigration policy, how much it could help Japan step out of painful declining is questionable.

It's often suggested that Koreans in Japan are somehow deprived of Japanese citizenship. This is not true. Rather they are not allowed to naturalize in Japan while retaining their Korean citizenship (yes, I realize that is not the whole story and there is a lot of history there - nevertheless, there is nothing stopping a Korean who has lived in Japan long enough, or was born there, from acquiring Japanese citizenship if they choose). Many countries have this sort of policy yet somehow it's controversial when Japan does it.

That said, mass immigration is unlikely, as you say.

Up until 1983 you couldn't naturalize unless you adopted a Japanese family name. Maybe that's what OP was referring to.

It is the same for the US. People that naturalize are "required" to sever citizenship they hold with other nations. However, many people fail to follow through and notify previous host nations.

That's not true. US citizens can have dual nationality. http://travel.state.gov/content/travel/english/legal-conside...

It's already easy to immigrate to Japan. It takes less than a month to get a work-sponsored visa. Much easier than the US H1B.

> the majority of the Japanese voting public don't want immigration

The vast majority of the American public don't want it either, but businesses do, so it happens anyway.

American society is much more accepting of outsiders than any other, as far as I know. Its not like others are deliberately racist, but just that America's history has been one of accepting immigrants from all over the place, so I guess having people who don't look like you or have the same beliefs/culture/language is more accepted than in other countries. At least that's my theory.

I've lived in America for just 3 years, yet have never felt unwelcome. In fact, most Americans I meet are very curious to know about my origins and the country I grew up in. But maybe that's because I live in a very liberal city (Austin) and can communicate well in English.

I've lived in Korea for some time and unfortunately never learned much Korean to be considered fluent. So I did have a hard time. Its also a very homogenous country so I guess it makes sense why they're so exclusive; I think its the same case in Japan too.

Historically, Koreans and Japanese ( and to an extent, the Chinese) have placed an almost absurd weight on purity of their race. I don't know the situation for other places.

It is not just race but cultural as well. Brazillian Japanese who immigrated to Japan also face discrimination, even though they are ethnically Japanese.

Nah, almost all Americans are fine with at least a moderate amount of immigration. The contention about immigration is mostly about whether we want to let in huge numbers of skilled workers in, and what to do about undocumented immigrants.

It's more than not wanting immigration in Japan --they're allergic to it. It's very, very hard to be in Japan illegally. Police do immigration raids routinely --the only way to be in Japan illegally is to work for the local mob --where they take a cut of your measly income. And legal immigration is less than one tenth of that of the US, for example. the situation is not comparable.

Large scale immigration is just passing the buck down onto a currently-poorer country. But poor countries aren't going to stay human-meat factories forever, and sooner rather than later someone is going to have to figure out a way to maintain an industrialized society with a stable population.

The end of consumerism, less income inequality, and automation.

I must just not understand. It seems pretty simple.

Right, but point me to a society that's been able to make that work. The formula has yet to be cracked.

Show me a society/country who has actually made a go at making it work in the last 40 years. If you're not attempting to execute theory in the real world, you're not trying hard enough.

I'm not sure I'd agree with you. It's not the kind of thing you try in order to see if it sticks. Communism tried with two out of your three criteria and it didn't turn out all that well --mostly ended up a terrible 'experiment' for those whom it affected. So, I don't think 'trying' is the way to go, when otherwise what you have is working well enough.

That said, Japan has to try something --they are entering 25 years of being in a standstill, so relatively speaking, they are in decline. They (politicians and population, by large) may not have the will to try anything radically different from the status quo --which is a quasi neo-liberal economic model, so they may just end up crashing hard or slowly becoming kind of irrelevant, economically speaking.

> Large scale immigration is just passing the buck down onto a currently-poorer country

This can also create a return of experience, business investments and money from the rich country to the poor one. Some poor countries are so backwards that what they need most is not more people, but people who have seen a better way of doing things and can apply at home.

I imagine that currently-poor countries would love to have the buck passed down to them if it improves their standard of living.

As someone who has lived in Japan for the past 8 years.. I still feel like an outsider in many many ways. Unfortunate to have to say it, but there's much deeper issues than immigration law at play.

> What they need to do is figure out a way to grow the population locally or through large-scale immigration.

That doesn't sound like a long-term solution. There'll be a limit to population growth at some point.

Yes, you're right. It depends on what we mean by long term. In the end we'll hit some natural population limits. It'll be interesting what they devise in order to have a viable economy in conjunction with a stagnant or declining population. We can all learn from their success or failure in that regard.

Well, their population looks about ready to take a nosedive, so it's not like they "just aren't growing fast enough".

Be that as it may, the other option, to export their way out of this is not going to happen. They are not a cheap-labor based economy --and they don't have known viable reserves of natural resources. So, what are they to do?

Export creative products or develop intellectual property?

The general answer every country seems to have is "knowledge-based economy". Except it never works. Knowledge flees countries the moment it presents more than a small advantage, as the knowledge moves with workers and companies.

> It'll be interesting to see what they figure out for their society and the lessons they might have for us.

What makes you think they will find a "smart way out" of the situation ? Japanese politicians have been incapable of handling pressing issues for years. They just care about the next elections, as usual. Since no-one expects any drastic change of political climate to happen soon, it's more likely that Japan goes in the wall.

> What they need to do is figure out a way to grow the population locally or through large-scale immigration

Or drastically increase productivity, or have more people join the workforce. Women are massively under-used in Japan. There's no need for immigration as long as there is a large untapped segment of the population not actively employed.

Integrating women into the workforce is a different issue. It would help to some degree --and the government is making a greater effort in having this happen. As paternalistic as Japan is, given the choice of making life easier for women to join the workforce or allow greater legal immigration in Japan, they have chosen to encourage women to stay in the workforce and to try to make it easier for them to succeed. As good as that is for society, it still will not make up for the structural problems bought on by a declining but aging population _and_ a large and growing retiree population. They need a younger population. Bringing in 10 million retirees from Florida would not help Japan's economy's structural problems. they need young, eager and enthusiastic immigrants to bring some vibrancy to their flagging economy.

Japan has great productivity and has automated moreso than any other country --it's had to due to a retiring population. They need a younger population with disposable income who are willing to spend their disposable income.

> Japan has great productivity and has automated moreso than any other country --it's had to due to a retiring population. They need a younger population with disposable income who are willing to spend their disposable income.

I'm sorry but the myth about Japan productivity has to stop :) I work in Japan and there are the most ineffective and honestly useless jobs out there. People guarding plastic cones on the road. People waiting at the car park exits everywhere to ensure no accident occurs. People at the front of numerous stores and train stations paid to salute everyone passing by. I understand it's all a part of customer service but this is just bringing actual productivity down. And I'm just citing obvious examples here, inside corporations there are tons of underemployed or useless jobs as well and since companies cannot fire people in Japan they carry on the deadweight for decades.

There's so much fat in every Japanese organization out there they have enough to skim out for 20 years and still be in shape.

Retirees working redundant jobs are not the issue. People staying in the office (twiddling thumbs) till the boss leaves is more of an issue.

Granted, construction is a big waste of money -but a lot of that is done by itinerant workers and pouring concrete over riverbeds and seashore is hardly useful endeavor, except to line the pockets of connected (all) politicians.

> Women are massively under-used in Japan. There's no need for immigration as long as there is a large untapped segment of the population not actively employed.

How would that help? People who are not employed (not "unemployed", but they simply don't need to work) still spend money (that their working relatives make), so by having them enter the workforce, you would not increase consumption at all, while reducing the average wage (making it impossible for a single working spouse to sustain a family).

> The simplicity and modernity that is often seen in Western Web Design gave these users the impression of not providing enough information, which made them uneasy and engendered a lack of trust.

huh, by adding another income to the family ? So, that should lead to a least a little more consumption.

Even if the average wage is reduced, I doubt it would be cut by half and result in 2 people working to reach the same salary as a single person before. You are not being very realistic here, since in Western countries putting Women to work has been a very effective way to increase households' levels of life.

Well, yes, it depends on the assumptions. Honestly, I have no idea how it worked out in the West, as I come from a country where 2 working parents has been the norm already for my grandparents. Maybe there is lack of production, and more employees could produce more, and hence get paid more (in average). On the other hand, (as I think you implied in another reply) there might be too many employees already, wasting time at work, and a lack of consumption. In that case, the only thing that 2 working spouses would cause is a redistribution in income (2-working-parent families would be getting comparatively more money, 1-working-parent families comparatively less).

If women also worked total family income would increase, and total family spending would probably also increase.

In the short term, yes, but in the long term, that's questionable... AFAIK, 50 years ago, it was very simple to raise a middle-class family with just one working parent (in the US), whereas nowadays it's almost impossible for the majority of professions.

And you believe this is because women are working now?

I really hope that we do not rely on population growth to stimulate or sustain an economy for too much longer. At some point humans will need to think about carrying capacity and understand how to structurally reconfigure such that we can maintain a high quality of life for us and other earth inhabitants.

I don't agree that increased immigration/population growth is necessarily the key (for Japan or other developed nations). Technology should be able to go a long way to replace the workers who support the nation. Japan, of course, is doing its utmost to prove this wrong.

They have 5% unemployment, and, after a quick check, it seems like a similar labour force to population ratio to the UK and US.

I'm not an economist, but in their position, what would mass immigration solve?

3.6% unemployment and virtually every store has an "help wanted" sign [1] on its front door. Japan is facing an incredible demographic challenge: Japanese population decline has really started 3 to 5 years ago (depending on the source), and it will be getting worse and worse in the next few decades. It means its internal market is essentially shrinking, which makes a terrible case for large investments.

That said the situation is not terrible for workers. I found a job here even though nobody in the company could even talk with me (my Japanese was really bad at the time). The first few months were interesting, we were just communicating with signs and drawings... Programming skills are few and far between in Osaka.

Conversely I know immigrants who took 5 years to find a job in France, which is in the opposite situation: population up, gdp flat, gdp per capita down.

[1] At shitty wage, as you can imagine...

Japan's biggest problems are extreme debt, and poor allocation of capital via government spending (Japan's famed public works programs, which have net resulted in zero real GDP growth for 20 years).

Japan is the poster-child for what's happening to the US and Europe: Keynesian economics has failed. QE, inflation, central bank stimulus, debt accumulation - none of it actually grows an economy or increases productivity. It's all fake, all of these measures are meant to keep the fraud going a bit longer, and now the clock has run out and the consequences are being paid.

> Keynesian economics has failed. QE, inflation, central bank stimulus, debt accumulation

It's kind of funny how much of a content-free buzzword Keynes has become. None of the measures you mentioned are originally tied to the original Keynesian idea of anti-cyclical government behaviour.

"Keynesian" as used by the mainstream today is only very weakly related the writing and thinking of John Maynard Keynes. I've seen it suggested in more than one place that if Keynes was alive today he wouldn't be a Keynesian.

Even modern Keynesians are usually the first to tell you the central bank is going to be pretty much helpless in a liquidity trap, that QE isn't going to make a big difference, etc.

(Twenty-five minutes too late...)

No discussion of Japan's economy (whether it's government debt, inflation rates, recession, etc.) is complete without mentioning that the unemployment rate is 3.6%, the 2nd-lowest (behind South Korea) in the OECD.[0]

So all the doom-and-gloom about Japan's future prospects and what they're doing and should be doing has to be balanced by the continued commitment by the successive Japanese governments to maintaining full employment.

[0]http://stats.oecd.org/index.aspx?queryid=36324

In my view low birthrates are a result of financial insecurity and the fact that now both parents have to work full time to make a decent living while 50 years ago it was sufficient to have only one parent working.

I just don't buy the story that post-industrialist societies are somehow more enlightened and therefore prefer to have less or in case of Japan often no children at all.

Reproduction is one of the strongest needs a human being can have after survival and security.

Had it not been for immigration from the 3rd world most 1st world countries would have a population in decline.

With the way Japanese society feels about immigrants, I doubt it'd be politically palatable.

I agree that Japan (and the US) would benefit from more immigration for a lot of reasons. But if you can only grow your economy by adding people, you aren't really increasing per-capita income, at least for the working class.

> you aren't really increasing per-capita income,

Even countries that are relatively open to (legal) immigration, like Canada and Australia, tend to limit immigration to working-age adults qualified to work in technical, professional or otherwise white-collar jobs. So I think it's fair to say that you do increase per-capita income.

I wouldn't put the US in the same boat as Japan, though. Between green cards and naturalizations, the US receives well over 1 million immigrants per year (that doesn't count non-immigrant visas like H1B etc):

http://www.voanews.com/content/us-issues-million-green-cards...