Japan and the USA / by kevin murray

Japan was utterly annihilated by their defeat in World War II in which two cities were subjected to devastating atomic bombs, and an additional 66 cities were firebombed in which a huge percentage of their infrastructure was wiped out.  Japan had numerous civilian casualties as well as military casualties as they laid ruined at the hands of the Allied forces in World War II.  Yet, one must give a lot of credit to Japan for their intelligence, their dedication; as well as their  fortitude in taking this defeated  and devastated island nation and its peoples, from the depths of despair so that by 1968, this small nation, about the size of California, had become the second biggest economy in the world.


The Japanese economic success can be attributed to many reasons, such as: governmental reforms which limited the Emperor's powers and created a more balanced and nuanced political structure, land reforms, the elimination of a standing army, and the money, capital, low tariffs, export markets, and advice provided primarily by the USA that aided and abetted the Japanese rise.  Japan became so successful as a nation that there was even a thought that one day their economic engine would even surpass the United States, but alas their stock market peaked in 1989 when the Nikkei 225 closed at 38,915 and hasn't recovered since, in which today's closing of May 21, 2014, the Nikkei 225 was at 14,042, an astonishing 64% below its all-time high which was set 25 years ago!


Japan's demographics have significantly changed over the last 25 years, in which their population has grown in total only about a mere 10%, while during that same time its composition of senior citizens aged 65 or older has doubled.  In short, the Japanese percentage of children is at historic lows while its percentage of adults that make-up their labor force is shrinking.  This means that the labor force, corporations, and the government are being squeezed by greater expenditures for pension benefits and health care for retired citizens, which often translates to higher taxes onto the workforce as a whole. Because of this demographic shift in Japan, there are less able-body workers that have to carry greater and greater economic and legacy loads in which because of the Japanese low birth rates and its low immigration rates, there is no hope that tomorrow will alleviate these problems and consequently the Japanese economic miracle is effectively over. 


The USA also has its fair share of problems that are similar in many ways to Japan and dissimilar in others.  The USA is aging but at a far slower rate and percentage as compared to Japan, nevertheless it is projected that by 2050 over 20% of our population will be 65 or older.  Defense spending in America is reportedly approximately 4.8% of GDP, whereas in Japan it is approximately just 1% of GDP.  The US dollar is the world's reserve currency which is of enormous benefit to Americans because virtually all commodities/goods are priced in our currency and because we have the printing press to make more dollars, it's almost like a perpetual hand in the cookie jar, however, if and when the US dollar loses its reserve status, our money will be discounted by other banks and countries, meaning that the cost of goods for Americans will substantially rise in real-money terms.


We should keep our eyes on Japan and recognize that despite their hard work rate, their great intelligence, and their wonderful innovations that you cannot safely rest of your laurels and so truly do not ask for whom the bell tolls, for it tolls for thee.