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A few Japanese business myths debunked

Site Néojapanisme offers some Japanese Economic Mythbusting from finance Professor Noah Smith. Some of these may surprise people operating on out-of-date information:

Myth #2: “Japanese households save a lot.”

This used to be true, but isn’t true anymore. The household savings rate nearly hit 0% in 2008 and is only around 2% now (America’s is around 5%).

Here are the topics discussed, with my super-short replies: 

Myth #1: “Japan is an export-dependent country.”

Not so much any more. (Note, too, that Japan runs only small trade surpluses, or even deficits.) 

Myth #2: “Japanese households save a lot.”

Not any more.

Myth #3: “Japan is a top-down economy guided by industrial policy.”

Not any more.

Myth #4: “Japan is a manufacturing-based economy.”

Not so much. Like other wealthy nations, it's largely moved to a service economy, leaving manufacturing to poorer nations. (That includes manufacturing performed by Japanese companies in those countries, so as always, the big picture is complex.)

Myth #5: “Japan has lifetime employment.”

This was only true for a fraction of workers, which appears to keep getting smaller. Layoffs are happening at big-name companies that we'd long been told could "never, ever" consider layoffs. (I see that Professor Smith says lifetime employment only applied to half the workforce, whereas I'd always heard that it only applied to a third or less. Well, they're both in the same ballpark.)

Myth #6: “Japanese companies aren’t innovative.”

Uh, many are innovative, while many arguably aren't innovative. It's a dumb statement, from whoever it is that says things like this.

 

So, what are Professor Smith's replies to all the above? Pretty much the same – though if pressed for details, I assume he can tell you far, far more than I can! (An added item, "Myth #7: The Japanese buy government bonds out of patriotism”, is one I leave entirely to him; I know nothing about that.) 

The article then goes on to discuss more specific matters of changes in the Japanese economy, particularly impacts of "Abenomics". It's a short and informative read; have at it!

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