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Japan's Lessons for America's Budget Warriors
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Japan's Lessons for America's Budget Warriors

John H. Makin
AEI, 2013
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Editorial Rating

7

Qualities

  • Comprehensive
  • Eye Opening
  • Well Structured

Recommendation

The US’s sluggish recovery from the 2008 financial crisis mirrors in many ways Japan’s post-1990 economy. However, their experiences are not identical. Thus, America’s ailment requires a different prescription. Economic consultant John H. Makin offers a cogent explanation to why the US shouldn’t swallow the same medicine as Japan. His text is highly detailed, but it provides a thought-provoking comparison with Japan and sheds light on many aspects of fiscal crises. getAbstract recommends this article to US policy makers seeking a model to emulate and to observers of the global economic recovery.

Summary

America’s faltering post-2007 economy resembles Japan’s post-1990 economy: Both crises manifested from a bursting property bubble, and both nations have faced soaring public debt and deficits coupled with falling interest rates. However, Japan has “suffered more intensely” than the US, and its crisis has lasted “four times as long.” Japan has undergone more than 20 years of economic stagnation and deflation since its devastating collapse in real estate values. Prime minister Shinzō Abe is now attempting to reinvigorate the economy with a massive $150 billion stimulus plan and is pressuring...

About the Author

John H. Makin is a former consultant to the US Treasury Department, the Congressional Budget Office and the International Monetary Fund.

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