Cao Ni Ma posted:

Whoa it took this long for the guy to realize this when japan got run over in the 80s already

Cao Ni Ma posted:

Whoa it took this long for the guy to realize this when japan got run over in the 80s already

Tankbuster posted:

Japan managed it's decline pitch perfectly with a massive cultural boost and slow sinking into dotage.

unwantedplatypus posted:

Thank you Xi Jinping for eliminating sexual poverty in China


https://www.youtube.com/watch?v=GpDbKnteBek&t=1697s

Stringent posted:

ok, but every time i read about japan's decline it's in reference to the bubble. like the current state of affairs is the aberration and the bubble wasn't.

seems backwards to me, but iunno i just live here.

quote:

It is impossible to understand the current existential threat the US feels from China without first understanding what happened to Japan 37 years ago.

This is the story of the Plaza Accord 🧵

As Japan emerged shattered from WW2, the US was intent on establishing a forward operating base from which to combat communism in Asia. So in the spring of 1949, under allied occupation, Japan joined a US-led system of monetary management known as the Bretton Woods agreement.

The agreement pegged the currencies of the largest economies to the USD, and the USD to gold, establishing the dollar as the global reserve currency. As a concession, the US allowed Japan to peg the yen to dollar at a favorable rate of 360:1, buoying Japan’s export economy.


While initially tolerable, the rapid post-war growth of Japan’s export industry quickly allowed them to outcompete US manufacturing by producing similar quality goods at 1/3rd the price. This led to significant anti-Japan reaction in the US, particularly amongst auto workers.




As a result of this growth, experts began predicting in the ’70s that Japan could overtake the US as the world’s largest economy by century’s end. This trend only accelerated when the US was hit by the ’73 oil embargo.


Meanwhile in the US, the costly Vietnam war, high social spending, and growing negative trade balance were all being financed by money printing. But almost as soon as they were printed, these newly minted dollars left the country via the US’s negative balance of trade.

As a result of this monetary inflation, it was becoming increasingly clear the USD was overvalued relative to its fixed gold tether and in 1968, this overvaluation manifested as a collapse of the London gold pool, when growing US debts caused a loss of confidence in the dollar.

In 1971, Nixon intervened to address rising inflation by instituting domestic price controls and a blanket 10% import tariff. He also officially ended the direct convertibility of dollars to gold, untethering the dollar and effectively kicking off the fiat currency era.


With the dollar untethered, it could now drift toward its ‘true’ value. In ’73, the USD was again devalued against its official rate as the price of gold continued to rise. Soon after, Japan and the EEC were forced to let their currencies float, ending the Bretton Woods system.


With the USD now in turmoil, the late 70s saw the worst US inflation in decades. When Reagan took office in ’81, inflation had reached a crisis. To get it under control, the Fed increased interest rates to the highest level ever, with the prime rate peaking in Aug ’81 at 20.5%



While this finally brought inflation under control, it came at the expense of dramatic economic slowdown and mass unemployment. What followed was an era of lower interest rates, slashed social spending, regressive taxation, and massive military spending, aka ‘Reaganomics’.

Reagan’s policies of military spending while cutting tax revenues resulted in an exploding deficit. This deficit spending combined with the contraction of US exports needed to be financed somehow. And the solution that was chosen was to sell the debt.


As a result of the high interest rates of the early 80s, combined with a flood of new government debt entering the market, demand for USD soared, and between 1980 - 85 the dollar appreciated against the currencies of the next four largest economies by a whopping 50%.


While good news for the cost of imported goods, this strong dollar was disastrous for US exports, and contributed to the further collapse of domestic manufacturing.

But who was buying all this debt?

Japan.

By 1985, capital inflow attracted by these high interest rates meant that Japan owned more US-treasuries than any other country. But why buy only treasuries?


Because after the collapse of Bretton Woods, the US began stipulating that dollars accrued through trade surplus could not be used to buy major American companies, only allowing them to be recycled back into the American economy to purchase debt securities.

With this, the USD had finally landed on a foundation seemingly more stable than gold: dollar recycling. This recycling became the way in which the US has been able to maintain both a budget deficit and a balance-of-payments deficit year-over-year, seemingly without consequence.




And while export countries gain a small but stable return from these US securities, they inadvertently finance the cost of surrounding themselves with 800 American military bases, which are then used to break any country that tries to form alternatives to this dollar system.

But this system of maintaining the dollar created a new problem: too much indebtedness to one country would pose a strategic threat. And with Japan now the primary debt holder, the US needed to throw a wrench in the engine driving Japan’s growing leverage.

Enter the Plaza Accord

Assembling leaders from the top 5 economies in Sept ’85, the Plaza accord was designed to boost US manufacturing and agricultural exports and lower the value of the US Treasury instruments purchased with the trade surpluses held by other countries. At least on paper.

But the true aim of the accord was to cripple Japan’s manufacturing-driven economy.

The plan had 2 parts. The 1st part was to decrease the value of the USD, while the 2nd was to deregulate Japan’s economy, loosen monetary policy / liberalize markets, and cut government spending.



To accomplish the first, Germany agreed to dump a massive portion of its USD foreign reserves, flooding markets with USD and driving the relative value downward. The actual USD surplus that entered the market was less impactful than the implied threat of further intervention.

Almost overnight, the higher relative value of the yen made Japanese exports much less competitive. At the same time, Japanese capital was being incentivized by the US-backed deregulation of the Japanese economy into real estate, the stock market, and even more US treasuries.


The deregulation that followed also led to foreign capital flowing into Japan like a firehose. Tokyo’s stock market index rose 49% in the year after the accords. By 1989, it had risen 300% and Japanese stocks comprised almost half the entire world’s equity market cap.

As the newly available cheap credit created by the Bank of Japan congealed within Japan’s real estate sector, a massive asset price bubble began to grow.


In 1987, Washington piled on further to break the back of Japan’s manufacturing base by imposing 100% tariffs on $300 million worth of imports from Japan, effectively blocking them from the US market.


Eventually, Japan’s financialized frenzy had to end. On the eve of 1990, the real-estate and stock market bubbles finally popped, resulting in widespread collapse and sustained stagnation of Japan’s economic growth, beginning a period now known as “the lost decades”.



And while Japanese exports became more expensive overnight, productive capital couldn’t shift as quickly. It took another 5 years after the financial bubble popped before the actual productive output of Japan finally began to sputter.

Where did production shift to? In response to the tariffs, some production, such as Japanese auto manufacturers, relocated to the US, while the rest, particularly electronic goods, moved to China.




Given that this exact outcome was largely predictable at the outset of the accords, why did Japan agree to so thoroughly subordinate their own economy to US interests?

Because the post-WW2 US occupation of Japan never ended.

https://twitter.com/bidetmarxman/status/1564268800916455424

Stringent posted:

ok, but every time i read about japan's decline it's in reference to the bubble. like the current state of affairs is the aberration and the bubble wasn't.

seems backwards to me, but iunno i just live here.

Some Guy TT posted:

so anyway im in quarantine now and im wondering if theres any way to get a chinese sim card and phone number while im stuck here ill probably need a whole new phone too while im at it since i cant open this one and replace the card

also will having a chinese phone number get rid of that stupid get a friend to invite you requirement for wechat thats never worked any time ive tried to get someone to help me with it im not sure how or whether any of this will work when all i have is a visa and not a residence card the police held me at the airport for like an hour because i didnt have a contact person and im still mad my school didnt mention anything about my needing one of those

Danann posted:

Japan basically got its prized manufacturing sector ripped up by the US:
https://twitter.com/bidetmarxman/status/1564267348017938434

Telluric Whistler posted:

Make sure you're getting monthly pay slips with the tax paid listed on them, or that the HR keeps those records in an easy to access place. If you ever want to convert RMB to foreign currency, you'll need those records because they basically need to do the matching of your take-home pay against the currency conversion.

fart simpson posted:

i dont think you need to keep paper records for this. you can just go to the tax office and request a copy of their records, it takes like 10 minutes and it's free

Stringent posted:

what decline? it's still the third largest economy by gdp in the world?

Stringent posted:

right, that's what i was saying. there's this narrative in the west at least that japan is in some terminal state of decline since the 90s, but the facts as i see them aren't that japan is in decline so much as it's no longer experiencing explosive growth.

and yeah, the fact that the US state dept runs the japanese government and the dollar being the world's reserve currency had a big effect on how that growth was stopped, but i'm p sure it was going to stop one way or another at some point.

droll posted:

My god. Xi Jinping please save us my people yearn for efficient local bureaucracy

OhFunny posted:

I would disagree with your opinion that it was only explosive growth that stopped. Growth has stopped. The economy has stagnated. The country is poorer relative to other nations than it was. Japanese people are poorer now then they were 30 years ago.

Sure it's the third largest economy by GDP in the world, but that's a result of things that predate most of my lifespan.

Let's take a look at GDP and per capita. We'll make the start year 1995, because that's the last year before Japan's GDP growth dives and flat lines.



We see Japan is sitting at $5.5T GDP and a per capita of $44k in 1995. It takes 15 years for it to get back to these numbers again and it does not stay there for long. It sits at $4.9T GDP and a per capita $39k in 2021. That's bad, real loving bad. Especially the last five years. Where the line is for all intent and purposes a flat line.

Even if we measure from 1998. The year that the GPD tanks to $4.0T. The country has barely climbed upward.

Let us compare with the country that sits right behind Japan in the rankings, both then and now: Germany.

In 1995 it sat at $2.5T GDP and a per capita of $31k. In 2021 it sits at $4.2T GDP and a per capita $50k.

Stringent posted:

i'm not an economist so i don't know what any of that actually means.

like, it's valued in usd, so is it accounting for fluctuations in exchange rates? does it take into account changes (or the lack thereof) of prices of things?

i get that number isn't going up, but what are the practical ramifications of that supposed to be?

fart simpson posted:

i think the point is that america stepped in to engineer all of this to keep japan's economy from rising up too high, despite being a pretty close ally

fart simpson posted:

ally

Danann posted:

Japan basically got its prized manufacturing sector ripped up by the US:

Mandoric posted:

And there are political considerations as well. Keeping a currency low encourages exports in a competitive market, and can be used to encourage spending domestically rather than on imports; keeping a currency high makes imports cheap but leaves exporters unable to compete. The US famously stomped its feet in the '80s and threatened to just ban imports from Japan unless it pushed the yen from around \300=$1 to \100=$1; Japan complied and turbofucked itself, with costs of labor and domestic commodities essentially tripling, and the creation of a bifurcated economy where those who had suddenly had 3x more when spending as long as they did it overseas while those who didn't and had to spend more of their paycheck to begin with on domestic goods suddenly couldn't find manufacturing work because real export prices had dropped by 67% but also weren't paying any less at the supermarket.

Mandoric posted:

Yes, IMO. It's not a universal opinion, but it's not an uncommon one; the result of a drastic upward revaluation "doubling a currency's value" is essentially deflation, which means huge unearned rewards for those already sitting on actual or locked-in future money and a big crunch for those with big cash flows but not a hoard. Very much in the short-term interest of bankers, poor for processing industry whose domestic labor becomes more expensive, and terrible for extraction industry whose expenses remain the same but whose export prices halve and for younger and more marginal laborers who are now costing the company twice as much but who still have to spend most of it on purely domestic goods that haven't gone down. Encourages financialization and speculative bubbles heavily as the bankers now have twice the weight to throw around, also encourages foreign rather than domestic investment as foreign things are ~so cheap now~.

Makes the books look real pretty for a few years, though, as the people who matter are flush with cash to burn. And produces a lot of looking like you're going to take over the world, since you're buying everything you see at what to you are fire-sale prices (and therefore not looking very hard at it.) Then the reality that you've burnt through the windfall and all you have to show for it is wrecked domestic demand and loans to folded industries hits, and *waves hands at the entirety of Heisei*.

Mandoric posted:

Frosted Flake posted:

I think the discussion of Princes of the Yen was a different thread, but how and why did Japanese central bankers destroy their own economy?

Did they think their policies would work, or was the destruction intentional? If so - why ruin their own country? Both on like a personal, individual level, and why would the Bank of Japan undo the economy of Japan…

It's a very fuzzy thing, but IMO as a surface-level rundown the primary contributor is US pressure. The appreciation in the dollar due to Volcker's high interest rates put the last stake into American mid-tech manufacturing, and public perception culprit #1 for why the GM and Ford and GE and Magnavox plants laid everyone off was the cheap, high-quality Toyotas and Hondas and Panasonics and Sonys. The American solution to this domestic problem, made possible by still being the preeminent single import market by far, was simply to insist that the yen was around half the value that it should be and that it must be fixed or imports would stop.
Japan not having much in the way of natural resources, but having large amounts of immobile capital investment, the first was probably the less terrible decision possible; short-term it drove labor costs through the roof but import costs way down, while calling the American bluff would have idled the factories anyway with no real market, barring fanfiction about nuclear-propulsion civilian shipping to a somehow non-protectionist Europe or somehow managing to try Comecon on for size instead even while still under American military occupation.

As other broad currents:
- "Well it works for me" is definitely something that was there. Japanese oligarchy has always been strong, with the liberal current in the founding of Japan as a modern nation-state rather than region notably so rich and influential that they alone aside from western Europeans were able to pull off industrialization on their own terms; the clusterfuck of otherwise-inexplicable decisions that led to Japanese participation in WW2 was first and foremost the best decisions for the oligarchs, and the settlement of that war, while painful for some of their number, was carefully and successfully constructed to make sure that the smallest share of the pain fell on them.

- "Well it works for me personally and will probably turn out well enough" was also a thing, and also backed up by repeated historical example within living memory. Japan transforming from a feudal, isolated backwater to the third great trading power, and then from a bombed-out resourceless shell to the second great trading power, both times within not just a human lifespan but graduation-to-retirement, was built on the idea of building society's processes to operate how the west believed it itself should operate from a clean slate. Which means a lot of prestige and personal reward attached to going and drinking deep straight from the ideological liberal source in Cambridge (accent which drops Rs) or Cambridge (other accent which drops Rs).
In the 1880s, this worked well if you ignored the human costs, providing a melange of American industrialism, British engineering and colonial profit, Prussian state cohesiveness and educational achievement, and French legalism. In the 1950s, this worked well if you ignored the human costs, providing a melange of American assembly-line efficiency and German defanging or co-opting of radicals. In the 1980s, they ignored the human costs to opt into American financialization, and, well... That didn't really work for many people at all in either place, unlike previously where the west had functioning ideas Japan executed on better, but there sure is a vocal minority willing to spend their newfound millions pushing for more of it.

- Also re financialization, the doubling in value of the yen was real bad for CMC capital (loans and sunk costs suddenly twice as burdensome, still had to pay dudes to work the machinery but now it cost twice as much) but incredibly great for MCM capital (now that yen held in cash/securities rather than machines was worth twice as much.) Investment was ~to the moon~, any given investment was suddenly much more achievable with twice the cash in the bank, and surely it can't all go bad at once right? Especially if we invest heavily in America that thinks it's going to have industry again now that we're not selling as much to it, and especially now that all those savings accounts here have twice as much value to buy domestic production with so surely our own industry won't really hurt?

- So with beaucoup cash floating around looking for returns like it just had to keep the plates spinning, enter the same sort of securities and especially land bubble that you see across the west now. It's working, see? Even our typist pool are each buying a bottle of Dom every Friday night to share with their gigolos! Mortgage the land to buy even more stocks and even more land before it appreciates further!

- Oh no, there's no actual use for this development because we're not physically producing as much anymore. Oh noo, the things we bought at ~half price~ in the US just got wiped out by Black Monday. Oh nooo, now land prices are going down because we don't have any of the windfall left, our competitors don't want it because they also ran through their windfall, and Taro Tanaka age 22 can't even dream of landing a job good enough to afford to live there since there's no more good-paying work in skilled manufacturing like we used to have or as a junior banker like we just had until now.

- That last one, especially because the sweetener to keep labor docile through the years when the yen was low (and therefore exports were extremely profitable for the industrialist: get paid in expensive dollars, pay laborers in cheap yen) was lifetime employment, often growth-based with the expectation that in 20 years the firm would need every one of its new recruits as foremen and in 40 years as managers. Rather than risk the instability of layoffs, the solution found was in large part golden parachutes or long-term hiring freezes.

- Politically this kind of spun out over the ensuing decades into roughly a crony liberalism that worked exclusively for the "works for me" types, and an extremely by-the-books liberalism as a reaction to them; no industry also means no union left to either be explicitly political or to carve out their share of the profits of dirigisme. The by-the-books liberals came to power in a shock result just as the hangover was finally starting to clear, both mortgages coming to term and the locked-in senior workforce hitting roughly midpoint of being phased out through retirement.

... This was in '08. As by-the-books liberals, they decided that their most important duty was to finally balance the budget by doubling the consumption tax.

strange feelings re Daisy posted:

brb, immersing myself in the Xi Jinping thought map
https://twitter.com/zhao_dashuai/status/1581627742483001344?s=20&t=NKMcl4e_Kt8PUKrWNwC_OA

Mantis42 posted:

would love to see biden thought map

Mantis42 posted:

would love to see biden thought map

Stringent posted:

i'm not an economist so i don't know what any of that actually means.

like, it's valued in usd, so is it accounting for fluctuations in exchange rates? does it take into account changes (or the lack thereof) of prices of things?

i get that number isn't going up, but what are the practical ramifications of that supposed to be?

BrutalistMcDonalds posted:

BrutalistMcDonalds posted:

Antonymous posted:

that might look OK but that puts it around the PPP of Spain, Czech Republic and Puerto Rico according to the IMF.

GDP Per capita also doesn't take into account income distribution and that's a big part of how wealthy a place might feel.

Here's 3 different groups measures of countries by GDP per capita in PPP

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

BrutalistMcDonalds posted:

Stringent posted:

that's interesting. i've actually got a couple friends from spain that have lived here for quite a while and, at least according to them, economic prospects are a lot better in japan than in spain.

i'm definitely too dumb to understand this stuff tho.