Japan’s Big-Works Stimulus Is Lesson for U.S.(nytimes.com)
nytimes.com
Japan’s Big-Works Stimulus Is Lesson for U.S.
http://www.nytimes.com/2009/02/06/world/asia/06japan.html?hp
8 comments
Shouldn't the US have learned a lesson about Japan's huge housing bubble and tried to prevent it from happening here in the first place?
During the rise of the US housing bubble, people pointed out similarities to Japan but the experts kept saying that it was "different" here.
In some ways, I feel like we are doomed to repeat many of the same mistakes.
During the rise of the US housing bubble, people pointed out similarities to Japan but the experts kept saying that it was "different" here.
In some ways, I feel like we are doomed to repeat many of the same mistakes.
It appears to me that an economic depression is the best time to invest in projects that last for a long time. When you have a depression, people are cheap, things are cheap, and it is a bit safer to print money because people are tending to hoard money - in this case, you take money and sink it into needed material things like roads and schools that last for decades.
At some point in the future, things get back to normal, but now you have a whole bunch of new roads and nicer schools that were built when things were a bit cheap.
And as an added side effect, you put a lot of money into circulation, which should lead to more purchasing and spending, which will reactivate the economy.
The train system in the U.S for example, should be upgraded. I've seen videos of some cities, and they really looked almost 3rd world - such places should be invested in.
At some point in the future, things get back to normal, but now you have a whole bunch of new roads and nicer schools that were built when things were a bit cheap.
And as an added side effect, you put a lot of money into circulation, which should lead to more purchasing and spending, which will reactivate the economy.
The train system in the U.S for example, should be upgraded. I've seen videos of some cities, and they really looked almost 3rd world - such places should be invested in.
It seems that one lesson to take away is that there's more to "public works" than just construction. Technology and science development, for one.
However, having been to Japan, I can say that, along with all the "waste" in rural areas, they have a genuinely better transport infrastructure than the US. Now, with the advent of telecommuting, maybe that looks less important. But extensive high-speed and local rail are fantastic for business; they literally carry customers straight to you in a way that requires less volition on the part of consumers than driving does.
Also briefly mentioned in the article is that the US infrastructure has not been as well-maintained; a lot of this money is hardly "stimulus" but just necessary work that's been put off.
However, having been to Japan, I can say that, along with all the "waste" in rural areas, they have a genuinely better transport infrastructure than the US. Now, with the advent of telecommuting, maybe that looks less important. But extensive high-speed and local rail are fantastic for business; they literally carry customers straight to you in a way that requires less volition on the part of consumers than driving does.
Also briefly mentioned in the article is that the US infrastructure has not been as well-maintained; a lot of this money is hardly "stimulus" but just necessary work that's been put off.
Nobody -knows- anything, what happened in the past barely applies today. What economists say is loosing credibility every time they open their mouth.
To even make an educated guess is hard. This is an unpopular thing but its time people realize if you want to help, save your money in a higher interest savings account (ingdirect is what I use), keep working, and never let anyone make you feel bad for the job you have. All work even the lowliest of McDonalds jobs is honorable. Also avoid all loans possible, keep living in that apartment, keep driving the beater and cut the credit cards now.
To even make an educated guess is hard. This is an unpopular thing but its time people realize if you want to help, save your money in a higher interest savings account (ingdirect is what I use), keep working, and never let anyone make you feel bad for the job you have. All work even the lowliest of McDonalds jobs is honorable. Also avoid all loans possible, keep living in that apartment, keep driving the beater and cut the credit cards now.
When it comes down to it, so called "big works" projects are no different from an other type of investing (save for the scale they're done on). When you're in recession is the best time to invest - if you're able to scrounge up the cash to do so and the government can do that through seinorage (printing money). Still, if you invest in crap, that money will still be lost. The government must be prudent to put the money toward projects that will be worthwhile in the long-run. For example, the interstate system was a big expense, but has offered vastly improved transportation yielding great gains in commerce.
The problem is identifying what will create a long-term healthy economic environment. Of course, that's hard to do. Investing is hard and it actually becomes harder when you have more money. It's comparatively easy to find an idea that will grow from $20,000 to $100,000 in a few years time compared to finding an idea that will grow from $50bn by 5-10% per year.
In many ways, I'm glad it isn't my job to figure that out and I do worry about what the government is going to get itself into, but I think we can all take solace that at least "big works" projects would see money spent in America. With the proposals sitting at about the cost of the War in Iraq, I think that we can safely say that we aren't looking at the scope of investment that Japan did and that it's an amount we have already absorbed as money down the drain.
The problem is identifying what will create a long-term healthy economic environment. Of course, that's hard to do. Investing is hard and it actually becomes harder when you have more money. It's comparatively easy to find an idea that will grow from $20,000 to $100,000 in a few years time compared to finding an idea that will grow from $50bn by 5-10% per year.
In many ways, I'm glad it isn't my job to figure that out and I do worry about what the government is going to get itself into, but I think we can all take solace that at least "big works" projects would see money spent in America. With the proposals sitting at about the cost of the War in Iraq, I think that we can safely say that we aren't looking at the scope of investment that Japan did and that it's an amount we have already absorbed as money down the drain.
Our energy policy was written by Ken Lay. I'm sure he's lovely in person. He also sells dead animals on ebay, as though they were alive. I would rather not go through the parrot sketch every time I want to by gasoline.
I said, here on HN, that the bank bailout wouldn't fix anything. I said that it was a temporary move to slow the collapse of the economy, while people figured out something better. I think this is the something better.
This article seems to be about how japan built a bunch of boondoggles to stimulate the economy... I don't think that's what's happening. The worst of the stimulus package, money for movies, still creates a ton of jobs now. right now. If you look at studios, one hit is all it takes to make all that money back. California is so bad off, they aren't paying back overpaid taxes.
Sorry for the rant, but this seems so far from how the money will be spent. It's not marina's in Oklahoma, it's replacing govt. cars with more fuel efficient versions.
Ah well. I guess none of us really have a say in the matter anyway.