Could We Still Suffer a Japanese 'Lost Decade'?

More

We did the right things -- save the banks, drop interest rates to the floor, pour money into the economy -- and we did them quickly. We're younger than Japan. We're riskier, too. We believe in the free market more. In the United States, it's easier to start a business and easier to fail. That's what makes us strong. But here's why we shouldn't be smug about avoiding a Japanese-style Lost Decade, or two:

Prolonged economic distress could undermine the attitudes responsible for U.S. economic dynamism. For example, the political winds are shifting against immigration even as labor-force growth slows because of an aging population and the leveling out of women's participation in the work force. The crisis has demonstrated that too much U.S. wealth is tied up in houses. The mortgages that financed them now clog financial institutions' balance sheets, starving new businesses of credit, much as Japanese banks kept lending to "zombie" companies at the expense of more promising firms. The U.S. risks perpetuating this misallocation of capital by maintaining extensive federal support for mortgages.

Read the full story at WSJ.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

What Do You See When You Look in the Mirror?

In a series of candid video interviews, women talk about self-image, self-judgment, and what it means to love their bodies


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In