When I was holed up in Beijing for several months last year finishing my China book, Eamonn Fingleton was part of a virtuoso team of guest bloggers who filled in for me in this space. One of his items drew a lot of attention and generated a lot of discussion. It was called "The Myth of Japan's Lost Decade," and it argued that the Western world had been all too self-congratulatory about the utter "collapse" of Japan's economy. In fact, he argued, Japan was still very rich -- and although its political system was terminally dysfunctional (sound familiar?), its companies in fact enjoyed ever-growing world market share in a wide range of high tech goods.
This is a case I sympathize with, and have made various times -- for instance, in the Atlantic two years ago. I am sure that Fingleton has noticed that Paul Krugman, long a skeptic of the "Japan is stronger than it looks" view, now agrees. Or so a new interview with Martin Wolf in the FT suggests:
The conversation turns to the Japanese crisis of the 1990s. In retrospect, I [Wolf] suggest, the Japanese seem to have managed the aftermath of their crisis quite well.
He [Krugman] agrees. "What we thought was that Japan was a cautionary tale. It has turned into Japan as almost a role model. They never had as big a slump as we have had. They managed to have growing per capita income through most of what we call their 'lost decade'. My running joke is that the group of us who were worried about Japan a dozen years ago ought to go to Tokyo and apologise to the emperor. We've done worse than they ever did. When people ask: might we become Japan? I say: I wish we could become Japan."
Respects to Fingleton, who was one of the few making the case against exaggerated Japan-pessimism all along. (Bill Holstein is another.) And to Krugman, for acknowledging how things have evolved.