How The Japanese Economic Miracle Led to Lost Decades.
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- Опубліковано 22 вер 2022
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From 1991 through 2001, Japan experienced a period of economic stagnation and price deflation known as "Japan's Lost Decade." This was caused by the collapse of an asset price bubble in late 1991. The term originally referred to the 1990s, but the 2000s and the 2010s can be added to the list due to the country’s economic stagnation. We’ll look at the postwar Japanese economic miracle, the bubble economy of the late 1980’s and the lost decades that Japan has experienced since. We will also discuss any overlaps between the Japanese Economic miracle and the last thirty years of growth that has been seen in China - and discuss to what extent history could repeat itself.
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Is there a way to send ideas for videos to you Patrick? Love your work and would love to contribute a bit.
ATT PATRICK:
"Printing Money"
It's a very loosely used term. I've seen senior analysts call selling bonds, "printing money".
So, what is it ?
How is it done ?
Can every country do ?
Can every country get away with it ?
How can one country get away with it and others not?
etc ?
you missed one huge point.
China.
1980 chinese export was only $11B but in year 2000 ,it was 250B.
major manufacture , including japanese companies moved its factory to china, replacing japanese export.
i dont know why all econ & finance channels missed this very obvious point.
maybe they are just copying each other??
Have you watch prince's of yen?
@@fffwe3876 ,,,,,,, and k
That sarcasm towards Harley’s innovation was delivered with a straight face 😂
That was amazing!
I was about correct that! Then i saw this
Ikr he didn’t even blink.
I mumbled on that for half of the video lol
The funny thing is, the bike used in the example is "edgy" by HD's glacially advancing style and engineering. They produced so many identical bikes for so many years, only a hardcore enthusiast can guess what year one is made in within the last few decades.
Love Mr. Boyle, his dry sense of humor is unmatched.
"...to protect Harley Davidson, and as you can see the extra breathing room really gave them opportunity to innovate." Wow, that was fast and sharp like a katana.
"Which I understand was a nice place to live" Oof. Cali you deserved that.
I@@j3i2i2yl7
As some who has lived through “The Japanese Miracle” as an adult, it reminds me very much of Warren Buffet’s saying, “When the tide goes out, you can see who’s been swimming naked.”FTX shares, anyone?
Indeed ....see Europe today - butt naked revealed 😆
It's screwed up when you lose a war and your conqueror blocks your exports
In what way does it remind you of that?
@@truth.speaker too much debt I guess
@@giovannip8600 who's debt?
Really glad I found your channel. I'm an American living in Japan for 32+ years, running a business and blogging for most of that time. I came here in 1991 and didn't realize it at the time, but it was right as the bubble was bursting.
Excellent review. I've been to Japan seven times since 1973. As a young sailor on that first trip, I was amazed at the business and industrial activity in Tokyo, Yokohama, Kure/Hiroshima and Sasebo. The culture struck me as astonishing beautiful (helped that I was lucky enough to meet a dual-degreed, bi-lingual -- and very lovely -- Japanese girl who showed me around in Hiroshima... one of my best memories.) In the 1990s and I had five more trips (1 more in the Navy, 5 with Toshiba) and saw a changing Japan. The Narita airport bookshelves still had titles about the Japanese economic miracle, but they were gathering dust by then. Japan was less exuberant and rambunctious than I remembered from my first trip (where I was simply a visitor taking in the sights for the first time). The Japanese are patient and resilient, but they do have more troubles now than before (or at least those troubles are more apparent, now). I have the deepest respect, admiration, and love for their country and culture and hope that their resilience and intelligence helps navigate the future. Japan has announced its opening to "foreign, independent travelers" as of Oct. 11, 2022. My wife and I are planning trip number 8 to Japan for next spring!
Same! I got stationed in Sasebo in 2016. Amazing country and wonderful homogenous culture. Everything about how they function is admirable. Ive always been surprised when i see so many smokers over there yet their average life expectancy is higher due to differences on diet and consumption volume
have fun!
You sound like a diplomat: have you thought about getting into diplomacy?
My wife and I had a house full of Japanese exchange students and one young boy is basically an older brother to our son in Canada. It pains me to see such a robust, hard working demographic struggling. They're a beautiful people with an incredible and unique culture. Of course, my son speaks Japanese, his first house language! We saw condos in Vancouver being bought up in the eighties by Japanese, but since locals really hadn't changed their housing desires it wasn't resented (and more high rises went up, feeding the frenzy). By the very late eighties the bubble (and yakuza and other criminal types) caught up with Japan, and things changed. Our "homestay" business in the nineties went Taiwan, Korea, and of course, the Chinese wave from the mainland.
@@thestockfother what’s so wonderful about a homogenized culture?
Not enough people are appreciating that Harley Davidson burn lol 😂
I think a seventh worthy driver of Japanese growth was their early embrace of the quality revolution. W. Edwards Deming had tremendous reception in Japan before American firms adopted “quality is job 1.” Folks shifted from consuming just any old crap, to preferring a quality product. Honda and Toyota, Sony and Canon, Sanrio and Manga, did not come from nowhere, and were ahead of the curve.
I am one of those who read all those japanese management books in late 2000s. Never thought about the macroeconomic and cultural aspect of the Japanese miracle. This was eye-opening. Thanks Patrick!
It's a funny thing: as much as people try to ascribe the successes and failures of nations to their cultures, religious beliefs, work ethic and such, it always comes out that those things had next to no impact compared to successfully capitalizing on fortunate circumstances, or failing to correctly manage less fortunate circumstances.
@@Hotshot2k4 so Europe just had fortunate circumstances? It had nothing to do with a multi-millennium intellectual tradition culminating in the enlightenment and the scientific, agricultural and industrial revolutions? Nah, I guess they just had good soil or something.
@@jasonmaguire7552 On the contrary. Unfortunate events, the back death, Kickstarter the societal changes necessary.
@@jasonmaguire7552 Multi-Millenium? Ehhh, a lot went right in Europe to get where it is today. The world leaders of science were in the Middle East. Until the Enlightenment, Europe was one of the worst places to live, which in that millenia of abject torture on the common people is what pushed the Enlightenment into even happening in the first place. We’re lucky in the sense that our predecessors in philosophy followed a different school of thought than the East, even, just look at what Legalism has done.
Same here. Thank you Patrick for your insight.
Now-a-days, real-estate in Japan is so expensive, they literally have 100 year loans. Your children and grandchildren are legally obligated to pay the debt.
I remember the mixed response in the US during the 80s when it came to Japaneses businesses. A lot of blue collar workers were becoming very anti-Japanese seeing them dominate American businesses like the automotive industry. People also resented Japanese companies buying American property. On the flip side, execs of all stripes saw Japanese businesses as something to learn from. Books having nothing to do with business, like the Book of Five Rings, became must reading. Later Chinese books like the Art of War followed that same philosophy. It was all very strange.
Yup, i read the book that anti-japanese sentiment are strong between 1970- 1980. Most protest are come from US Auto industries because they can't compete with japanese car auto industries.
True but right now American car companies are trash and unreliable no body buys American car companies u less for a truck
I remember when Mitsubishi bought Rockefeller centre and then Sony buying Columbia Picture, the news papers were how Japanese were buying American Icons.
Something to learn from? And they didn’t! GM and Ford are still losers. Most US companies just suck and can’t export anything except entertainment and arms.
Trends are that way. Mob mentality can be a scary thing.
I'd like to see a part 2: the Future of Japan. Where does the Japanese economy (and society) go from here?
They need to open up. Japanese society (and consequently economy) is rather insular. That's affecting their numbers - just look at their ageing population. Maybe they should consider an EU-style single market with the rest of Sth East Asia?
@@archipiratta Im sure their population problem are more about they destroying their own villages, by accident. If they want stable population they need to balance village and city development.
to the bottom of the Sea
Depends on leadership.. Japan has a real opportunity to snipe china and take some of that manufacturing.. Mexico... Thats the next frontier unfortunately..
@@yulusleonard985 i agree with that actually..
The quality of information in this video and the level of expertise in its summarization is astounding to me, especially compared to usual youtube fare. I will explicitly sign in to the sponsor's service just in recognition of your brilliant work. Thank you very much indeed.
Brilliant analysis. I love your history/economics focused episodes.
I love your history oriented projects.
Loved it where you synced the part about 'redistributing and equalising income' with a Robinhood rendering.
Thank you Patrick for such a densely packed and mind blowing talk. I will have to watch this several times to make sense of it all.
Though there are many videos on the Japanese economic miracle/the bursting of the bubble here on UA-cam, it's exceptionally rare to find one which gives such an accurate and comprehensive overview of the entire thing, not just looking at the 1980's and beyond, but also at the very start.
Kudos.
Patrick's fame to popularity is his research on Japanese economic bubble from what I know. It's his most notable work.
princess of yen
Princes of the Yen..? 🤔
You have turned your channel from just another UA-cam channel into one that is hilarious and extremely educational. New binge discovered, love the videos!
Cheers from Brazil!!!
Looking forward for this video!
Quite interesting I posted few days ago in your 1987 crash video asking opinion about the fall of Japan and the book written by German economist Werner "princes of Yen". Glad to see this video. Great piece of information as always. Thanks Patrick.
Good summary. Not only does it explain how Japan's economy got to where it is today but it also puts paid to the reputation of business and economic reporting about Japan over the last 40 years.
...especially those who peer at you (often wearing bow ties, for some reason) from over crystal balls and news headline photo captions and UA-cam thumbnails and proclaiming that "It's OVER!" or "The END is coming in # Days or Years!" or "SELL EVERYTHING NOOOOWWWW!!!" So, pundits look in the rear view mirror and tell you what the future portends and why the past the way it was as if they knew all along what was going to happen (why didn't they alert us, then?) and then know that you will forget everything they predicted once the future they spoke about comes to pass in a very different way. I worked for a major (very major) international banking house based in London in the early 2000s and they were hiring any American with a pulse (guess that included me!). Several years later, they were washing their hands of their American businesses, explaining that they preferred Jaguar and Range Rover drivers to those who drove Hondas and Ford pickups. Their new focus at that time: China (because all the new drivers there liked Brit cars, too, maybe?)! I've enjoyed seeing how their investments have been working out these last couple of years. (BTW: Jaguar and Land Rover are now owned by Tata Motors of India, I believe. Rule Britannia!). As for their commercial bank network on the West Coast, Cathay Bank bought them out in 2021! Nice finish, because I was lucky enough to go to the same high school with a lovely, very intelligent girl whose dad was one of the key founders of that L.A. Bank in the 1960s when most lenders would not give a nod to a Chinese person who wanted a home loan, no matter how successful he or she was. Her dad solved that problem!
Japanese economic recession is clearly the US engineering, it’s man-made.
Many Japanese management techniques were implemented around the world, like just-in-time inventory management, employee rotation system, main bank conglomerate etc.
Japanese are very smart
and Kaizen
Japan build their own success. Japanese management techniques were similar to those in America but each were developed independently.
They learned Confucianism from China, which itself has botched a bit.
@@krunkle5136 I think china is legalistic right now
At about 12:45, Patrick puts forth the idea that Japan's growth had less to do with productivity and more with finance in the 80s. "A sharply undervalued currency and low interest rates." I hadn't considered that. I've worked in production and the Japanese quality model, rooted in American Edward Deming, is sound, but I now think that internal quality is a company-micro issue and that government finance policy is the macro issue that has a greater effect on company profits. In other words, "You can't fight the FED." It also demonstrates how complex international finance is.
As always fabulous!! Thanks a million!
My favourite video of all that I've seen from you. Really first class - though you're looking stressed mate. Keep well.
Thanks Patrick! I love your channel. Also, your sense of humor is among my favorites on the web--in fact, I get at least half of my wit from you. Much gratitude sir.
California was nice then.
I do really enjoy your very dry humor. Well thought and perfectly executed. Love it ❤
Very informative video. Keep up the good work.
Great video Patrick, I learned something you're always worth watching.
love the book binding colors, patrick! :)
I noticed the book spines too!
Such a great breakdown of this economy. One of the best I've seen.
Another amazing video as always Patrick! So much effort goes into these, I wish I could do more than just leave a like!
What a great channel- thank you for all your efforts.
I grew up in the Detroit area and remember the worries of my parents (my father and many other family members worked for the Big 3) that the Japanese would overtake the auto industry. The lessons - like those regarding lean production vs mass production - were instilled in high school students to prepare us for the eventual fight that lay ahead.
Even though the Japanese auto makers still remain largely competitive to American Auto, I feel many believed they "won" the battle simply due to the fact that American ingenuity could never be a match for any competition, leading to further American complacency.
Only cars I've owned were japanese made. Toyota and honda are the 2 names that were always brought up when I asked about reliability and cost, to the point where I wondered how other car companies were still around (because at the time I didn't get why anyone cared about anything else besides reliability and cost, and also because I thought everyone that didn't have kids drove sedans).
I still don't know that much about cars.
look at detroit now.
@@ashishpatel350 Yeah, it's really made a comeback in the last 10 years or so. Nice to see things finally turn around.
@@matthewdrews i mean it can only fall so low before something picks back up... but its still the heart of the rust belt
I remember a Michael Keaton movie called Gung Ho about the car situation at the time.
awesome video. Complex financial concepts were explained quite well and clarified.
Love you Patrick, great video
Very interesting and timely. Brings forth points that I had not thought of, and which makes sense following your analyses. Thank you for all the work and sharing.
The graphic when you said 'adding fuel to the fire' is amazing attention to detail 🔥⛽😄
Another great video from mr Boyle, well balanced and documented with some sarcasm sprinkled over it
This was very interesting! I learned a lot from this one
Looking forward to your analysis of the UK’s latest budget/tax cuts and the reasons behind the decisions made…
The most comprehensive analysis I've found on Japan. Bravo 👏
@PatrickBoyle I come for the first-rate finance knowledge + digestion but I stay for the comedy! Thank you.
your history stuff sheds new light. thx
That "low key" had me laughing... great video, as always
Another great analysis. Really enjoyed it. Always makes my day. I never really got why this all happened and you summarized it in half an hour. Well done.
Brilliant mate. Well done.
Can anyone explain to me why Patrick's content is consistently more thrilling and exciting than a Hollywood blockbuster movie? I mean it's financial and economic news and analysis for God's sake, why is it so addictive!?
It might be because most economic news we’re used to get is very badly explained and simply makes no sense at all. There certainly are good analysts out there. But few bother to enlighten us.
Unlike a romance comedy movie, these videos actually have romance and comedy.
Patrick is a talented writer (assuming he writes his scripts) and story teller. His voice is rather pleasant, his pacing is quick but not rapid, he finds effective visual aids and does a good job with editing, and ultimately humans are primed-culturally anyway (and perhaps biologically)-to engage with stories.
Another observation, his writing is really quite good, and if he doesn’t employ the services of an editor to refine his scripts, I would actually be surprised. I follow several channels with similar “explainer” reading-to-camera styles, and I have since started to pick up on those whose scripts are well written (which is a prerequisite to this style of content), and those who have also employed a professional editor to give a final polish to their scripts and ensure they are exceptionally clear, concise, and correct while also engaging for audiences. It makes a huge difference, in my experience.
You think it’s a joke and presents as an act, but in a weird was it’s feels genuine, like he’s like John Stewart or a comedy news show but has a different punch
Thanks for yet another excellent video
❤ this channel - makes me feel smarter which is a gift thank you
I love the little stonks man on the bottom shelf there, haha
Great video! Thank you.
Thanks Patrick, will you do one over the UK mini budget? Very interested to hearing your analysis!
Excellent analysis…thanks
I thoroughly enjoy these videos Patrick😃🤝. Thank you.
Great video, thank you.
Eager and excited for this episode!
Love your video mate
I finally got a clear and reasonable explanation of that bubble burst. Thanks.
I remember a movie with Michael Keaton about a Japanese car manufacturer, which would have been firming this time 80s
Gung Ho.
The voice of authority.
I found you hard at first to listen to. Now I drop right into concentration. Good content.
Book stack was a nice touch.
From what I see in Japan, infrastructure projects, large scale property projects still remain at an impressive level. meanwhile the working class non-urban appear to be poorer. Still impressive is many prefectural cities have gone through modernisation and appear to be wealthy.
Great video, thanks Pat 🤝🏽
Patrick is the second person I heard explains about the Window Guidance mechanism. The first person that I heard talking about Window Guidance is Prof. Richard Werner.
Very informative and delivered in simple language
Daily Upside so much better than the Morning Brew in my opinion. Really enjoy it.
There is a fantastic book over the period of stagnation that Japan has suffered called "Japan's Great Recession" by Richard Koo. As a note; the book proclaimed that what happened in Japan after the burst of the bubble was not an unwilling-to-lend banking sector but a lack of demand of funds by firms
in light of the suffering and suicides post bubble, I feel a lot of japanese mentality changed across its business culture regards high growth. They yearned a simpler easier life with less fighting/stress. A previous flatmate (japanese) father owned a publishing company and suicided post bubble. They all suffered.
You touched on it briefly, but I was of the understanding that demographics have played a significant part in their inability to fight deflation
Thank you for the mention of "Japanese productivity: lessons for America".
Can you add references to the description ? ... in all the videos, not only this one :-)
That Harley Davidson comment (with pic) was possibly the smoothest low-key burn I've ever been fortunate enough to hear. Well played, sir.
Excellent backgrounder! Thanks.
Was hoping to see some future predictions and what options does Japan have for the next 10 years. Felt like video was cut short.. May be for another video Patrick?
Japan has a bleak future after over 3 lost decades.
if he can predict future, he is not doing UA-cam. 😂😂😂😂😂😂😂
This was a history video. How did you determine that predictive analysis or forecasting was part of a history video?
I find interesting how Japan incentivized the import of foreign goods & technology after the war
You mean stole, and copied, something that was well known in the PC, and other tech sectors that was so bad that companies would not let their latest stuff go anywhere near Japan because the would clone it in months. Nintendo ironically used a questionably copied clone 6502 chip in it's NES, by the way at the time in Japan it was technically OK, now today it is 100% a patent violation.
@@greyfox79007 no not like that
@@greyfox79007 and then Russians stole nes and named It "dandy" =)
@@priceandpride No exactly like that Japan and China are known for stealing and copying tech. It has been a very big sticking point for a long time. Doing that means they don't have to front the research money which believe it our not tech research is big chunk of US GDP. Japan around coincidentally around the time they started to not grow anymore agreed to change there patent laws. China has only recently started to agree to change their laws.
@@nerdomania24 There are rumors that Chernobyl was caused by a cloned computer chip that was sabotaged to prevent cloning. Something US computer companies were doing at the time to prevent Japanese firm from stealing tech. Which also might explain why Japan gave Russia forbidden tech to make subs quieter as they were trying to prevent a war.
thanks for the info 👍👍
Simon Kuznets
"There are four kinds of countries in the world: developed countries, undeveloped countries, Japan and Argentina"
Thank you Patrick.
Always good. Thanks.
Very interesting video
Nice new suit! Well done, Mr. Boyle 👍
Great content
Japan is a fascinating study. They essentially won the 20th century, and has the NIIP to prove it.
very well explain you got a sub sir
Exzellent lecture in economic history.
Arigato gozaimasu Patrick san.
Economic History is so interesting.
Great talk.
RS. Canada
That final bit about rising prices not making it through to rising wages is still very, very true - my institution here announced in our last round of salary adjustments that CPI had gone up by 3.2%, but wages were only going up by 0.2%. It was an announcement that wasn't met with much enthusiasm, as you can imagine.
I wonder what other tools Japan has to curb the falling jpy against the USD. A few days ago they intervened by buying yen, but this can't be sustained on the long run.
200 here we come.
Raise interest rates should do it.
@@matthewrogerson9119 that will crush their debt though.
They sold some US Bonds, to put some downward pressure on the dollar and then bought Yen to prop up their currency. I believe that Japan holds more US bonds even than China. Nice for governements as the yeilds are rather good for those US bonds, at around 4% for 2-year bonds, expecially as Japan still has deflation.
Generally, currency intervention is not as effective when undertaken by a single actor versus when undertaken by multiple actors. My guess is that BOJ and other central banks will work together to support faltering currencies as needed.
Great work. 😲
Great video indeed Patrick! Besides seeing somewhat the highlighted parallels to China, it seems also like a very cautious tale to what has been going on in the EU, UK and US in the recent decade.
The growth post global financial crisis seems to have been fuelled - at least for a large part - by speculative growth in several asset classes (from real estate, stock market, venture capital and also more intangible BTC) in the context of continuously lowering interest rates.
Very curious on how it will play out, especially as it's not a geographically confined phenomenon this time. Not sure if there would be a better historic reference for this.
US economy is probably doing the best right now. China’s population will decline by 600 to 700 million by 2100. They’re going to experience economic stagnation and slow decline even worse than Japan.
Meanwhile the US economy and population will steadily keep growing. America’s GDP Per Capita is now substantially higher than most other developed countries with large economies.
USA GDP Per Capita is about 50% higher than Germany’s which itself has a 50% higher GDP Per Capita than Japan
Lmao at shibainu appearance.
I left Japan at the peak of the bubble, so it still amazes me that the prices in general are actually cheaper today decades later
"plaza accord"
The visual gags are great. "Art assets" pic 🤣
Explained way better than in Random Walk Down Wall Street... congrats!
The demographic issue was very important too (as mentioned around the 25 min mark).
Damn looking sharp!
The Nikkei 225 peaked at around 39k in 1989. It dropped 50 percent almost immediately in Late November ish to 1990 spring/summer. It collapsed to 80 percent down by 2004 ish. Now that is 15 years. Not making new highs until 2021 32 years later. A cautionary tale which has been overlooked throughout history. But I know this time is different for the US /sarc. The S&P may do the same but the Nasdaq should reach the bottom first. I’m old now and have never profited from these booms and subsequent busts. My bad. But in any event it won’t be pretty.
wow very good episode, always heard of the lost decade but to hear the break down help me understand the natural tendency for first class nations to becomes cash rich, lazy frivolous spending and less productive and worsen off by unproductive debt speculation, and poor economic policy interventions.
That picture of US food has some kind of message attached to it! made me laugh! 5:25