In response to the overall exchange but this in particular:
> Paul A writes:
> > Some rough numbers illustrate:
> > Budget deficit 1994: 2.2% of GDP
> > Budget deficit 2000: 8.0% of GDP
> > {IMF Country Report Japan}
> >
> > Don't you think it is fair to say that for most mainstream Keynesians
this
> represents the 'pedal to the metal' range and thus a fair test of a
stimulus
> package?
In fact the pressure over Japanese gov't surpluses started when US trade rep
teams focussed on it back in the late 80s (when 'the Japanese are going to
takeover the world' rhetoric dominated). The idea was that the Japanese
gov't ought to loosen up and spend more (since everyone said that the
surpluses were a 'consumption' problem, i.e., not enough overall
consumption, which lead to trade surpluses and Japan's alleged predatory
capitalism).
And if the money was spent right it would help recycle dollars (like Bush's
Bechtel buddies getting construction contracts). The trade reps were
obsessed with (1) sewerage, (2) roads, and (3) the opening up of
construction contracts to US construction firms (the elimination of 'bid
rigging', which is hardly unique to Japan and which isn't the only way
insiders get the contracts).
This was also when a lot of big military contracts were secured.
As the bubble burst, the steady succession of Japanese prime ministers (they
change on average every 2 years) just kept adding supplementary budgets to
the already supplementary budgets to it until the gov't moved well into the
fiscal red. This did, indeed, help Japan's measured GDP keep pace , for the
most part, with the rest of the OECD during the so-called 'lost decade'.
Charles Jannuzi
