AHC: a Richer Japan

[Alon]

Japan's economy is infamously not doing very well. It was converging to Western labor productivity levels until 1990, but since then has been stuck at two-thirds the US level. It's about as rich as France, both with about 70% the US's GDP per capita, but France has very short working hours, whereas Japan is comparable to the US.

My question is, can you come up with a good TL with a POD after August 1945 in which Japan manages to converge to the wage rates of the US, France, and Germany? The rule is that you can't do this exclusively by screwing the West so that Japan has less ground to make up - Japan needs to have the wealth level that the US and the richer European countries have in OTL today.

 

[mcdo]

Japan's economy is infamously not doing very well. It was converging to Western labor productivity levels until 1990, but since then has been stuck at two-thirds the US level. It's about as rich as France, both with about 70% the US's GDP per capita, but France has very short working hours, whereas Japan is comparable to the US.

My question is, can you come up with a good TL with a POD after August 1945 in which Japan manages to converge to the wage rates of the US, France, and Germany? The rule is that you can't do this exclusively by screwing the West so that Japan has less ground to make up - Japan needs to have the wealth level that the US and the richer European countries have in OTL today.

On the topic of the growth of GDP per capita in Japan, this may be relavent:

So the Financial Times has a column called "Someone is Wrong on the Internet", in which they try to find examples of conventional wisdom that are either incorrect, or at least an incomplete picture. The title for today is "Japan's economic miracle" . Here's a quote from the article:

Dhaval Joshi of BCA" said:
Since the late 1990s, the growth in Japan’s real GDP per head has outperformed every other major economy. And unlike other major economies, income inequality in Japan has not increased, remaining amongst the lowest in the developed world.

Apparently, while the economy has been growing only slowly, the population is shrinking, so GDP per head has been increasing. GDP per capita is now over 135% of what it was 18 years ago.
A shrinking and graying population will bring its own issues, the national debt is a problem, etc. But amidst the doom and gloom of the economic media, as the article itself concludes, Japan has actually seen two decades of rising living standards. That I did find quite surprising.

As you can see above, the growth rate of GDP per capita in Japan has outpaced all other developed nations in the past 18 years. If that rend continues, than Japan should start to catch up to the level of the US.

Anyway, I don't know enough economic history to attempt a TL, but it seems to me that the obvious PoD is to lessen the severity of the bubble, so there is less damage when it pops. Less irrational exuberance in the 1980s, say. Otherwise, have the government take a strong hand in forcing banks to start merging and paying down non-servicable loans earlier on, too. The stock price bubble, land price bubble, and the existence of "zombie companies" were all self-inflicted wounds that might have been either avoided, or at least lessened. As to the specifics of how one brings that about in a TL... I will have to think about it.

Edit: spelling

 

[Spens1]

Its not that bad, is it really that much worse than France. You have to note, Japan's cost of living (outside of Tokyo at least) is relatively lower than France is (and their GDP per capita is basically the same). 40k per year average is not bad at all.

 

[Johnrankins]

On the topic of the growth of GDP per capita in Japan, this may be relavent:

As you can see above, the growth rate of GDP per capita in Japan has outpaced all other developed nations in the past 18 years. If that rend continues, than Japan should start to catch up to the level of the US.

Anyway, I don't know enough economic history to attempt a TL, but it seems to me that the obvious PoD is to lessen the severity of the bubble, so there is less damage when it pops. Less irrational exuberance in the 1980s, say. Otherwise, have the government take a strong hand in forcing banks to start merging and paying down non-servicable loans earlier on, too. The stock price bubble, land price bubble, and the existence of "zombie companies" were all self-inflicted wounds that might have been either avoided, or at least lessened. As to the specifics of how one brings that about in a TL... I will have to think about it.

Edit: spelling

In that case Japan probably needs more babies. That would keep the GDP up.

 

[Alon]

Its not that bad, is it really that much worse than France. You have to note, Japan's cost of living (outside of Tokyo at least) is relatively lower than France is (and their GDP per capita is basically the same). 40k per year average is not bad at all.

GDP per capita is adjusted for living costs. And yes, Japan and France are close, but Japan has to work about 40% longer hours to get the same output. The long work hours of Japanese salarymen are unknown in France.

On the topic of the growth of GDP per capita in Japan, this may be relavent:

As you can see above, the growth rate of GDP per capita in Japan has outpaced all other developed nations in the past 18 years. If that rend continues, than Japan should start to catch up to the level of the US.

It's catchup from no growth in the 1990s. Japan's labor productivity as a percentage of the US rate peaked in 1990 (at 70%) and hasn't quite returned to that peak.

What I'd look for in a POD isn't just reducing the severity of the bubble, but also finding a way to get Japanese megacorps to shorten their work hours. High-income East Asia all does this - Japan is far from the worst. The question is whether it's possible for this to happen with a late POD without some serious cultural shock causing Japan to imitate Western norms regarding work hours. This shock is happening as we speak, since the American smartphone industry destroyed the Japanese feature phone industry, but it might be too late.

So if we're looking for a shock, we might want to find a way for Honda and Toyota to lose out to VW early. It's dicey - the auto industry in Japan is not just the largest exporter but also by far the largest sector that works outside the keiretsu system. On the other hand, the reduced profits of the Japanese auto industry don't really translate to fewer Japanese jobs, because, not exporting as many cars to the US as in OTL, Japan is never forced to pass export quotas by the Reagan administration.

So in the ATL, Honda and Toyota aren't providing many fewer Japanese jobs than in OTL in the mid-1980s. But they're a lot less profitable, which contributes to a slightly smaller financial bubble. To avoid being eaten alive by German and French automakers, they adopt German and French industrial norms: hiring engineers with graduate degrees, expecting them to stay in the industry their entire life but not necessarily at one company, paying and promoting people by work output and not by seniority or by face time. By the late 1990s and 2000s they are growing to the same size as in OTL, but by this point the US is near the peak of its free trade commitment and isn't passing export quotas, especially if the watershed year is 1999 and not 2002.

Within Japan, the auto boom is leading the traditional keiretsu to start adopting the business culture Honda and Toyota adopted from Europe. As a twist, the more tech-oriented companies are trying to incorporate Silicon Valley norms; most of these American ideas don't really fit in, unlike French and German ideas, so Japan doesn't invent Facebook and is basically a nonentity when it comes to software (except games), but it does manage to maintain its lead in consumer electronics. Sony and Panasonic are a lot bigger and Apple is a lot smaller than in OTL.

 

[Nivek]

Japan's economy is infamously not doing very well

I wish my country would have fare as japan, japan is the fine example of keynesianism and ISIS Latam wished to achieve. The issue japan got amazing growth and thanks China isolated per year got the lead in east asia, the rest woud be no world war thus they don't start from scratch and keep some colonies but that is other can of worms itself.

 

[Slowpoke]

As Alon has pointed out, achieving 25% more productivity for 50% longer working hours actually means you are less productive per work-hour.

 

[fasquardon]

Japan's economy is infamously not doing very well. It was converging to Western labor productivity levels until 1990, but since then has been stuck at two-thirds the US level. It's about as rich as France, both with about 70% the US's GDP per capita, but France has very short working hours, whereas Japan is comparable to the US.

My question is, can you come up with a good TL with a POD after August 1945 in which Japan manages to converge to the wage rates of the US, France, and Germany? The rule is that you can't do this exclusively by screwing the West so that Japan has less ground to make up - Japan needs to have the wealth level that the US and the richer European countries have in OTL today.

Hm. A stronger women's lib movement after WW2 results in a healthier relationship between the sexes from the late 70s on?

Or perhaps Japan starts reducing working hours during the boom in the 80s, meaning people have more family time?

Both shouldn't hit growth that much (making it so employers have less work hours available to draw on would encourage the adoption of automation especially in office work, where Japan lagged; also, there's a good body of evidence now that shows that people have about 6 hours/day of good work in them and reducing work hours can actually increase productivity, or at least doesn't reduce it by much, depending on the study and the type of work) and both would lower the "barriers to entry" to parenthood.

if Japan grew at similar rates to other developed countries, its productivity gains would actually make it one of the most successful rich economies. The "lost decade" - more like "lost 3 decades" now - started as a financial collapse (which always produce long recessions), but is mostly a demographic phenomenon.

That said, I don't see much potential to increase actual per/capita income. Per capita income/hour worked is easy. But I suspect that Japan is producing as much wealth as is possible with current technology, and while Japan is under producing leisure/family time, such things just aren't things we can measure in terms of our current concept of "richness".

So the overall wealth of the country can be increased (due to more people) and Japan could transition to a more leisure-rich paradigm, but without somehow making Japan the hegemonic superpower (and allowing it to collect hegemonic rents as the US does), I don't see how its wealth/capita can be improved beyond that of France.

Maybe if Japan invested more in blue-sky research? (The economically efficient level of science spending in a developed economy is around about 5% of gdp, and while Japan spends alot on R&D for a developed nation, it's still well short of 5%.)

this may be relavent:

What I find really interesting in that chart is the poor performance of the US compared to the UK. Especially as the US tends to have much longer work hours/capita than the UK does (though the Brits in turn tend to work longer hours than the Europeans).

fasquardon

 

[Pipcard]

As a twist, the more tech-oriented companies are trying to incorporate Silicon Valley norms; most of these American ideas don't really fit in, unlike French and German ideas, so Japan doesn't invent Facebook and is basically a nonentity when it comes to software (except games)

What do you mean by "don't really fit in"?

Or perhaps Japan starts reducing working hours during the boom in the 80s, meaning people have more family time?

The issue is that when you're in a boom, where is the incentive to reform?

 

[Slowpoke]

What do you mean by "don't really fit in"?

The "creative disruption" mindset and general "NCO-ism" of US corporations would be alien to the rigidly hierarchical operation of Japanese companies.

 

[Pipcard]

The "creative disruption" mindset and general "NCO-ism" of US corporations would be alien to the rigidly hierarchical operation of Japanese companies.

What POD can you get Japanese work culture to be more like the United States?

 

[dartingfog]

Japan's economy is infamously not doing very well. It was converging to Western labor productivity levels until 1990, but since then has been stuck at two-thirds the US level. It's about as rich as France, both with about 70% the US's GDP per capita, but France has very short working hours, whereas Japan is comparable to the US.

My question is, can you come up with a good TL with a POD after August 1945 in which Japan manages to converge to the wage rates of the US, France, and Germany? The rule is that you can't do this exclusively by screwing the West so that Japan has less ground to make up - Japan needs to have the wealth level that the US and the richer European countries have in OTL today.

According to this site: https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

The stereotype of the Japanese workaholic simply isn't accurate. Japanese workers don't work particularly long work hours compared to other industrialized nations. In 2016, they were ranked 19th out of 35 OECD countries in terms of hours worked per year, between Italy and Canada. They do work more than the French, but less than Americans.

In that case Japan probably needs more babies. That would keep the GDP up.

Having babies might increase GDP eventually, but may cause per capita GDP to decrease. More Japanese women might become stay-at-home moms, or be "mommy-tracked" into lower paying jobs.

 

[Electric Monk]

Print Yen to crank inflation. Helicopter money in a negative income tax. (My Japanese history is mostly 1980s onward so I’m going with a late POD here.)

I’m thinking maybe Noboru Takeshita isn’t involved with the Recruit scandal and him staying PM butterflies out some of the idiots following him and well he is pretty radical for a Japanese PM (POD: Nixon talks him into it!).

 

[Johnrankins]

According to this site: https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

The stereotype of the Japanese workaholic simply isn't accurate. Japanese workers don't work particularly long work hours compared to other industrialized nations. In 2016, they were ranked 19th out of 35 OECD countries in terms of hours worked per year, between Italy and Canada. They do work more than the French, but less than Americans.



Having babies might increase GDP eventually, but may cause per capita GDP to decrease. More Japanese women might become stay-at-home moms, or be "mommy-tracked" into lower paying jobs.

Possibly, but since we are talking since 1990 or so they would have grown up by now. By this time they are contributing to the economy.

 

[Alon]

According to this site: https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

The stereotype of the Japanese workaholic simply isn't accurate. Japanese workers don't work particularly long work hours compared to other industrialized nations. In 2016, they were ranked 19th out of 35 OECD countries in terms of hours worked per year, between Italy and Canada. They do work more than the French, but less than Americans.

Americans work long hours by European standards! This is why the US has a GDP per capita that's 40% higher than France's and 20% higher than Germany's. The problem with Japan is that it has American work hours and French output.

But more importantly, in Japan the higher-end workers work brutally long hours. In the US the relationship between income and working time used to be negative, and only recently did the gradient become zero, i.e. Americans work approximately the same hours in all income categories.

 

[Slowpoke]

How is the per-capita income calculated? If it's out of the entire population, that is, out of all living individuals who have received a social identification number, then the calculation would be favorable towards countries with few children and many people working past standard retirement age (both of which characterise Japan).

Americans work long hours by European standards! This is why the US has a GDP per capita that's 40% higher than France's and 20% higher than Germany's. The problem with Japan is that it has American work hours and French output.

But more importantly, in Japan the higher-end workers work brutally long hours. In the US the relationship between income and working time used to be negative, and only recently did the gradient become zero, i.e. Americans work approximately the same hours in all income categories.

This as well. In Japan you might work reasonable hours as a blue-collar, but office hours tended to be absolutely brutal last I read. Also, those semi-mandatory after-work drink sessions.

 

[Spens1]

As Alon has pointed out, achieving 25% more productivity for 50% longer working hours actually means you are less productive per work-hour.

so much this, they work longer, doesn't mean they're neccesarily more productive. In some offices they're experts at looking busy and not doing much of anything just cause its expectation to stay the long hours.

 

[Spens1]

As for a richer japan. Easy, you avoid the detrimental, reckless spending of the late 80's so even when the 90's come along, you don't have a crash in the economy. Meaning in the 2000's it isn't too bad either. Again in the 2000's no loaning out money left right and centre which led to their crash (iirc) and you don't have such a steep crash. On top of that, investment into a wide array of areas like more in tech in particular in the 2000's and you'd have an average income similar to the U.S instead of France and the UK.

 

[Rothbardian21]

Japan's economy is infamously not doing very well. It was converging to Western labor productivity levels until 1990, but since then has been stuck at two-thirds the US level. It's about as rich as France, both with about 70% the US's GDP per capita, but France has very short working hours, whereas Japan is comparable to the US.

My question is, can you come up with a good TL with a POD after August 1945 in which Japan manages to converge to the wage rates of the US, France, and Germany? The rule is that you can't do this exclusively by screwing the West so that Japan has less ground to make up - Japan needs to have the wealth level that the US and the richer European countries have in OTL today.

Easy, give Keynesian economic theory the boot after the crises in the 1990s. Let the recession run it's course and liquidate the mal-investment, allowing entrepreneurs to reallocate resources along profitable lines (lines no longer sending the wrong signals via artificial credit expansion and government lowered rates of interest, i.e. giving off a false signal of flush consumer savings for the demand of future products and encouraging businesses to take out a bunch of loans and expand for the future), and you'll be good to go within a year to two years time, granted it will be a painful recession for that 1-2 years, so it's difficult to implement politically. Then, bring government expenditures down to 20-25% of GDP, and sit back and enjoy the fireworks.

 

[Pipcard]

The "creative disruption" mindset and general "NCO-ism" of US corporations would be alien to the rigidly hierarchical operation of Japanese companies.

What POD can you get Japanese work culture to be more like the United States?

Is this really possible? I have wondered about this for the longest time. Or is this yet another case of "it is impossible for Japan to succeed because of their inherent, ingrained national character"?