Turning Japanese, Part 2

I, along with a considerable chunk of saltwater economists, have been harping on the history of Japan from 1990, as an object lesson for the USofA and The Great Recession. So, imagine my surprise when today's NY Times runs a piece on the front page of the Review section claiming that the USofA should now *emulate* Japan! What's up with that? Another case of Judy, Judy, Judy?

In part, I have to disagree with some of his conclusions based on inappropriate data. He says: "Luckily there is a yardstick that finesses many of these problems: electricity output, which is mainly a measure of consumer affluence and industrial activity. In the 1990s, while Japan was being widely portrayed as an outright 'basket case,' its rate of increase in per-capita electricity output was twice that of America, and it continued to outperform into the new century." Now, in my dead trees version which I read this morning over dark roast Panera coffee, that sentence is right next to a 1/4 page photo of an open air pedestrian shopping street at night. Could well be Tokyo. Wherever it is, it shows the profligate use of electrons devoted to signage. Moreover, Japan uses much more electricity for public transport, which is a Good Thing, but really isn't an indicator of progress vis-a-vis the USofA (here). A few minutes with interTubes search didn't yield a source of household electricity use, which didn't surprise me. On the other hand, WikiPedia has this piece, citing IEA data, which shows Japanese per capita electricity use declined in the mid 2000's.

The number he should have used, if it were available, is median household electricity usage for both countries. Since Japanese homes, at the median, are significantly smaller than US (not the best number, but the best I could find), the delta percentage is a truer measure of usage, with the caveat that 10% more of 1 is a lot easier to do than 10% more of 100. And whether using more electricity is a sign of progress is a whole 'nuther question.

Where I have to agree, at least superficially, is this:
"Japanese manufacturers have graduated to making so-called producers' goods. These typically consist of advanced components or materials, or precision production equipment. They may be invisible to the consumer, yet without them the modern world literally would not exist. This sort of manufacturing, which is both highly capital-intensive and highly know-how-intensive, was virtually monopolized by the United States in the 1950s and 1960s and constituted the essence of American economic leadership."

While I have to agree that not killing off manufacturing is a Good Thing, the manic chasing of export sales is foolish. If one wants to have a robust domestic economy, then domestic consumption of capital goods is also necessary.

Where I really have to praise his insight is the tale of victimhood perpetrated by the Japanese hierarchy internationally. Poor downtrodden Japan!! As my Pappy used to say, "a hand full of gimme, and a mouthful of 'Much obliged'".

One point about the article needs amplification. He talks about differences in inflation over the relevant period, and remarks that US statistics makers had changed their methodology to something called "hedonic inflation adjustment". I missed that somewhere along the line, likely when I was trying to make a living with a camera. The concept was taught when I was even an undergraduate, but I don't recall the term. It amounts to calculating 'flation weighted by the change in "quality" of the various goods in the market basket (the technical term for the list of goods and services used to measure 'flation).

The BLS says this about it.
An opposite view is here.

On balance, hedonic (a truly woeful term) adjustment is appropriate. The concept is commonly used by Right Wingnuts, by the way. They use it to say that Americans aren't really more prone to poverty now than years past just because the goods (services, not so much, of course) of today are so much more capable than five or ten or twenty years ago. That doesn't stop them from complaining when the argument defeats them.