Japan’s Big-Works Stimulus Is Lesson for the US (Obama, American, dollars)

[delusianne]

New York Times | Japan's Big-Works Stimulus Is Lesson | also here - Japan's Big-Works Stimulus Is Lesson for U.S.

Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience. While Japan is not exactly comparable to the United States — especially as a late developer with a history of heavy state investment in infrastructure — economists say it can still offer important lessons about the pitfalls, and chances for success, of a stimulus package in an advanced economy.

Excellent article illustrating stimulus-spending dangers - glad we're aware, hope we dont forget.

[ndfmnlf]

Originally Posted by delusianne

New York Times | Japan's Big-Works Stimulus Is Lesson | also here - Japan's Big-Works Stimulus Is Lesson for U.S.

Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience. While Japan is not exactly comparable to the United States — especially as a late developer with a history of heavy state investment in infrastructure — economists say it can still offer important lessons about the pitfalls, and chances for success, of a stimulus package in an advanced economy.

Excellent article illustrating stimulus-spending dangers - glad we're aware, hope we dont forget.

Japan is different from the US for basic demographic reasons: Japan's population is shrinking, not growing. It also has a stricter immigration policy than the US. It is people who create demand for goods and services (hence economic growth). If population is shrinking, no amount of stimulus is going to revive that economy.

[TuborgP]

It was uncharted territory for them now and uncharted territory for us now.