Skip to content
Subscriber Only
Michael Schuman

Easy Money Isn't the Answer for Japan

Arguably, the main focus of policymakers should be preserving wealth.
Tokyo's streets are full of shoppers.

Tokyo's streets are full of shoppers.

Photographer: Carl Court/Getty Images

Strolling through Tokyo on a Sunday afternoon, it's hard to tell Japan’s economy is a mess. Deflation has returned, while growth hasn't. But Shibuya Crossing remains as packed with diners, bag-toting shoppers and gawking tourists as ever. Nearby, a line of more than 50 people stretches outside a restaurant selling overpriced burgers. Lost decades be damned!

Japan had the good fortune to have become wealthy before entering its years of stagnation. Some Japanese are now suffering in an economy that's endured four recessions in eight years; the poverty rate has reached 16 percent, its highest level on record. But for many, especially in big cities such as Tokyo, life hasn’t so much deteriorated as frozen in time. GDP per capita, on a nominal basis, is little different now than in 1992. And though the quality of many jobs has waned due to the increase of temporary work, joblessness remains a rarity. The unemployment rate is an enviable 3.2 percent.